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Commons Chamber

Volume 410: debated on Wednesday 25 April 1945

House of Commons

Wednesday, April 25, 1945

Prayers

[Mr. SPEAKER in the Chair ]

Private Business

PRIVATE BILL PETITIONS [Lords] (STANDING ORDERS NOT COMPLIED WITH)

Mr. SPEAKER laid upon the Table—Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petition for the following Bill, originating in the Lords, the Standing Orders have not been complied with, namely:

Mid-Southern Utility [ Lords ].

Report referred to the Standing Orders Committee.

Oral Answers to Questions

Questions

Literary Copyright (Great Britain and Russia)

asked the Secretary of State for Foreign Affairs the present position in regard to literary copyright as between Great Britain and the U.S.S.R.

No copyright convention exists between His Majesty's Government and the Soviet Government, nor have the latter adhered to any international copyright convention. Under Soviet law a work first published in the United Kingdom may be reproduced or translated in the U.S.S.R. without any authorisation from, or payment of royalties to, the author or publisher in this country. There is similarly no legal obligation on British publishing firms to obtain authorisation or pay royalties when reproducing or translating works first published in the U.S.S.R. I understand, however, that in practice ex gratia payments are usually made by publishing houses in each country when reproducing or translating a work first published in the other country.

Is not this a very suitable time for us to conclude some copyright arrangement with the U.S.S.R.?

Holland (Relief Supplies)

asked the Secretary of State for Foreign Affairs the amount of relief supplies which have so far been distributed amongst the suffering civilian population of German-occupied Holland by the International Red Cross; and whether, in view of the intensity of the need, steps will be taken to increase the supplies sent, pending the complete liberation of Holland.

Since the beginning of this; year Sweden has sent 13,500 tons of foodstuffs and Switzerland 5,000 tons of foodstuffs to Holland. Medical supplies have been sent from Sweden and from the United Kingdom. This relief is being distributed under the supervision of the International Red Cross and the Swedish Red Cross. It is possible that the Swedes will be able to send a further 1,700 tons of foodstuffs in the near future. His Majesty's Government, for their part, have done all in their power to facilitate, these shipments. Urgent consideration is being given to any possible means of facilitating the despatch of further supplies to relieve the tragic situation in those parts of the Netherlands.

German Garrisons, Biscay Ports (Spanish Supplies)

asked the Secretary of State for Foreign Affairs what official evidence he has that German troops, holding out in pockets along the West coast of France, are being supplied with food by Spanish nationals from Spain; and if he is making representations to the Spanish Government about this.

His Majesty's Government have for some time had reason to believe that small quantities of food and supplies were being smuggled by boat from Spain to the German garrisons in the Biscay ports. From the information at the disposal of His Majesty's Government it appeared that this traffic was taking place at least with the complicity of certain Spanish elements. A close watch has been kept on developments, so that appropriate action can be taken to put a stop to this at the moment best calculated to achieve results. His Majesty's Chargé d'Affaires in Madrid, acting in concert with his United States and French colleagues, made representations to the Minister for Foreign Affairs on the subject. Following these representations, certain arrests have been made by the Spanish authorities.

How is payment made by these German troops for food smuggled into them?

The right hon. Gentleman referred to certain elements in Spain; what are those elements?

To the best of my belief, the Spanish Government were not aware of this traffic. The Spanish Government have denied any knowledge of it; and, as I have said, they have made certain arrests in connection with it. I imagine that the traffic was carried on by Spanish smugglers, whom I could not identify.

Have the Foreign Office asked the Spanish Government to see that every possible effort is made to stop these smugglers getting food to the German pockets?

British Subjects' Interests, France and Italy

asked the Secretary of State for Foreign Affairs what arrangements have been made by his Department to protect the interests of British subjects in France and Italy; and, in the case of those who had property in those countries which was damaged or looted by the enemy, what steps have been taken to recover the property.

His Majesty's Embassy in Paris and Consulates in the principal towns of France have been reopened. In Italy there are consular offices in Naples, Rome and elsewhere in parts of the country not under enemy control. Responsibility for the care of British property in Italy at present rests on the Allied Commission although His Majesty's consular officers will answer inquiries relating to such property, take such steps as are practicable to trace missing property and generally lend such assistance as they can. Steps are being taken to ensure that British property shall be restored by the Italian authorities in cases where this is practicable and the damage or loss is known. In France, where the position is different, His Majesty's Ambassador is discussing the question with the French Government. As in Italy, His Majesty's consular officers are assisting British owners as far as they can. I am afraid that it is still too early to make a definite statement on these matters, but I can assure my hon. and gallant Friend that His Majesty's Government are doing all they can to secure a satisfactory solution.

British Ambassadors (British Motor-Cars)

asked the Secretary of State for Foreign Affairs whether he will arrange that His Majesty's Ambassadors and High Commissioners in foreign countries shall in future be enabled to use British motor-cars.

Yes, Sir. It is the policy of His Majesty's Government to supply His Majesty's Ambassadors and High Commissioners in foreign countries with British motor-cars whenever possible.

Is not my right hon. Friend aware that in Persia and in the Middle East His Majesty's Ambassadors, High Commissioners, and Ministers, habitually, with, so far as I know, only one exception, ride in foreign cars; and does he not agree that this is a great deterrent to the prospects of our own motor-car industry?

Yes, Sir; I agree with my hon. and gallant Friend that the practice that he has described is not a desirable one. Of course, in the conditions of the war, as they have existed up to date, I have no doubt that we have sometimes had to make shift with second best. But I can assure my hon and gallant Friend that the policy of the Government is as I have stated.

Allied Nationals, Germany (Repatriation)

asked the Secretary of State for Foreign Affairs what steps are taken to distribute to their countries as soon as possible the slave labourers who are being liberated in Germany.

Responsibility for the repatriation of nationals of the United Nations liberated by the Allied Armies in Germany rests at present with the military authorities. Where practicable they are repatriated at once to their respective countries, under working arrangements between the military authorities and the Allied Governments concerned.

Where does U.N.R.R.A. come in, as regards to the repatriation of these people?

My right hon. Friend the Under-Secretary of State dealt with that matter in reply to a Question last week. It is a somewhat complicated subject, and perhaps my hon. and gallant Friend will refer to that reply.

Hungary (Military and Political Situation)

asked the Secretary of State for Foreign Affairs whether he is now in a position to make a statement in regard to the position in Hungary, both military and political.

Yes, Sir. At the end of December last a Hungarian Provisional Government was formed at Debrecen. An armistice with this Government was concluded on 20th January. Since that date reports from the British representatives in Hungary have shown that the Provisional Government has been seeking, in agreement with the Soviet authorities, to extend its authority throughout the areas liberated and occupied by the Soviet forces. Certain measures of internal reform have been initiated, including land reform. As regards foreign policy, the Hungarian Ministry for Foreign Affairs stated that Hungary wished to work her passage honestly, so as eventually to be able to obliterate all former misunderstandings and ill-will, and hoped to establish friendly relations with neighbouring countries. As regards the military situation, the whole of Hungary has now been occupied.

May we gather that through our representatives in Hungary we are kept in constant touch with all the political and military developments?

Is it a fact that we have a military mission to the Russian military authorities in Hungary? Has any news been received from that mission?

We have a military element in the Allied Control Commission in Hungary, with whom, of course, we are in touch. We have also a political representative.

Escaped British Prisoners of War (Repatriation)

asked the Secretary of State for Foreign Affairs if everything possible is being done to hasten the homecoming of British prisoners of war who have taken refuge in neutral territory, as they will require special care at home.

Yes, Sir. All escaped British prisoners of war who have reached a neutral country have already been repatriated with the exception of a small number in Switzerland. Some of these have volunteered for temporary war work in that country and the others are at present unfit to travel and are receiving medical attention. These will be repatriated as their health is restored.

Will every effort be made to have these prisoners of war brought home at the earliest possible moment?

Polish Representatives (Whereabouts)

11 and 12.

asked the Secretary of State for Foreign Affairs (1) whether he has now received any information as to the whereabouts of M. Jankowski, Vice-Premier of Poland and delegate at Warsaw of the Polish Government, who, with 14 other Polish representatives, was taken away by the Soviet authorities on 28th March;

(2) whether he has now received information with regard to M. Witos, the former Polish Prime Minister, who was taken away from his home near Cracow on 31st March.

His Majesty's Government still await a reply to the inquiries which they have made of the Soviet Government on these matters.

Does my right hon. Friend realise that three out of the 14, in addition to the Vice-Premier, are members of the Polish Government, and that their colleagues await news of them with the most intense anxiety?

This is a matter which, as the House knows, is occupying the earnest attention of His Majesty's Government, and in particular of the Foreign Secretary, at this moment. I do not think that the work of the Foreign Secretary would be helped by discussion of these matters now, and I have really nothing to add to what I have said.

On a point of Order. I beg to give notice that I shall return to this matter at the earliest possible moment.

Vienna (Visits by British Members of Parliament)

asked the Secretary of State for Foreign Affairs whether, as no British Press correspondents have been given permission to go to Vienna, he will arrange for a deputation of Members of Parliament to leave immediately.

No, Sir. I do not consider that such a proposal would be practicable so long as Vienna remains in a zone of active military operations.

Is a British military mission going to Vienna at the earliest possible moment?

May I ask the right hon. Gentleman whether it would not be possible when Vienna is no longer the scene of military operations, for a deputation from this House to go there?

Transport (International Organisation)

asked the Secretary of State for Foreign Affairs whether the British Government is taking steps to set up at the earliest possible moment an authoritative international transport organisation in Europe; whether the conference which has been considering the establishment of a European central inland transport organisation for five months is approaching a decision; and whether steps are being taken to expedite its work.

With regard to the first and second parts of the Question, His Majesty's Government have made it clear to all other interested Governments their desire to see such an organisation established and their willingness to participate therein, but the decision does not of course rest with them alone. The answer to the last part of the Question is in the affirmative.

Aircraft Accident (Flight to Yalta)

asked the Secretary of State for Air if he is now in a position to make a full statement as to the cause of the loss of the aircraft on passage from this country to Malta on 31st January to 1st February conveying officials of the War Office and Foreign Office to the preliminary conference held on 2nd February.

Yes, Sir. The party of officials, who were required to travel to the Yalta Conference on 1st February, were due to leave at 1 a.m. in a Liberator. At midnight, the aircraft's engines were tested, with satisfactory results; but, when the time came to take off, one of the engines developed an electrical fault which could not be quickly remedied. The resources of Transport Command were at that time taxed to the utmost. On top of their normal trunk services, they had to cater for the unusual number of special flights required in connection with the Conference. There was only one other long-range aircraft immediately available, a York. This was a thoroughly suitable type and it was fully serviceable; but its crew, though individually experienced, had not previously flown together. There was no other crew available and the station authorities decided that this crew should make the flight because the journey was one of urgency and the weather forecast was good. This decision proved to be unfortunate.

At first, the flight was uneventful, but, near Naples, which was to have been the first stop, the weather deteriorated, obliging the pilot to descend through cloud before approaching Naples from the sea. On emerging, he mistook the dark appearance of high ground for thunder-clouds, and, as there had also been a misunderstanding about the weather information received in flight, the captain decided not to attempt to land but to fly on to Malta, for which he had ample petrol. In the event, the aircraft arrived not over Malta but over Lampedusa, 85 miles to the South-West. After circling for an hour in the darkness, the captain obtained what proved to be a correct bearing, but decided that he then had insufficient petrol to reach Malta and brought the aircraft down on to the sea. Soon after alighting, it broke up.

The error in navigation was mainly due to radio distortion caused by adverse atmospheric conditions and to a misunderstanding of the reliability of the wireless bearings transmitted from Malta. The mistakes and misunderstandings were small in themselves, but, cumulatively, were the likely cause of this most regretable accident. They would probably not have arisen if the members of the crew had had experience of flying together. With the increasing resources available to Transport Command, it has been arranged that crews will gain their first experience on long-distance routes in flights without passengers. In addition, the process of equipping the trunk routes of Transport Command, and the aircraft which fly over them, with the latest aids to navigation is continuing at high priority and everything possible is being done to attain progressively higher standards of safety.

Can the right hon. Gentleman say what steps are being taken to explain to the relations of those who died what actually happened when the aircraft broke up at Lampedusa?

I cannot tell the House the position at the moment, but I will inquire and inform my hon. Friend.

Are we to understand from what the Secretary of State has said, that this accident really occurred from anxiety and fear of keeping the three great men waiting?

No, Sir; that would be quite untrue. I could put it in a different way, but I have told the House, quite frankly I think, that the decision was an unfortunate one and that steps have been taken by the Commander-in-Chief to make it quite impossible for any such decision to be given in the future.

Royal Air Force

Embarkation Leave

asked the Secretary of State for Air whether he is aware that the amount of leave granted to members of the R.A.F. in respect of service overseas is based on the time between the date of an airman's embarkation at a United Kingdom port and the date on which he embarks at an overseas port for the homeward voyage, whereas, in the Army such leave is calculated upon the interval of time between a soldier's original embarkation at a United Kingdom port and his subsequent disembarkation at a port in this country after service overseas; and whether he will bring R.A.F. practice into line with War Office practice in this matter.

Yes, Sir, I am aware of this difference, but what the Service loses in disembarkation leave it much more than gains in privilege leave.

Does not the right hon. Gentleman think it desirable to have uniformity in these matters in the Services?

No, Sir. Conditions in the Services are different, and these particular arrangements which we have in the Royal Air Force are undoubtedly the best for the Service as a whole.

Night Exercise (London)

asked the Secretary of State for Air why a mock air raid took place on London on the night of 16th and 17th April.

An exercise took place over London on the night of the 16th-17th April in order to give training both to aircrews and to soldiers and airmen employed on the ground in the air defence of London.

Is the right hon. Gentleman aware that the people of London have had enough air raids, whether mock or real, and that the people are very angry about that occasion?

I think that their anger arises from the fact that they thought that, because there was an exercise going on—and I have told the hon. Member that there was such an exercise—the noise was due to that. I do not believe it was. The noise was, in fact, due to bombers going out on a raid at extended range, for which the shortest available course was over London.

Will the right hon. Gentleman give an undertaking to the House that bomber aircraft will no longer be marshalled over the London area, but somewhere else outside?

Group Releases

asked the Secretary of State for Air if, under the demobilisation scheme, men in the R.A.F. are to be released in groups as they become due for discharge and if he will give an assurance that it is his intention that a man's position under the demobilisation scheme shall not be affected by his branch, category or trade.

Men in the Royal Air Force will, in general, be released in groups determined by age and length of service, but, as foreshadowed in the White Paper on Re-allocation of Manpower, and as has been fully explained to the Service, it will be necessary, in order to maintain the Force at the level of strength and efficiency required for the war against Japan, to deal separately with the different branches, categories and trades. The Royal Air Force is a highly specialised service, with a wide range of occupations, and the intakes from the various age groups have been uneven. Steps are being taken to minimise the differences by the re-training of officers and airmen not due for early release and by training new entrants as they become available.

May I ask the Secretary of State whether the answer which he has given indicates a change of policy since the statement in regard to demobilisation made in this House?

Questions

Royal Navy (T124x Officers, Gratuities)

asked the First Lord of the Admiralty if he can give a full statement indicating why it has been decided that T124X officers serving alongside other naval officers are to be denied the gratuities which the former will receive; what arrangements were made for similar officers in the last war; and whether arrangements can be made to reconsider this matter before the conclusion of hostilities.

The full benefits of the release plan are intended only for those members of the Forces in receipt of Service rates of pay. T124X officers are paid on a Merchant Navy basis and are not therefore eligible for gratuity. During the last war the position of T124X personnel was different inasmuch as they were paid on rates which were fixed by the Admiralty and which were not kept in line with the Merchant Navy rates. It was on these grounds that they were eligible for war gratuity.

Dunkirk Evacuation (Awards)

asked the First Lord of the Admiralty if he will now consider authorising a special pennant to be used by all vessels which took part in the Dunkirk evacuation.

While the Admiralty fully recognise the great value of the services rendered by all the vessels which took part in this operation, they have come to the conclusion that it would be invidious to attempt to distinguish between those services and the countless others of equal merit performed by other vessels on other occasions. In view of the endless administrative difficulties which would arise if my hon. Friend's suggestion were to be adopted, I regret that the proposal is not one which the Admiralty could support.

Is the First Lord aware that, about four years ago, he gave quite a sympathetic reply to this Question; and is he further aware that this concession would cause intense satisfaction to seamen of all types in these islands?

I am aware that we said we would give it sympathetic consideration, but my hon. Friend knows that, in the course of this long war at sea, there have been so very many wonderful examples of service of this kind that it would be rather invidious to pick out these men.

Is the honour to be given to the boats, or to the people who man them?

asked the Parliamentary Secretary to the Ministry of War Transport to what medal civilian personnel who formed the crews of vessels engaged in the Dunkirk evacuation are entitled.

Civilians who helped in the evacuation at Dunkirk may be awarded the 1939–43 Star. Applications, with full particulars of service, should be sent to the Ministry of War Transport.

African Colonies (Compulsory Labour)

asked the Secretary of State for the Colonies what is the general position of forced labour in Africa; how many are being conscripted and have been conscripted in the different Colonies; and how long this is likely to continue.

I have been asked to reply. I assume that my hon. Friend is referring to unskilled manual labour conscripted for work in Government civil undertakings or private undertakings. Such conscription is permitted only for purposes essential for the conduct of the war or the maintenance of the life of the community, and is in operation only in Kenya, Tanganyika and Northern Rhodesia. The latest figures available show that at the end of November, 1944, the number of conscripts in Kenya was 26,032, and in Tanganyika at the end of December 26,256. In Northern Rhodesia the Governor has authority to permit the recruitment of up to 1,000 men for work on essential food production. In this colony, there is also a Government Labour Corps with a maximum strength of 630. The employment of compulsory labour is kept under constant review and will be discontinued as soon as circumstances permit.

Does the Minister appreciate that, in some cases at least, this continuation of forced labour may have some unfortunate effects upon the activity of the whole industry and of the men themselves?

In order to put this matter in its proper perspective, will my hon. Friend also furnish the total number of people conscripted in this country?

West Africa

Social Science Students (Appointments)

asked the Secretary of State for the Colonies what provision is made for the employment in West Africa of scholarship social science students now in this country; whether Government posts will be available to them; and at what approximate grades and salaries.

The West African Governments certainly intend to offer appropriate employment to these students on their return to their colonies after the successful completion of their courses, but complete information is not yet available, and it is hardly possible for final plans to be made until the results of the course are known.

Can I at least assume that there will be no contraction of opportunities for those who are studying over here?

Alcoholic Bitters (Importation)

asked the Secretary of State for the Colonies if he is aware that a commodity known as bitters is being imported into West Africa, purporting to be a medicine but having from 15 to 20 per cent. alcohol; what quantity of this and similar articles were exported from this country to West Africa last year; whether the Bill recently introduced into Nigeria will prevent or limit the sale of this article; and if he has any information respecting the ultimate selling price to customers.

Alcoholic bitters may be imported into West Africa and both their import and their sale are subject to the provisions of the Liquor Ordinances in the four Territories. West African Governments are being asked to supply the particulars requested in the latter part of the Question.

Meanwhile, may I be assured that the facts are being seriously attended to, because numbers of social workers and others are concerned very much indeed that this commodity, brought in as medicine, is in fact an alcoholic liquor, and, in addition, is being sold at a very high price to natives in the interior?

No, Sir, that is all under very careful control, as I have mentioned in the reply.

Are we to get any farther report than the one which the hon. Gentleman has given just now?

Questions

Evacuated Malayan Residents (Assisted Return Passages)

asked the Secretary of State for the Colonies whether, as the Transport Commission is asking planters and their wives now on Australian soil to register themselves for passages to Malaya after the war and as few now have money reserves to pay lump sums down, some financial assistance will be given towards the amount required.

The question of assistance to Malayan residents who were evacuated from Malaya and who wish to return there after its liberation as soon as conditions permit, is under consideration; but my right hon. and gallant Friend is not yet in a position to make a statement on the subject.

Tanganyika (Hospital, Dar-Es-Salaam)

asked the Secretary of State for the Colonies if his attention has been called to the insufficiency of accommodation and the inadequate and obsolete equipment at the European hospital at Dar-es-Salaam and the high incidence of malaria contracted by patients therein; what representations thereupon have been made by the chamber of commerce and other local bodies; what report was made by a commission of inquiry upon the matter; and what steps are proposed forthwith to deal with the position.

No representations on the subject have been addressed to my right hon. and gallant Friend, but, as the result of the report of the Committee referred to, which found the state of the hospital to be unsatisfactory, expenditure of £74,000 has been approved for the extension and improvement of the hospital buildings. Arrangements have been made for a firm of private architects to prepare plans. Large orders for modern equipment have been placed in this country by the Tanganyika Government, and these orders will be met as rapidly as possible in present circumstances.

Can my hon. Friend say when these improvements will be effected; and has he not heard from the chamber of commerce of this deplorable state of affairs in this hospital?

No, Sir; I have not heard from the chamber of commerce, but these measures will be carried out as soon as possible, and in view of war conditions it has not been possible to get ahead earlier.

May I have an assurance that this will not be pigeon-holed but will be regarded as a matter of great urgency?

Certainly, Sir; I will give an assurance that the work will be carried out as soon as possible.

Citrus Fruit (Import Duties)

asked the Secretary of State for the Colonies what is the import duty in the U.S.A. on Jamaican citrus fruit; and what is the corresponding import duty in the United Kingdom on American citrus and Jamaican citrus.

As the answer includes a number of figures, I will with the hon. and gallant Member's permission, circulate it with the OFFICIAL REPORT.

Following is the answer:

I understand that citrus fruit is not mentioned by name in the U.S.A. Tariff Act of 1930, but under paragraph 752 of that Act, fruit in its natural state shipped to the U.S.A. from any source is subject to an import duty of 35 per cent. ad valorem.

The import duty on citrus fruit entering this country from the U.S.A. is as follows:

Uganda (Detentions)

asked the Secretary of State for the Colonies whether, in view of the recent release of one of the five Africans arrested in Uganda on 28th February, he has any further statement to make as to the other four.

Yes, Sir. Since my reply to the Question by my hon. Friend on 18th April, the Governor has reported that one of the five Africans concerned was released from detention on 15th April.

I am glad to take this opportunity of correcting the statement which I made in reply to a supplementary question on 18th April by the hon. Member for West Walthamstow (Mr. McEntee) that these five Africans would be tried by the ordinary court. The position is, of course, that these men were detained under the Uganda Defence Regulation, which is equivalent to United Kingdom Defence Regulation 18B. The purpose of that Regulation is preventive and not punitive. There is, therefore, no question either of any charges being made or of the persons concerned being brought for trial before a court in connexion with their detention. I much regret that I should inadvertently have misled the House in the reply which I gave to my hon. Friend.

Will my hon. Friend have steps taken to see that these men are informed of their right of appeal to the Advisory Committee, of which, I believe, they are not aware; and will he have an inquiry made into the conditions under which they are at present detained in prison, under considerable hardship?

Motor Passenger Vehicles (Size)

asked the Parliamentary Secretary to the Ministry of War Transport whether he is now in a position to give a decision on the representations made to him in January this year by the road passenger authorities with reference to the length and width of motor passenger vehicles; and can he now make a statement.

On 30th January I received a deputation of representatives of the manufacturers and operators of road passenger vehicles, who laid before me their objections to the present regulations which govern the length and width of omnibuses and lorries. In accordance with a promise I then gave, I received the deputation again on 23rd April. I explained that on the information before him, my Noble Friend was unable to depart from his previous decision that road conditions in this country do not permit the general use of wider or longer vehicles. I promised that, if new facts were submitted, they would be considered.

Is the Minister aware that the road transport passenger carrying authorities are unanimously in favour of the suggested change; and is it possible to set up an independent inquiry, to discover the suitability of the various suggestions?

On the first point, I have had representations from omnibus operators that they would not be able to use eight-foot buses and therefore the two standards would have to remain. On the second point about an independent inquiry, I must remind my hon. Friend that this is the responsibility of my Noble Friend, who must make the decision.

Will my hon. Friend bear in mind the wise words of the Chancellor of the Exchequer yesterday, that in many of these matters we must not in future consider our own convenience, so much as the importance of the export trade?

Yes, Sir, but we must also bear in mind congestion on our roads and the question of safety.

Fishguard-Rosslare Cross-Channel Service

asked the Parliamentary Secretary to the Ministry of War Transport when he contemplates the restoration of the Fishguard-Rosslare cross-channel service; and how soon regular sailings may take place.

I regret that I am unable to say when it will be possible to restore the service from Fishguard to Rosslare.

Will my hon. Friend take into consideration the importance of reopening this service as soon as possible in the public interest?

We are very anxious to re-open it, but it really depends on the availability of a suitable ship, and that depends on the progress of the war.

Ministry of Information

Buchenwald Camp (Films)

asked the Minister of Information if films have been taken showing the conditions at the concentration camp in Buchenwald; and if such films will be shown to the public so that the atrocities which the German people have endorsed may be widely known.

Yes, Sir, there is ample film material showing conditions at the concentration camps in Germany. This is available for incorporation in newsreels in the usual way, and I understand that the newsreel companies in this country are making use of it so far as they find it possible to do so. The material is also being used by the Ministry of Information for making a film to be shown in Germany, and a version of this will be available for showing to audiences in this country.

While thanking my right hon. Friend for his reply, may I ask whether the films which are being made will be made available for showing in the Dominions and the Colonies, in the same way as they are being shown here?

While agreeing with the right hon. Gentleman's desire that these films should get the widest possible circulation, may I ask, in view of the statement in the Question that these atrocities have been endorsed by the German people, whether it is not the fact that hundreds of thousands of the victims are German people?

Most of the victims appear to be foreign slaves, and if the German people did not endorse the conduct of the people whom they put in power, then the German people must remember that they have to accept the consequences of their government.

Can my, right hon. Friend say whether the German version of the film will be available to Members of this House?

In view of the Minister's answer to the supplementary question, will he make it perfectly clear in the films who the victims are; and will he pay due regard to the reports of the Members of this House who have been to the camps, to make it perfectly clear that a very large majority of German people did not know what was going on?

That will be a very large part of the new propaganda campaign which will be organised by Dr. Goebbels' successor. In this war the Germans have shown themselves to be very good in organising fighting, and let me warn the House that they will be equally good in organising whining.

Is it not the fact that many such camps which have been disclosed now, were in existence from 1933 to 1939 when the friends of my right hon. Friend were supporting the Nazis?

First of all I should think it is probably true that these camps existed before the war, and that they existed with the full cognizance of many of those who are called "good" Germans. When the hon. Gentleman talks about my hon. Friends, let me say to him that their record is a lot better than his.

The hon. Gentleman has already put one supplementary question and cannot put another.

On a point of Order, Mr. Speaker. This matter is one of very serious consequence. Hon. Members of this House have visited these camps and surely you ought to permit more supplementary questions?

On a point of Order. I wish to give notice that I shall return to this matter also, at a very early opportunity.

Anti-British Propaganda, United States

asked the Minister of Information in view of the importance to world peace of Anglo-American friendship, what steps are being taken to combat anti-British propaganda and statements immediately they appear in the U.S.A.

I think that the British information services have an effective record of rebutting such statements in the United States. And they have had plenty of evidence of the eagerness of leading American newspapers and broadcasting companies to combat anti-British, propaganda.

May I ask my right hon. Friend, in view of the great importance of this question, if he will have a conversation with me on the subject, and I will tell him a lot that he never gets through the usual channels?

Is it not true that it is not what they say against England, but what they do not say about her war effort which is such a danger?

In answer to the Noble Lady I would say that on the whole the American Press have been very fair to the British war effort, but the House must remember that the American newspapers primarily report the doings of American troops, just as our papers report the doings of British troops. I must put it on record that, in my judgment, the American Press and the American broadcasts have been very fair to England in reporting the war.

United Nations Information Organisation

asked the Minister of Information the amount of grant given to the United Nations Information Organisation; and whether he is solely responsible for the accuracy of the information to be given at the Russell Square office of this organisation.

The contribution of the Ministry of Information towards the cost of the United Nations Information Organisation is £7,000 a year. The answer to the second part of the Question is "No, Sir."

Has my right hon. Friend seen an anonymous circular sent round to hon. Members, and will he see that if letters are sent round, it is done in a proper way, so that we know what they are?

As I was explaining to my hon. and gallant Friend, we do not control this organisation. We make our proper contribution to it, as His Majesty's Government make contributions to all sorts of other international organisations, but I have no doubt that the people responsible for running this organisation will take notice of my hon. and gallant Friend's Question.

No, Sir, I could not consider withdrawing the grant because I have not seen the evidence upon which the hon. and gallant Member's question is based.

Post Office

Postmen (Conditions)

asked the Postmaster-General whether, in view of the low wages, poor pensions and long hours worked by postmen, arrangements can be made for them all to have a regular half-day off as in other trades.

Postmen differ from most classes of workers in that the only practicable way of granting a regular half-day relief from duty each week is by restricting or adjusting public services. This course is followed so far as is reasonably practicable. I do not accept the implication of the hon. and gallant Member concerning the pay and conditions of postmen.

Is it not possible to apply some of the profits of the Post Office to supplying more postmen, so that these wretched people can have the same facilities as people in other trades?

No, Sir, it is not a question of money but a question of the public service which has to be carried on.

Mails, Belgian Congo

asked the Postmaster-General what arrangements are now made for the quick transit of the mail between the Belgian Congo and Great Britain; and the average time now taken for the transit of the mail from the Belgian Congo to this country.

Surface mails for the Belgian Congo are despatched by all suitable opportunities; 1s. 3d. air mail correspondence is sent either by sea to Freetown and thence by air or, as opportunity offers, by the direct flights of the Belgian air service to Leopoldville; the airgraph service, operated via Cairo, is also available in both directions. Surface mails and airgraphs from the Belgian Congo reach this country from five to seven weeks and a fortnight respectively after despatch; air mail correspondence is conveyed by direct flight from Leopoldville and the time of transmission is about three to seven days.

Repatriated Prisoners of War (Facilities)

asked the Postmaster-General if he will give special telephone facilities to prisoners of war returning to reception camps in this country to enable them to speak direct to their families.

Telephone call offices are being provided at all reception camps for the use of repatriated prisoners of war. Each repatriated prisoner will also be provided by the camp authorities with a telegraph form to enable him to send a free telegram notifying his arrival in this country.

Telephone Service, Shetland

asked the Postmaster-General whether he is now in a position to make a statement concerning the opening of a public telephone service between Shetland and the mainland.

Yes, Sir. A public telephone service, to which the ordinary Inland trunk call charges will apply, will be opened at midnight, British Double Summer Time, on Sunday, 29th April, 1945, between Shetland and all parts of Great Britain and Ireland (including Eire) and it would give me pleasure if my hon. and gallant Friend would undertake to make the first call.

Whilst thanking my right hon. and gallant Friend for this very satisfactory reply, may I ask him to indicate what sort of service we are likely to get and, in particular, whether it will be possible to speak to people in the country districts?

We hope to give as good a service as possible, of course, but I am afraid that, in the early stages, it will not be quite up to the normal standard owing to war-time difficulties. No doubt it will improve as time goes on.

London—Paris Postal Service

asked the Postmaster-General whether, in view of the fact that censorship operations do not take more than a maximum of three days and rail and sea transport are going daily to France occupying less than 24 hours, he will accelerate the transport of letters between London and Paris.

I am not aware that there is any avoidable delay in this country in the postal service between London and Paris, but if my hon. Friend will furnish me with the covers of any letters which appear to have suffered delay I shall be happy to make inquiry in the matter.

Is my right hon. and gallant Friend aware that 14 days is quite the normal period, and could he not do something so that people who are striving to open up the export trade with France are not handicapped any longer in this way?

As a matter of fact 14 days is rather more than the average at the present time—

But my hon. Friend must remember that the communications system in France is not yet completely restored, and that the difficulties in that country are what cause the delay and not those in this country.

Housing

Repairs Limit, Scotland

asked the Minister of Works if he is aware that in tenement property in Scotland, only £10 per tenement is allowed for repairs, that this frequently includes nine separate houses and two shops; and if he will take steps to have the £10 placed against each separate house and shop.

For the time being the licensing limit in Scotland is still £100. When the limit is reduced I shall endeavour to redefine the unit of accommodation to which it applies in order to overcome the difficulties referred to by my hon. Friend.

Has the right hon. Gentleman any fixed date in his mind when the reduction from £100 will take place in Scotland?

Would the right hon. Gentleman keep in mind the fact that in small villages, if this proposed restriction is applied very severely, it may render large numbers of people unemployed who cannot find employment in alternative building work?

That is, of course, quite outside the Question on the Paper but, as it has been raised, let me say this. The object of this restriction is to make sure that the available labour is used on the most essential work. It is ridiculous, if I may say so, to suggest that this restriction will create unemployment; the purpose of it is to use the labour we have to the full on the most essential and argent work.

Is the right hon. Gentleman aware that while in England it is £10 per house, £10 per tenement in Scotland means £10 per 10 houses, which is a totally different thing; and will he take the trouble to consult somebody who knows about tenements in Scotland?

I thought I had made it clear that I am anxious to meet this difficulty, which I recognise exists. On the other hand, it is very difficult legally to define this smaller unit of accommodation. However, we are getting down to it with legal experts to see what we can do about it.

Materials from Germany

asked the Minister of Works what arrangements he is making with the Allied Administration of Occupied Germany for the urgent prefabrication of well-designed timber houses for shipment to this country by way of reparations and to ease the housing shortage caused by German bomber and V weapon attacks.

The Government feel that it would not be inappropriate that the Germans should be called upon to do anything that is practicable to help relieve the housing shortage in Britain, which has been so largely caused by their own wanton aggression. As part of reparations from Germany, I should like to obtain building materials, housing components, and possibly also complete prefabricated houses. This project, of course, raises many practical problems of transport and organisation. I am, therefore, arranging for technical representatives of the Ministry of Works to go to Germany with the Allied Control Commission in order to explore the possibilities on the spot.

Is my right hon. Friend aware that his statement will give great satisfaction, but that it is hoped that the provision of prefabricated houses will go ahead soon, and will not wait for the general question of reparations, which will have to be settled after the war?

Building Industry (Mechanised Equipment)

asked the Minister of Works whether he is taking steps to ensure the production of mechanised equipment for the building industry, including small bulldozers and similar equipment.

Yes, Sir. A proportion of the factory capacity and labour which is released from war production is being reallocated to the firms producing mechanised equipment of this kind for the building industry.

Decorating Materials

asked the Minister of Works whether he will devise means whereby householders who wish to supplement the repairs done to bomb-damaged houses by doing their own decorations can obtain paint, distemper and the use of brushes.

These materials must still be used sparingly. However, steps have been taken to increase production as far as possible and to allocate supplies to those areas such as London and South-East England, where the need is greatest.

What steps is my right hon. Friend taking to make these materials available to householders who want to do a little decorating in their own houses?

The best way of making them available is to ensure that reasonable supplies are on sale in the shops. I considered the possibility of making paints and brushes available free to all those who have suffered bomb damage. But when I looked into the supply position, I found that if we unduly stimulated the demand we should run the risk of creating an over-all shortage.

When supplies become available will not my right hon. Friend reconsider the matter and make them free to people who have been bomb damaged, as he said he would?

I do not think it is practicable. With regard to my hon. Friend's suggestion that brushes should be lent to householders so that they can do their own work, the difficulty is that brushes have to be carefully looked after. If they are not, they are soon ruined.

asked the Minister of Works if he is aware that the present circular authorising distemper to be used instead of paint on the interior of buildings will result in many cases in a waste of money and of time; and if he will permit discretionary powers to be exercised by local authorities to approve interior painting work to be carried out, other than on new wood work, when the local authorities consider it advisable and more economical than distemper.

In order to ensure the most economical use of scarce labour, local authorities in London and the South-East counties have been asked to avoid undertaking interior painting and to do distempering only in cases where it is necessary on grounds of health or where the labour available is not suitable for other more urgent work. As soon as the situation becomes easier local authorities will be given wider discretion.

Is my right hon. Friend aware that in literally thousands of places in London rooms are being distempered, and the distemper will not "stay put," and is not this a waste of time, man-power, material, and money?

If there are cases where distempering is being done unnecessarily, I shall be glad to look into them.

Is my right hon. Friend aware that one coat of paint would do the trick?

Houses (Conversion into Flats)

asked the Minister of Works whether, in view of the urgency of the housing problem, he is prepared to give early priority of building licences to owners of large untenanted urban and rural houses who are willing to convert them quickly into maisonettes, flats or flatlets as may be suitable.

Where the applications are supported by the local authority, licences are granted in all areas other than London and South-East England for the conversion of houses into flats, provided that the work does not exceed £400 per flat.

Can my right hon. Friend say why it is that licences for this purpose are not given in the Greater London area?

It is a question of priority. In Greater London some of this work is going on, but we are not able to issue these licences as freely in London, where so much bomb damage repair work is outstanding, as in other parts of the country.

South-West Norfolk

asked the Minister of Health how many houses in the rural district council areas of South-West Norfolk were condemned as unfit for human habitation at the outbreak of the war; how many new houses were planned before war put a stop to these schemes; how many houses were due for renovation under the Rural Workers Housing Act; how many have been built during the war and how many are planned to be built by local authorities in the area in immediate post-war development schemes?

I have been asked to reply. At the outbreak of war 107 of the houses in the five rural districts in South-West Norfolk were condemned, or classified by the local authorities, as unfit. Fifty-six new houses were planned in approved schemes, apart from any in schemes which had not been submitted for approval. The local authorities have built 334 houses during the war and are planning to build another 759 in their initial post-war schemes. I understand that the records of the Ministry of Health do not show the number of houses due for renovation.

War Damaged Property (Sales)

asked the Minister of Health whether he is aware of the serious hardship caused to individuals who have entered into contracts for the sale of property which has been damaged by enemy action, by reason of the local authority having unofficially intimated that they were considering making a compulsory purchase order under Part V of the Housing Act, 1936, but when approached to purchase the land in question for the sum for which it had been contracted to be sold after advertisements in the Press, having declined to take any action in the matter or say whether they required the land or not; and whether steps will be taken to protect the public from injustices of this kind.

My right hon. and learned Friend has received no complaints of hardship of the kind referred to, but if the hon. Member will send him details of any cases he has in mind, he will be glad to look into them.

Is the hon. Gentleman aware that only quite recently a charitable trust, with the approval of the Charity Commission or Board of Education, entered into a contract to sell property for £5,000 and the purchasers were unable to proceed with the matter because the local authority let it be known that they were considering the acquisition of the property under the Act mentioned in the Question, and when they were offered the property for the same price as was agreed to be paid for it, they declined it?

I will bring that supplementary question to the notice of my right hon. and learned Friend.

Lettings and Sub-Lettings (Re-occupation)

asked the Minister of Health whether in view of the approaching end of the war in Europe and the desirability of permitting owners and tenants who have been compelled to let or sub-let their houses on account of their having undertaken military or other war service, to reoccupy their houses without undue delay, he will consider introducing legislation at an early date to implement the recommendations contained in paragraphs 91 and 92 of the Report of the Inter-Departmental Committee on Rent Control, Cmd. 6621.

The recommendations of the Committee on this and other points are under consideration.

Questions

British Naval Vessels (Transfers to Allies)

asked the Prime Minister which British warships have recently been transferred to an Allied country; when and why they were so transferred; and on what terms.

I would ask the House to forgo receiving any statement from me upon this subject: at the present time.

China (Political and Military Situation)

asked the Prime Minister whether it is now convenient to make a statement in regard to the position in China, both political and military, particularly; and how far the lack of cooperation between the various Chinese Armies against the common enemy has been rectified.

It would not now be convenient to try to compress into the answer to a Question the extraordinarily complex but by no means disheartening position in this theatre of war.

German Concentration Camps

asked the Prime Minister whether he will endeavour to secure that representative men and women from every occupied city and town in Germany are taken to see the concentration camps in the hands of the United Nations and thereafter are compelled to lecture on what they saw there, with cinema apparatus, to their fellow townspeople.

Food Supplies

Flour

asked the Minister of Food on what date the Standing Committee on Medical and Nutritional Problems made its recommendation with regard to the reduction of the extraction rate of wheat from 85 per cent. to 80 per cent.; and on what date the advice of the Committee was specifically sought on this question.

The Joint Parliamentary Secretary to the Ministry of Agriculture
(Mr. Tom Williams)

I have been asked to reply. I understand that the Committee was asked for advice on 8th May, 1944, and that it submitted its report on 27th July, 1944.

Can my right hon. Friend say on what date the decision was taken with regard to the reduction in the rate of extraction?

Sugar

asked the Minister of Food what percentage of the total sugar supplied to all users, including manufacturers, domestic consumers and the Armed Forces, in the British Isles during the year 1944, was provided by beet sugar; and what percentage by cane sugar.

It is estimated that the total production of beet sugar in the British Isles during the year 1944 expressed in terms of refined sugar, represented 24 per cent. of the total sugar supplied to all users in the United Kingdom in that year. This percentage was affected by the poor crop for 1944–45. A normal yield would have brought the figure to 28 per cent.

Do I understand this 24 per cent. was distributed exclusively for domestic purposes and that the remainder, for the use of manufacturers and the Armed Forces, was supplied from cane sugar?

No, Sir. Obviously when the raw beet enters the factory for refining it quickly loses its identity.

Is it not true to say that roughly not more than 33 per cent. of our sugar consumption in this country was supplied from beet sources?

Were we not boasting, about a year ago, that practically the whole of our domestic sugar ration was being obtained from home sources? Has production gone down in comparison with previous years?

No, Sir, the only reduction suffered last year was entirely due to the bad weather.

New Catering Establishments (Licences)

asked the Minister of Food, in view of the expected early ending of the European war, he will confine the granting of food permits for new restaurants, cafes, etc., to ex-Service men and women and civilians compulsorily displaced by war circumstances, for a period to the end of the Japanese war and 12 months afterwards, in order that they may have the opportunity to establish themselves and build up a goodwill.

No, Sir. Licences to open new businesses must be granted to meet essential consumer needs. But instructions have been given to local food control committees, who advise on applications for licences in their areas, that in estimating consumer need they must take into account the extent to which that need is being met by the issue of licences to ex-traders discharged from national service who wish to re-open their former businesses. Under the priority arrangements introduced last April applications from such persons are considered without regard to consumer need.

Is the right hon. Gentleman aware that this class of trade is rapidly being handed over, because of war conditions, to non-Britishers and aliens? Is there to be no protection whatever for Service men and others who have been compulsorily displaced by the war? I regard the right hon. Gentleman's reply as entirely unsatisfactory.

I totally disagree with the hon. and gallant Gentleman's statement. Licences granted and those that were forfeited are about equal in number, and there cannot, therefore, be any truth in the statement he has just made.

Will the right hon. Gentleman look carefully into this matter, because there is now a very large number of foreigners running restaurants, even in Plymouth?

In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Adjournment at the first opportunity.

VE-Day

asked the Minister of Food whether he is satisfied that, in the event of the VE-Day announcement being made at short notice followed by two days holiday, measures have been taken to prevent food shortages occurring, particularly of bread.

My right hon. and gallant Friend is in communication with appropriate trade associations on this subject and it is hoped that a statement for the information of the public will be made in due course, if practicable.

Swans and Cygnets

asked the Secretary of State for the Home Department under what authority it is now lawful to kill or to offer for sale as food, swans and cygnets.

I have been asked to reply. There has been no recent modification of the provisions on this subject in the Wild Birds Protection Acts. If my hon. Friend will send to the Home Secretary particulars of any cases in which he thinks there have been breaches of the law, inquiries will be made.

Is my right hon. Friend aware that last week in the dining room of the House, I consumed a plate of swan masquerading as cygnet, and does he intend to proceed against the Chairman of the Kitchen Committee, the hon. Member for Dulwich (Sir Bracewell Smith)?

I think I must refer my hon. Friend to the Chairman of the Kitchen Committee.

Is it not the case that swans and cygnets belong to His Majesty the King, the Vintners' Company or the Dyers' Company; and will my hon. Friend have this matter looked into?

Ministry of Supply

Waste Food Collections

asked the Minister of Supply if he will publish the names of local authorities whose collections of waste food are below the standard of one ton per month per 1,000 of population.

No, Sir. I fear that such a list might give rise to criticism of the local authorities in question which, because of the varying circumstances of different localities, would in most cases be ill-founded.

War Factories (Redundant Machine Tools)

asked the Minister of Supply what action he has taken or proposes to take to ensure that redundant machines can be quickly removed from factories now engaged on war work and removed to storage, thus preventing delay in the change over from war to peace-time production.

The machine tool disposal scheme provides for the quick removal into store of redundant machine tools with a view to subsequent disposal. These arrangements have been made in consultation with my right hon. Friend the President of the Board of Trade, who is doing everything possible to make storage space available. Arrangements are also being made, where practicable, for sales ex site in the case of large redundancies at individual factories.

Am I to understand that if V-day occurs next, week, we shall have sufficient space in which to store the machinery now on war production?

Timber Seasoning Plant, Northern Ireland

asked the Minister of Supply whether he will arrange to have timber-seasoning plants erected in Northern Ireland at the earliest possible moment, as the shortage of seasoned timber is a serious obstacle to the building of urgently needed houses.

I understand there are 10 timber-seasoning plants in Northern Ireland, of which two have been recently erected with the support of the Timber Control, but I should be glad if my hon. Friend would let me have any information he has as to the need for further kiln-drying capacity.

Will my right hon. Friend grant to the Northern Ireland Government the essential materials for making seasoning plants? We are held up for lack of seasoned timber.

So far as our Department is aware, there are no outstanding claims for further plant of this kind, but if my hon. Friend has any information on the matter I shall be glad to have it.

Questions

German Prisoners of War (Rations)

asked the Secretary of State for War if he will give a detailed table of rations allowed to German prisoners of war and German civilian internees; and in those cases where the rations allowed are higher than those of British civilians consider a reduction in them.

I would refer my hon. and gallant Friend to the answer given to a number of hon. Members by my right hon. Friend yesterday. As regards German civilian internees, I am informed that the dietary scale in operation in the Isle of Man camps is based on the rations allowed to civilians and in no case exceeds them.

Civilian War Casualties, London

asked the Secretary of State for the Home Department how many of the 146,760 civilian casualties in the United Kingdom, due to enemy action during the war, occurred in the London regional district.

The total civilian casualties caused in London Region by enemy attacks amount, up to date, to 80,307.

Message from the Lords

That they have agreed to—

Colonial Development and Welfare Bill,

Ministry of Civil Aviation Bill,

Army and Air Force (Annual) Bill, and

Staffordshire Potteries Stipendiary Justice Bill, without Amendment.

Orders of the Day

Ways and Means

Considered in Committee [ Progress, 24 th April ].

[Mr. CHARLES WILLIAMS in the Chair]

Amendment of Law

Question again proposed,

"That it is expedient to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance."—[ Sir J. Anderson ].

3.17 p.m.

The discourse that we heard yesterday from the Chancellor of the Exchequer has won widespread approval, but so far as the tangible results in terms of taxation are concerned, I think it was a good example of the ninth beatitude, "Blessed are they who expect nothing, because they shall not be disappointed." For my own part, I would describe it as a good pedestrian Budget, and remembering the important and essential work performed by our infantry in the war, I do not know that that is necessarily a disparaging description.

I will begin by expressing my views on the minor alterations embodied in the Budget Resolutions. I will refer first to the treaty which the Chancellor has succeeded in getting through with the United States of America with regard to double taxation both on incomes and estates. I think the Committee as a whole has nothing but congratulations for the Chancellor in this respect. This treaty takes cognisance of the growing international character of industrial ownership. No doubt when this matter comes before us in the later stages, we shall want to have more meticulous details, but I have no hesitation in saying that so far as I can see at present, it will have the unanimous support of all sections of the Committee.

Secondly, with regard to the relief of Excess Profits Tax on small businesses, my party are rightly concerned to secure that concessions to employers are, in the first place, justified on their merits and, secondly, that they are balanced by equally justifiable concessions to the workers. But I do not think my party will grudge or cavil at this small recognition of the hardships imposed by a rigid Excess Profits Tax in these cases. We hope that small as this concession is it will be of some help in getting the wheels of industry turning again as soon as possible when the war is over.

Thirdly, with regard to the motor duties, it certainly seems to me a sensible alteration that the Chancellor is proposing to make, and if, as I understand, it is an agreed solution, certainly he will have no opposition from the party on these benches. Of course, the magnitude of of the tax remains a heavy, if not a crushing, burden on the industry, and in years to come we hope that it may be possible to adjust it downwards. However, that is a problem for the future, when the road schemes which have been adumbrated, and for which the tax was originally instituted, take positive shape.

Fourthly, at to the proposal with regard to the termination of the exemption of certain import duties—I gather that these are what used to be called the McKenna Duties—I reserve my comments until more details are available. To the other minor changes downwards in taxation, such as that adumbrated with regard to the Entertainments Duty and the hydro-carbon duties, there is no occasion for the Chancellor of the Exchequer to anticipate any opposition from any quarter of the Committee.

I turn from these pedestrian matters to somewhat larger issues. In the first place, I am not very clear why the Chancellor thinks it probable that he or his successor will want an Autumn Budget. Incidentally, I would remind him and the Committee that there is a possibility that the interest in Parliament will be transferred from this Chamber to the larger arena of the country during the Autumn, and I should have thought it would be difficult and unsuitable to introduce a Budget either just before or just after a General Election. But, apart from this, it does not seem to me to make so very much difference from a purely budgetary point of view whether the German war ends in May, June or July, or whether the Japanese war ends late in 1945, or runs over some way into 1946. Of course, it is immensely important from the human and from the national point of view, but I should have thought that from the point of view of the Budget it did not make so very much difference. The Chancellor, as a matter of conjecture rather than of estimation, has assumed that there will be a drop of some £500,000,000 in the requirements of the Votes of Credit. On the most unfavourable turn of events, I think that that £500,000,000 is not likely to be very much reduced and, on the most favourable, I can hardly imagine it going very much beyond £1,000,000,000. Honestly, it does not seem to me to make a great deal of difference, therefore, as far as the Budget alone is concerned, precisely what happens in the course of the next few months in the theatre of war.

Further than that, I should have thought it was rather upsetting to the country to have the prospect of some alterations in taxation—not to know what was going to happen during the next 12 months. [HON. MEMBERS: "No."] Some Members seem to think that uncertainty, even a favourable uncertainty, will be an advantage, but I cannot get away from the fact that to release additional purchasing power before there are goods to buy with it, can only cause disappointment to individuals and danger to the State. Surely, for the whole of the coming 12 months, the fiscal year covered by the Budget, it is certain that goods and services will be in very short supply.

Indeed my only fear is that, even without the Chancellor doing anything to encourage it, there may come into the market a very considerable additional purchasing power which has been withheld during the war. Let the Committee consider what will be the sources of that additional purchasing power. There are large individual balances at the banks, there are very considerable hoardings, not necessarily in stockings nowadays but in cupboards and drawers, which the Chancellor will recognise in the enormous volume of the currency, amounting I believe to £25 for every man, woman and child in the country, not all of which by any means can be accounted for. There are all the encashable savings certificates. The Chancellor cannot prevent anyone who has them drawing the cash for them, and he will not wish to take powers to do so. If all these forms of purchasing power were prematurely put into circulation, they could create a most dangerous inflation, and the Government might find it very difficult to prevent a rise in the rate of interest. Apart from the loss of cheap money, the creation and the keeping of which has been such an outstanding and successful feature for a good many years now, if all this purchasing power were to come into the market augmented, as it is bound to be, by industry wanting to get to work to carry out the preparations for the work of the future, and also by the Government themselves seeking resources with which to build the houses for which the nation so greatly and rightly clamours, then the Government even with their considerable powers of control—including the full continuance of rationing—will have the very greatest difficulty in preventing inflation.

The right hon. Gentleman has rather left out of sight that the time when the monetary resources are augmented by the events that he has mentioned is the very time when, owing to the reduction of overtime and double time at the week-end and the withdrawal of female and volunteer labour from industry, there will be a fall in purchasing power which would offset that.

I had not forgotten that, and I will mention it in its proper place. I am only saying that what I fear is that the enormous volume of additional purchasing power might cause great danger. My hope is that this inflation will not happen, and my reason for that is principally because I trust the extraordinary restraint and judgment of the British people, which never lost its head as some people did in the financial crisis of 1931—except perhaps from a political point of view. But in my opinion they will need all the advice and all the leadership which Members of all political parties, both in the national interest and the interest of the people themselves, can bestow upon them.

Having said this, I hasten to add that I am glad the Chancellor is beginning to think of tax remission and I agree with him, if I understand him aright, that he need not necessarily wait to commence that remission until the Budget reaches strict equilibrium. That brings me to ask the question when we shall be in a position to remit and where we shall begin. When Income Tax was first extended downwards so as to take in millions of wage earners, who had formerly been exempt, one part of the burden was put on firmly and another part was declared to be returnable. The second part was a modified form of the proposal of forced loans which had been earlier adumbrated by Lord Keynes. Without wishing to say anything derogatory of that extremely great statesman and financier, I never entirely shared his enthusiasm for forced loans, nor was I particularly enamoured of the system of putting on a great many taxes and promising post-war credits to be repaid after the war. Still that was the method that was adopted, and of course those obligations will be honoured, as the Treasury does honour meticulously the promises which are made. But before the post-war credits are returned it is clear that we must stop exacting fresh forced loans, and that comes as a high priority in the realm of tax reduction. It would be absurd to go on exacting forced loans and then, in the early future, restore them in common with the others.

Now I come to the point raised by the hon. Member for The Wrekin (Mr. Colegate). I think the time to begin that remission and other remissions of that character will be when there are signs of a falling off in the receipts from overtime, which has already in some respects begun, and when there is a return of many married women from war industries to keeping homes for the soldiers who will be coming back from the war. That will certainly constitute a set-off to be put on the opposite side of the account, but I do not think that in the early future it will anything like use up the whole of the additional resources of purchasing power to which I referred a little while back.

Beyond these priority reductions I should like to ask the Chancellor to examine all the incidence of the Income Tax in view of the new facts of its application. In the old days Income Tax rested almost exclusively on the well-to-do section of the community and, being very small in amount, originally there were no exemptions and no modifications; but gradually, as it grew and as the weight of the burden increased, a number of modifications and exemptions were introduced. There was the allowance for life assurance, and allowances were granted later on behalf of children, until eventually the fairly complicated system which we now know as the Income Tax law grew up to meet, so far as possible, all the hazards of human life in the case of the middle and upper classes. Now there has been an enormous extension of Income Tax to classes that originally were never thought of in connection with it, and I suggest to the Chancellor that in consequence a number of different factors have entered into the picture which he will do well to examine with meticulous care when he comes to consider what ought to be done with regard to Income Tax in the future. Already, I know, there are allowances for some of these things, but I think they will have to be adjusted to the circumstances of working-class life, and such matters as tools, travelling expenses, artificial limbs, housekeepers, personal infirmities, either of the taxpayer or his dependants, what may be called "adopted relatives" and possibly even rent, will have to be fitted in to the new picture if the Income Tax is to become not only as regards the upper and middle classes but as regards the whole community the sheet anchor of finance in the future, and if it is to be adapted to the capacity to pay of people whose circumstances vary very considerably from one to another within the same class or as between one class and another.

There is another point which I think is entitled to early recognition. The differentiation between earned and investment income has passed through a great many phases in the course of the history of the Income Tax. Many years ago it used to be given in a different form. Then it became recognised as a certain percentage, and the percentage of difference increased ever a great many years until, with the outbreak of war, it was reduced again. I would like to put this problem in a form which I think will be appreciated by Members on both sides of this Committee. Take a very rich man who is paying not only Income Tax but also a substantial slice of his income in Surtax. He may be faced with a proposal to embark his capital in some fairly hazardous enterprise. If he felt sure that if he made a profit he would get it and that if he made a loss he would have to forgo not only a profit but the capital itself, he might still be willing to engage in that hazardous enterprise. But at the present time such a man is faced with this position: If his enterprise fails he loses his capital; if it makes a profit, no insignificant part of every pound of that profit goes in tax. Therefore, very often that rich man will hesitate about embark- ing on the hazardous enterprise, even though it might be very much to the benefit of the country as a whole that he should undertake it.

On the other side take the case of a working man. He gets through a lot of heavy work and he earns a fairly good wage. When he is asked to exert himself a little more, to put in overtime or produce a greater output—for which he would be paid more if he were on piece work rates—if he was going to get the whole benefit of his increased earnings he might willingly undertake the additional task. But it is very likely that he has to pay Income Tax at the full rate on that additional portion of his income. The tax is 10s. in the pound at the present time, less the 10 per cent. reduction for earned income, and so he may be paying in tax 9s. out of every pound voluntarily earned by his additional labours and exertions. It is clear that both in the case of the rich man and of the working class man those considerations will act to produce a diminution of enterprise and output. It may be very wrong that it should be so, it may be that they should suppress their personal feelings and think only of the advantage to the community of the additional enterprise and effort, but human nature being what it is, in both cases those considerations will operate. The moral of that, it seems to me, is that the Chancellor must restore as soon as possible the full difference between the earned and the investment rate, and it may be that he will have to find ways and means of going further than he went before to prevent what is bad for the community arising from I will not say the deterrent, but the lack of incentive, which a heavy tax on the higher range of the income will bring about.

No, I do not take the view of my hon. Friend behind me, because money must be raised somehow. This brings me to another aspect of the general problem of taxation. Our tax system has so grown up that in the main it is what is called progressive, that is to say that not merely does the man of greater wealth pay a greater sum in taxation absolutely but he pays a greater sum in proportion to his wealth; in fact, a very rich, man will pay 60 or 70 per cent., in exceptional cases even 80 or 90 per cent., of his income away in tax, and when he dies his estate pays a very large percentage in Estate Duty. But there is one point in this tax picture of the whole community, which incidentally was noted in "The Times" yesterday, and which has long been recognised by statisticians, where the tax schedule is not in this sense progressive, but in fact regressive; that is to say that people in the range of incomes between say £500 or £600 and £2,000 pay less taxation as a whole in proportion to their income than those of lower means. That arises largely through the fact that what is called indirect taxation partakes more of the nature of a poll tax and less of the nature of taxation proportional to wealth. I think that statisticians have often regarded this as an accident. I do not believe it is an accident, but that it arises from a quite definite cause. It comes about because the responsible middle class element in society—professional men, technicians, small managers and people of that kind—have in the past refused to avail themselves of the common services of health and education which are open to the people as a whole. I should be going beyond the limits of Order if I were to go into that subject in detail, and I am certainly not going to argue the merits or demerits of their attitude, but, of course, it is recognised by hon. Members on all sides of the Committee.

As this is perhaps the last Budget when, as I may put it, we are talking with one another instead of talking at one another, I think we might more than usually come down to brass tacks. As I see it we in this country are approaching very much nearer to a one-class society than we have ever done in the days gone by. The outlook of the technician, the small manager or the professional man, whose income only just reaches into four figures, is not so fundamentally different as it used to be from the outlook of the skilled worker who may be earning a few hundred short of those figures. It seems to me, therefore, that the reasons which prompted those middle classes to disdain the public services for themselves in health and for their children in health and education, are very much less than they were. Further than that, in present circumstances they may find it much more difficult to afford this differentiation. From the worker's point of view, the fact that these services may be used by these other classes will be a great advantage, because these people, who have a great deal of power, will see to it that the services are much better than they would be if they were regarded as things which the rich provide for the poor. I will not go into the details of that as I should be getting too far afield from the subject of to-day's discussion.

Is my right hon. Friend fair in suggesting that these services are disdained? Is it not a question of those people about whom he is talking thinking that the services which they give to themselves and their children make a better return, and should not our object be to level up the State services rather than to level down?

I do not think the hon. Gentleman has said anything with which I disagree. My point is that these middle classes have said, I do not want to send ray children to the elementary school, but to a special school where they will get a better education. I do not want to go on to the panel, but I will have a special doctor and pay special fees because I think I shall get better attention." I agree that our object should be to bring up the public services until they reach a point that is equal to those which the middle classes have hitherto advocated for themselves and their children. The point I am coming to that does affect the Chancellor, and, therefore, is relevant to this Debate, is that the reason which subconsciously has operated in order to give to the middle classes the regressive advantage of taxation is now ceasing to be the case.

In addition to these priorities to which I have referred, there is the question of the reduction and repayment of Excess Profits Tax. That will be required in due course, partly because it is just, and partly because some measure of that might well be necessary to get the wheels of industry rotating. That has to have a place in the priorities which the Chancellor must consider.

The final point that I want to make to-day is a speculative point on which, perhaps, it is too early to ask the Chancellor to pronounce; but I am sure the Committee will be interested if he finds himself able to say anything, as was the case in the previous war, when it was mentioned a long time before the war came to an end. I refer to a speculation as to the likely magnitude of the Budget when the present emergency has passed and affairs have settled down to what our American friends call normalcy. My hon. Friend the Member for Hastings (Mr. Hely-Hutchinson) called our attention in 1938 to the fact that for the first time the income and expenditure sides of the Budget exceeded £1,000,000,000, which he regarded as being a remarkable phenomenon. I think that the Committee as a whole—I certainly did—agreed with him. All of us, including the Chancellor, would be delighted if he really thought that when we reached normal times we could get down to that attractively low figure again. I fear, however, that there is no prospect whatever of that.

I will make this speculative calculation. The Debt Services, etc., which make up the Consolidated Fund are, in the present Budget, about £480,000,000. I do not suppose, as the Chancellor pointed out, that we can reduce the rate of interest on the Debt, at any rate for some time, and there will be additional debt yet to be incurred. Therefore, I put the total Consolidated Fund figure in the normal Budget somewhere between £500,000,000 and £600,000,000. The Civil Votes in this Budget amount to something like £550,000,000. Perhaps that will become between £700,000,000 and £800,000,000, bearing in mind all the promises of the Government. Then we come to the purely problematic question of the amount to be spent on defence. In 1938 the figure was £350,000,000. Suppose we put it, for the sake of argument, at £700,000,000. That would bring the total up to something like £2,000,000,000. I venture to suggest that the really critical question will be, not whether we can get the figure down to £1,000,000,000, but whether we can get it below £2,000,000,000 in the years to come. If the Chancellor can say anything with regard to that, I am sure the Committee will be interested to hear it.

That is a very large sum, but I am not going to be unduly depressed by it because I have looked back in history. A little more than 100 years ago, shortly before Queen Victoria came to the throne, the expenditure of the country was in the neighbourhood of £10,000,000 a year. Some 60 years ago when the father of the present Prime Minister was Chancellor of the Exchequer, he threw up his posi- tion because he was unwilling to face an expenditure of £100,000,000 a year. In 1938, we had a Budget of £1,000,000,000, and it may be that in 1948 we shall come to £2,000,000,000. These figures, gradually increasing as they are, have been met by the increasing resources of the country as a whole and, as long as those resources continue to increase, I do not think we need be afraid of a corresponding increase of the burdens of the State.

If therefore we continue to have the splendid qualities of our people which have shown themselves during the war, if we have the workers of this country who, in the skill and industry of their toil, are unmatched by any other section of people throughout the world, and if, at the same time, corresponding with that skill and energy of our workers, we have the progressive enterprise of those who have the guiding hand in industry—whether it comes as hon. Members opposite desire, largely or mainly from private individuals, or, as those on this side desire, from control which is largely in the hands of the community through the House of Commons, is not a question which I am facing at this moment—then I am not afraid of the future. I think it will still be necessary to have cheap money, and I regard that as of vital importance. With these three things together, I believe we can face the future. I believe that the rise in volume of production will carry the war charges and even the external Debt without difficulty. I believe that we can have a volume of exports which will enable us to import what is required. I believe that our industry will take in its stride the social services which the country demands and that it will make provision for a fine standard of life for our people, worthy of the great nation to which we belong and of the sacrifices which our people have made both in peace and in war.

3.56 p.m.

In the masterly survey of the nation's finances made yesterday, the Chancellor of the Exchequer feared that he was being too pessimistic. We all realise his difficulties. He was endeavouring to forecast an unknown future. I differ from my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) in the view that the Chancellor was unwise to promise an alternative Budget later in the year. My right hon. Friend thought that it would have an unsettling effect. If the Chancellor proposed to increase taxation, I agree that it would have an unsettling effect, but we all hope that he may show some indication in his interim Budget that he will reduce the taxes. It is impossible to foresee the future. We do not know when the war will end, how it will end and what will be the conditions afterwards. We can say definitely, however, that after five-and-a-half years of a human blood-bath, and destruction on an unprecedented scale, there will be great commotion and dislocation, and we shall have a hard, stony road to travel.

There is a considerable amount of optimism in the country, largely due to the plenitude of paper money. My right hon. Friend suggested that there were great hoards of it. Because people think they have got money they regard it as a great asset and sometimes they are spending very freely. When the Chancellor told us yesterday that the taxation on beer and tobacco brought in £700,000,000 a year, it made those of us gasp who remember the old Budgets. I understand that, apart from the social side, the Chancellor welcomes this consumption. I am informed that every pint of beer pays 7¼d. tax and every cigarette 1d. My right hon. Friend the Member for East Edinburgh recalled what happened when Lord Randolph Churchill was Chancellor. I remember when Sir William Harcourt put 6d. on a barrel of beer and there was a terrible outcry about taxing the poor man's beer. Money to-day—that is, this paper money—has little value. If any hon. Member went into any of the large stores with £50, he could not buy a suit of clothes or a leg of mutton or a pair of boots without coupons. Why would he want coupons? Because of the scarcity. It is the scarcity of goods that we have to combat now. We must realise that the larder is empty, and the clothes cupboard is bare. There is real scarcity of clothing, but owing to the admirable administration of the Ministry of Food we have been fairly well fed, although the ration for the muscular worker is extremely meagre. The muscular worker really requires more.

I will not attempt any forecast or become involved in any of the questions which my right hon. Friend raised about the future. I am interested, anxious and apprehensive about the next two or three years. I want to know how the Chancellor of the Exchequer will deal with them. We have changed from a creditor country into a debtor country. He told us yesterday that we were £4,000,000,000 in debt overseas. In times gone by we imported very large quantities of essential food and commodities as a result of the investments made by our ancestors. The Chinese, I understand, worship their ancestors. We did something better; we lived on the investments of our ancestors.

Whereupon The GENTLEMAN USHER of the BLACK ROD being come with a Message, The CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.

Royal Assent

Message to attend the Lords Commissioners.

The House went; and, having returned

Mr. SPEAKER reported the Royal Assent to:

1. Ministry of Fuel and Power Act, 1945-

2. Colonial Development and Welfare Act, 1945.

3. Ministry of Civil Aviation Act, 1945.

4. Army and Air Force (Annual) Act, 1945.

5. Staffordshire Potteries Stipendiary Justice Act, 1945.

Ways and Means

Again considered in Committee.

[Mr. CHARLES WILLIAMS in the Chair]

Question again proposed,

"That it is expedient to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance."

4.14 p.m.

Before that agreeable interruption, I was endeavouring to show that we had been living to a considerable extent upon the investments of our predecessors. The yield was estimated at about £200,000,000 a year, not in £1 notes but in the shape of wheat, beef, mutton, pork, butter, cheese, eggs and all com- modities for human consumption. I am anxious to know whether the Chancellor of the Exchequer, in the absence of these commodities, will be able to finance imports sufficient to maintain even the present level of nutrition in this country. I hope he will be able to give us an assurance. I do not criticise him in the least—in fact, I think he is a worthy successor to the late Chancellor of the Exchequer—but I would like to know whether he can give us any information about it.

There will be a shortage of food in the world. We used to import from Holland and Denmark large quantities of bacon, butter and eggs. These cannot come here for years to come. If I may be allowed to say so, one of the foulest crimes ever committed by Germany was to flood Holland. They have been murdering and torturing the peasantry and are now destroying the future livelihood of the people. We have had considerable benefit from Lend-Lease from America. I was very much astonished the other day when there was a little fright about our meat ration, and when the Ministry of Food gave it out that out of the 1s. 2d. worth, 9d. worth came from abroad. That has to be financed. Whether the Chancellor of the Exchequer will be able to accumulate sufficient foreign exchange I do not know. I hope he will be able to do so.

I welcomed very much the announcement that the Chancellor proposes to foster and encourage the export trade. I do not think that foreign or overseas producers of essential foodstuffs will send them here, unless they get goods in return. Our paper money will not be of much value to them. I hope that the Chancellor will prod his right hon. Friend the Minister of Labour. We are short of labour for export. We must re-equip this country. We are entirely different from our great Allies, America and Russia. We have 684 people to the square mile, America has 30 and Russia has 20. They are self-supporting and can export, whereas we must import. I hope that the Chancellor of the Exchequer will be able to reassure us that he has foreign exchange to finance those imports. We must have, for two or three years at least, some drastic control of personal expenditure. We cannot allow the vast purchasing power which exists to express itself fully. I detest controls, but they are certain to be necessary. It would be a sad commentary if, this year, a year of victory, we were to have a reduction in the food ration. My right hon. Friend yesterday used the word "subsidies." That word is always associated with the idea that we are subsidising the producers of the country. We are not. We are not subsidising the farmers, but are keeping down their prices. If we took off controls, prices would go sky high. Fresh eggs would be 1s. or 2s. 6d. each, because of the large volume of purchasing power. I want the Chancellor of the Exchequer to make it clear that he is not subsidising the producers but the consumers in this country, by means of the drastic price control.

I am a little puzzled, in present conditions, about the Government's action in regard to their social services. It seems that they are going to distribute a large amount of purchasing power, but the goods will not be there to be purchased. I do not quite understand the reason for the Government's proposed distribution of five shillings in children's allowances to the father or mother. What are the people to get for it? Where are they going to spend it? I fear that any large volume of expenditure will be rendered null and void for some years to come. The Chancellor said yesterday that taxation was oppressive to industry, and I agree with him, I do not think we have quite realised how much taxation is oppressing the business man who wants to develop in industry. It hag a deterrent effect upon everybody. I do not know whether the Government realise it or not, but there has been a very striking increase in the rates. In my own county where I happen to be an alderman—although I do not look like it—

This is one of the occasions on which we cannot possibly deal with rates, and if any question on the subject were put to the Chancellor, he would not be in Order in answering it.

I was putting the argument that taxes were oppressive and rates doubly so. I am sorry to say that our rates have gone up 2s. in the £, but I will not pursue that subject if you, Mr. Williams, say it is out of Order. It is the policy of the Government—

Yes, but we cannot discuss the Government's policy on rates now. That is for some other occasion.

Another great factor in the situation is the availability of men to engage in the production which the Chancellor will require for his export trade. I hope that in the future we shall all cooperate rather than get into conflict with each other. I am certain that with good will we can recover. I therefore hope that this famous Coalition, to use the words of the Prime Minister, will go on, and lay the foundations of a permanent peace.

4.24 p.m.

It is always a special pleasure to follow the right hon. Gentleman the Member for South Molton (Mr. Lambert) and to hear his spirited, valuable, and expert defence of the agricultural community. I want to say a word or two on the points which he has raised, but first I would refer to the speech of the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence). It is by no means the first time that I have had the pleasure of following him, but I have not always agreed with his views. I am the more glad to-day that I am in a good deal of agreement with what he says. One of the advantages, however, which the Conservative Party has in this House is in the speeches of my right hon. Friend, because he helps us very much. He made certain statements which I thought were rather remarkable, coming from one of the leaders of the Socialist party. For example, there was his statement, which he made quite clearly—and every thinking person agrees with him—that you cannot expect, under the existing conditions of human nature, that people will work with the same keenness for the State as for themselves. That is a statement which we have made very often from this side, but it has always been put forward as the view of the right hon. Member's party that, if the State took charge of industry, people would work with just as much keenness for the State as if they were working for themselves.

I did not want to interrupt the hon. Member, but he must not misrepresent me. I was not comparing the man working for wages under the State and under a private employer. My point was that a man, by the sweat of his brow, might earn a great deal in wages, but the State took a great deal of it away. Obviously he could not be as keen to work as if the State let him keep more of his wages.

I accept the explanation of the right hon. Gentleman, but when he reads his speech again in HANSARD I think he will agree that I have not really misrepresented him. His statement was fairly wide, I thought, and the principle of self-interest the same.

My right hon. Friend gave a very interesting survey of the Chancellor's speech, and he dealt, first, as I would like to do, with what he called the less important features of the Budget. The Chancellor is to be congratulated on the negotiations with the United States Government with regard to double taxation. There will be little difficulty, I hope, in our extending this agreement to our Dominions, and eventually to similar arrangements with other nations. That part of the Chancellor's speech will give as much satisfaction to the business community as anything that he said.

I do not pretend to be an expert on the motor taxation question. I only know that representations have been made to me, and I fancy to many other hon. Members, for a long time. If the right hon. Gentleman has found any consensus of opinion in the trade on the matter, I congratulate him. I hope that producers of motor cars will be encouraged and able to expand in the export trade in the future.

The Chancellor of the Exchequer's future Budget policy, as he said, is entirely dependent upon the course of the war. If, for example, the German war were over within a few weeks and that with Japan in a few months, it is probable that the Chancellor will have overestimated his expenditure by something like £1,000,000,000. If, on the other hand, both of those wars go on to the end of the year, it may be that his estimate of a reduction of even £500,000,000 on last year's figures would be too optimistic. No human being can say what the position will be, because it will and must depend entirely on the course of these two conflicts. When we come to days of peace there will be a very definite decline in industrial earnings. The fact that overtime, Sunday work and other extra effort which have increased earnings will not be required to the same extent, is bound to make an average over-all reduction in industrial earnings. But against this it has to be borne in mind that there will be much larger earnings and spending power owing to the large number of men returning to industry from the war. It is very difficult to know to what extent one set of new earnings will offset the decline in the case of the other.

I do not think anyone would have expected that the Chancellor, in the circumstances in which he spoke, and to which I have referred as the uncertainty of the future, would be able to reduce taxation at once, but I am bound to say that his Budget does not give a great deal of immediate encouragement to industrialists, although his speech on the broadcast last night carried a rather happier tone, I thought. The one thing that is urgently necessary if industry is to be re-established is a definite reduction in the Excess Profits Tax. Without question, the sooner we can lighten that burden and allow earnings to flow back to re-equipment and reconstruction to meet post-war competition, the better. I welcomed very much the Chancellor's giving to the small concerns that reduction in taxation which comes from the allowance upon the E.P.T. standard. That will be very helpful, and I quite agree with the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) in what he said in that connection. It is not a very large concession, but it will certainly do a lot of good. I am anxious that it should be as widespread as possible, so that we can get as many of these small industries as possible back into production.

People generally are not getting any relaxation of taxation. I do not know whether they expected it or not, but, surely, the time has come when, at the earliest possible moment, the people of this country, who have borne this tremendous burden for five and a half years, are entitled to some relaxation of the heavy taxation they have had to bear in those years. The right hon. Gentleman the Member for East Edinburgh and the other right hon. Gentleman who preceded me, both referred to the danger of increased spending power, which might cause inflation, and they quite rightly referred to the danger of this at a time when there was a great shortage of goods. I entirely agree. I think there is a grave danger, and that we need to be extremely careful in that situation. But again, I was a little amused that my right hon. Friend the Member for East Edinburgh omitted to remark that the same danger can exist if money reaches the populace by means of social services, as well as by means of earnings, to which both he and my right hon. Friend below me referred. I do not suggest that he does not know, or had not thought, about it, but it occurs to me to mention it because the argument, which is a perfectly sound one, of the danger which can result from increased spending power from earnings can also result from increased spending power reaching people in the way of social services.

I am not for a moment suggesting that that is an argument against social ser vices. I think the House on the whole agrees with the schemes of the Government in that connection, but I think it is well to remember, when we are dealing with this question of the danger of inflation, that we have to consider every way in which the money may reach the people, who will want to spend—

The hon. Member is dealing with a point of great substance. Perhaps he will be good enough to clarify it. He said that the taxpayers were entitled to some relaxation. Then he proceeded to declare that there is a grave danger in too much spending. How does he reconcile both statements? What does he mean by giving the taxpayer some relaxation?

I do not reconcile them. It is the very fact that they are irreconcilable that we have been discussing. I do not know whether the hon. Member was here at the time, but we have been discussing the point that while it is necessary and desirable, and while we all want to see taxation reduced, there is this danger of inflation if a large spending power is suddenly available on a market where there is a great shortage of goods. It is not a question of reconciling the statements. It is a danger which both right hon. Gentlemen who have spoken before me have seen. That it exists, I feel sure, does not alter their views that there should be relaxation of taxation as soon as we can have it. I think they were wisely drawing the attention of the Committee to the dangers. My right hon. Friend said: "Let us face the facts," because we are not speaking antagonistically in this Debate. All I am saying is that if we are facing facts, we must also bear in mind that it is also true that to some extent social service payments may provide the same danger. I do not say that on that account we should not have social services.

I put it to the hon. Member that we have to bear in mind both time and amount. I suggest to him that the amount of the social services is not comparable with the larger sums of purchasing power which may come on to the market. As to time, I was talking of the present year, the next 12 months, whereas the new social services will not begin to operate until after this fiscal year comes to an end. It makes all the difference.

I recognise that point of view, and I do not entirely dissent from it, but the danger point may be further off than 12 months. The point I was trying to make when I referred to this subject was that whereas there will be a large reduction in earnings, and therefore in spending power, because of the ending of overtime, there will also be the men coming back and earning again. Much as I dislike them, certain controls must go on for a time. I merely say that all the facts have to be taken into consideration, not only certain facts.

Does my hon. Friend not agree that no matter how great the amount of spending power there is in the hands of the people, the danger of inflation is not simply because there is that spending power? There is no danger of inflation when there is lack of opportunity of purchasing.

My hon. Friend puts it quite clearly, but danger exists when there is purchasing power combined with a shortage of goods. Again, my right hon. Friend the Member for East Edinburgh referred to the objection that there might be a second Budget in the same year. He thought it was a point of view to be considered that that might cause unsettlement in the minds of people generally and perhaps in industry. I take a contrary view to that. I think the Budget we heard yesterday makes it plain, above all other matters, that a second Budget this year is essential. I cannot conceive, and I think the Chancellor's speech made it clear, that anybody could expect the Budget to-day—and the term "Budget" is a misnomer, because what we get is a mere estimate of current expenditure and the methods the Government propose to tax the people to raise the money required—to make a real estimate of expenditure. That being the case, it would seem that with the end of the war in Europe at least, even if the war with Japan still continues, it would be desirable that we should have a second Budget to deal with what the position of the country is to be for the rest of this financial year.

One further point I wish to put to my right hon. Friend, which I hope he will put to the Chancellor of the Exchequer, is this: Has not the time come for something more than a Budget, whether it be single or double? Has not the time really come when we should have, in addition to the Budget, a very definite annual statement of current and of capital expenditure separately? The two kinds of expenditure should be quite distinctly dealt with. We have come to the time in the financial history of this country when we should separate altogether the Budget—which I have said is merely an estimate of what the Government is to spend in the year ahead and how it is to raise the taxation to meet that expenditure—from an annual statement of what the Government's capital expenditure is to be, apart entirely from its current expenditure. I think it could, and should, be done. The various Chancellors of the Exchequer in past years have been gradually moving I believe towards that position, and I hope and trust that the House of Commons will induce the Government to adopt that system. If we could get from the Government a statement separating entirely what they expect their capital expenditure to be—capital expenditure to be met by borrowing with sinking funds provided from the annual Budget—from current expenditure, which has to be met year by year, I believe we should have made an important step forward in dealing with our financial problems. It ought to be a very clear-cut division.

There is a good deal of discussion in the Press and elsewhere about planning. If there is one direction in which planning is required it is in planning our finance ahead. We must do so for various reasons. After the war we are not really going to be troubled for some years to come with the question of finding full employment. There will be plenty of employment. There will be a shortage of goods and labour. When dealing with that kind of situation we must consider whether we are to spread our capital expenditure over a number of years, reducing it when there is a danger of inflation, and increasing it where there is a danger of the opposite result. If we are to avoid a frightful scramble after the war for goods which do not exist—a grave danger of inflation—the surest way to do it is to set out to the country beforehand what the programme is to be, and what action we are prepared to take, if necessary, to avoid inflation on the one hand or deflation on the other.

Like my right hon. Friend below me, I am very interested in what our attitude is to be towards this question of food subsidies. If I have the figures correctly, in 1940 we spent £70,000,000 on food subsidies; in 1941 we spent £140,000,000; in 1943, £190,000,000; and I understand that last year it was about £225,000,000. I would like to know how far the Government are going to carry this policy. I think it has been the right policy—I am entirely in favour of it—but we have to be careful how far we go. I would like to know how much the removal of these subsidies would increase the cost of living to-day. I do not know if the Government have such a figure—no doubt they have.

According to the Chancellor yesterday, the official figure of the cost of living is now some 30 per cent. above pre-war, and the wage figure is about 82 per cent. above pre-war. I should think that if you abolished these subsidies there would be an immediate rise in the cost of living—clearly, it would be a considerable rise. This is what worries me. If there are after the war, as there may well be, further demands for wage increases—I am not talking about total earnings—it seems to me that this policy of carrying on food subsidies to a greater extent will become impossible unless we get our production so geared up that we can bear the increase. We are getting to a time when we shall have to face a new set of conditions. If there is a further increase in prices, are we going to get a continuation, and an in- crease, of the amount paid in food subsidies? There is a very important point in this connection which was touched upon by my right hon. Friend the Member for South Bolton (Mr. Lambert) and that is what is going to be the position of the farmer if we do away with these subsidies. The farmer must be assured of reasonable returns; and how is he to be assured of them if the subsidy is removed? I agree also that this is a subsidy to the consumer, and not to the producer. I would also like to know how much of the present expenditure on food subsidies is founded on home-produced food. Some of it certainly is—

The hon. Member will appreciate that in abolishing all subsidies we should have to abolish bulk purchase. Does he consider that bulk purchase should be abolished?

No; I am not even proposing that the food subsidies should be abolished. I said that I was in favour of them hitherto. I am merely pointing out that there will come a time, when we have an increase price ratio throughout, when it will be almost impossible to continue these subsidies or increase them to correspond. What is the Government's policy to deal with that situation? I have said that I think the policy was the right one, and the only one that the Government could have followed in the past.

I think that the country will not be disappointed with the Budget we heard yesterday, because I doubt whether anybody really expected any definite changes in taxation in the present state of the war; but it is essential that we should give industry and particularly exports some fillip as soon as we can, and the way to do it is to make a reduction in E.P.T. at the earliest possible moment. There is no question, that that tax is most disastrous from the point of view of enterprise and extension of industry. I do not quarrel with the fact that the Chancellor could not do it yesterday, but I hope that he will do what he hinted at yesterday, and bring in another Budget as soon as he can clearly see the position ahead, and when he knows, much better than he does now, how the country stands. I would also impress upon him the necessity of having, apart from the annual Budget, a definite statement of the country's liabilities in future, on capital as well as on current expenditure, and to meet the former in the manner I have ventured to suggest.

4.51 p.m.

Tempted though I am, I cannot take up all the points that the hon. Member for Kidderminster (Sir J. Wardlaw-Milne) has dealt with. It would take too much time, and I have other things to discuss. I will deal with two of them. On one I am in complete agreement with the hon. Gentleman. That is on the necessity of ceasing this rather inadequate statement which we get year by year, which is nothing more or less than a glorified expenses account, and having a proper statement of capital assets and current expenditure, just as an ordinary business does. If an ordinary venture, whether publicly controlled or privately controlled, were to conduct its finances in the way the Government do theirs it would be in a permanent state of bankruptcy.

It goes further than that. It is a statement of future estimated capital expenditure.

I would be content, in the first place, to separate the capital expenditure from the revenue expenditure. I entirely agree that any sound business man plans ahead. Long before the five-year plan was thought of, a business man always planned ahead what his capital expenditure could be, based on what his current returns would be. On the other point, I think I am probably in complete disagreement with the hon. Gentleman. He seemed to indicate, when talking about the probability of there being less overtime, Sunday work, and so on after the war, that total individual earnings would fall; and then he went on to say that the total earnings would rise. I could not follow him at all. Those who support my point of view confidently expect that after the war there will be fewer hours worked, but no less total wages individually. That that could be done was proved before the war.

I mean the weekly pay packet—that is what matters. I am not interested in how many people there are. What matters to the individual person is how much he takes home on Friday night.

The hon. Member suggests that you should work fewer hours, and get more wages for the hours that you do work.

I will talk about that later. The Chancellor says that the only way we can maintain our standard is by increasing our efficiency. Does he mean that greater efficiency should be used to employ fewer people with less wages? I would submit that we must employ at least the same number of people, at a higher average rate of wage, and let the working people get the advantage of greater efficiency. At least, that is what we are going to have—let there be no mistake about it. I have proved to my own satisfaction that the ordinary working man will produce more in a five-day week of 45 hours, even in the heavy engineering trade, than he will in a 5½ day week of 47 hours.

I do not disagree with my hon. Friend about that, but I said, "provided we get the production," The whole question is, what are we getting for it?

Yes, but it is a question of how you are going to divide the results of the increased efficiency. We hear a lot from the planning experts, the P.E.P. people, and so on, about man-hour production. All the pundits who consider themselves experts in business organisation talk about that sort of thing. Let us be clear that greater efficiency is going to bring a greater reward to the individual worker. I leave my hon. Friend now, because I want to talk to the Chancellor. I am sorry that he is not here. I suppose he is away on one of his secret orgies, about which he will not tell me anything. Perhaps my right hon. Friend the Financial Secretary will tell him what I have said—I hope so.

I do not agree with those people who have congratulated the Chancellor. It seems to me that this is becoming a sort of fan's paradise, where everybody congratulates the Minister on his speech. In the first place, no Minister now makes a speech at all. It is written out for him by his scribes in the Department, and he comes down and reads it here, with a greater or less degree of accuracy or efficiency. I do not see why Ministers should be congratulated. Certainly, I never expect it myself, because I never expect to be on that side. At any rate, the whole thing seems to me an absurdity. So far as I could judge, the Chancellor was only making a rather subtle attack on both the wages and the savings of the worker. He seemed to view, not with certainty but with acquiescence, if not encouragement, the idea that the level of the cost of living—he used so many percentages that it was difficult to sort them out—should be ultimately inflated on the whole from 130 per cent. to 150 per cent. That surely is a direct attack on wages. There is no reason whatever why prices should rise if we continue to control both prices and distribution. This is the thing that ought to be attended to. It is really an attack on savings, because it means that savings will become less valuable. I would remind the Committee of what the Prime Minister said.

Will my hon. Friend read out from the OFFICIAL REPORT the part of the Chancellor's speech that he has been referring to? If he does, he will find that the Chancellor has been making no attack whatever on the working man.

I will not read it out. I will give my hon. Friend the column, so that he can read it for himself; it is a matter of opinion how one interprets it. But certainly the Chancellor gave me the impression that he viewed with acquiescence, if not with encouragement, the idea that the cost of living should rise from 130 to 150. I advise my hon. Friend to read it—it is in column 716. I do not propose to do it, because it would take too long. [ Interruption. ] I should never expect to reach any measure of agreement with my hon. Friend, so why should I waste time in arguing with him?

I want to get on to the Prime Minister. The point I want to make is this. He referred in a speech to the Conservative Party Conference to the danger of paying bonuses and gratuities and goodness knows what and he said that by doing so:

The second point in the Chancellor's speech which I want to take up is that of the cost of the National Debt. I have had many battles with him on interest charges; and, apparently, without causing any shiver of any kind to run through the Committee, the right hon. Gentleman calmly tells us to-day that the interest on the National Debit for the current year is £465,000,000. I think of these figures and wonder whether people really realise what that means. If you think back to before the 1914–18 war, the whole National Debt was only £700,000,000, and here we are quite calmly accepting and regarding as inevitable—because it is never going to drop—an annual interest charge amounting to no less than 60 per cent. of the total National Debt before 1914–18. It is even more fantastic when you contemplate what the National Debt is. It has risen from £700,000,000 in 1914 to £24,000,000,000 or £26,000,000,000 today. How has that come about? Has it come in peace-time by building up magnificent places for people to live in, by new housing, new developments and so on? Not at all. It is due entirely to wars.

While I could make out a pretty fair case for paying interest on capital which continues to exist and continues to be used in the means of production, surely it is perfectly crazy to pay interest for ever on capital which you deliberately destroy as in war? It seems to me to be a form of insanity which only this universe in its present state would put up with, and I call attention to it, because, really, the fact of the matter is—and I am making no attack on savings, because I appreciate that it may be an advantage to get people to put savings away and not spend them—that no Conservative Chancellor of the Exchequer has had the audacity to tell the people the amount of new money created behind the screen of savings. I cannot get it out of the Chancellor; he says he does not know. If the accountant of my business gave me an answer like that, I should tell him to walk out, but, of course, the Chancellor will not tell the people because he does not want them to know. It is perfectly obvious that the banks have created £3,000,000,000 since the war began at a cost of 6s. 8d., some pieces of paper and a couple of nibs. They get away with it in the long run, and it matters not a bit to them whether War Loan stands at 40 or 50 or stands at nought so far as the return on their investment is concerned.

Is the hon. Member aware that the National Debt in 1921 was not less than £328,000,000, and does he not consider, therefore, that the increase in the National Debt is amazingly low, in view of the fact that we have fought the greatest war in history?

That is a form of argument with which I am peculiarly unaffected. It is ridiculous to talk about an increase not being an evil because it is such a little one. That reminded me of the story of the housemaid. If a thing is wrong, it is wrong. The evil of the thing is that you are literally allowing the Bank to create money and get away with it, and, surely, the argument that it must be better to create money for ourselves and use it free of interest rather than create money as debt and pay interest on it, is an unanswerable one. The sooner the people of this country realise it, and they are beginning to realise it slowly, the better for all of us. The Chancellor boasted about this low money rate. The right hon. Gentleman talked about how much more cheaply this war was being run than the last. I know. That is the housemaid story again. Surely, it should be recognised that, if the control of money rates ever gets out of the hands of the Government again, the people of this country are going to be in for a very sorry time.

I remember the beginning of this war. What happened? I remember a terrific row at the bar of the old Chamber when the Bank rate went up to four per cent., and the hon. Member for Southampton (Mr. Craven-Ellis) and one or two of us raised a row in this House, and I personally, without taking unwarranted credit to myself, took part. The result of that row was not only to stop the rate going any higher but to bring it back again to two per cent. There is no reason at all why it should ever go up again, providing it is controlled by the Treasury. I warn the people that this is one way of depriving them of their savings. Inflation is one way, and altering the money rate is another, because if the Bank rate goes up down goes the value of gilt-edged securities, and, when they come to realise their savings, they will find that they are only worth half what they were worth before.

I want to come to Pay-as-you-earn. I am glad this system was brought in, but I am astonished at the figures which the Chancellor used yesterday. I was both amused and astonished, because what the Chancellor said was that there were something like 16,000,000 workers involved out of which 12,000,000 workers paid tax, and, as I understood him, the amount of money raised was £540,000,000. I find, in my experience, that with a unit of, say, about 1,500 people, in direct wages it costs about £500 a year more to the industrial concerns to collect that money. That is not allowing for wear and tear and administrative expenses, but the direct clerical labour involved. Roughly speaking, then, £540,000,000 is collected from the 12,000,000 workers involved, which means that it costs to collect something of the order of £3,000,000. The Chancellor went round congratulating everybody, employees and Inland Revenue authorities, and said what a fine thing it all was. I am reminded that, in 1932, the Conservative Party, in effect, suspended the Land Value Tax Sections in the 1931 Finance Act because, they said, it cost so much to collect. What was the cost? A little under £2,000,000. What did it yield? It would have yielded £500,000,000 a year eventually. I agree that there would have been a deficit on the first year's tax, but the process would have been established and it would have cost no more to collect the whole £500,000,000 than it cost to collect the first year's £1,500,000 as was then proposed.

I do deplore the fact that the Chancellor has done nothing in this Budget to raise money from the source of all wealth—the land and raw materials. The right hon. Gentleman says we must have greater efficiency and constant revision of production, but all he proposes is to de-rate the value of the workers' wages and de-value their savings and promise them a kind of continued slavery for many years to come. I protest, and I would like to ask if that 1931 Measure could not be incorporated sooner or later—perhaps in the Chancellor's interim Budget You never know. The right hon. Gentleman may have seen the light by then, though, having studied my right hon. Friend, I do not think he will. Perhaps, under pressure, he might.

I want to state why such a method should be followed. Surely, the whole keynote of taxation is, first of all, that the tax must be a just one. This proposal is to collect back for the people the values which they have created. What is more just than that? Secondly, it is a sound form of taxation, because it is easy to collect and absolutely impossible to evade. You do not need an army of bureaucrats to do it. Thirdly, it stimulates rather than hinders. All these Purchase Taxes and Income Tax—I would abolish the lot, Income Tax included—hinder production. If you tackle the thing the right way, and tackle wealth at the source, you can stimulate production, instead of penalising people for their effort. I think the present Lord Chancellor once said that if you can tax boots you put the price up and make boots scarce but you can tax land until the cows come home and it will not make the slightest difference to the amount of land available or to its value. Again, this tax does not in any way hinder or limit production and it does not interfere with the income of the working people. I hope the workers of the country will learn that soon. I am glad to see that they are getting a higher level of education on this point and are beginning to realise the humbug of Income Tax, which is a most iniquitous form of tax.

My hon. Friends on the other side who do not like Income Tax will never face up to this question. Their mentality reminds me of the story of the lunatic asylum with a very fine milk bar, in which the man serving behind the bar, also a lunatic, was asked by a thirsty lunatic for a milk shake. He said, "Yes, sir, and what flavour would you like to have it with?" To which the thirsty lunatic replied he would like it without flavour. Whereupon the lunatic attendant said: "Well, what sort of flavour would you like to have it without?" This started the thirsty lunatic thinking, so he said: "What sort of flavour have you got?" That is the state of mind of the average Member opposite; he knows the present system is wrong, he knows in justice it ought to be changed, but he does not want any change that affects him. He wants his change without flavour. When we offer him just changes which will bring the desired end he will not have them because he does not like the taste.

The hon. Member thinks there is something very miraculous about Income Tax.

My puzzle is to know what the hon. Member thinks. If he told me I would answer him. I am telling him what I think. I have been trying in the House of Commons for seven years. The hon. Gentleman is quite friendly but does not understand me, and I would rather get into a huddle with him afterwards and go through the whole process of the first principle of political economy and make him understand. Wealth is produced, and it is only produced by the application of labour to land. A certain amount of what is produced must be taken to run the community. The thing that I am fighting is the criminal burden laid on the working people of the country by the private monopoly, ownership and control of land and raw materials. I want to give the value of it back to the people through a charge on site values which would stimulate production and force idle land into use.

The Chancellor talked a great deal about the after-war position. We have had all sorts of talk about full employment. I do not want just full employment. I should like full liberty and freedom and, if I could have it, full idleness on full pay. The great point of taxation, and what is in the minds of hon. Members opposite, is to keep the workers poor. If they can keep them poor, they can keep them with their noses to the grindstone and they will not be so much of a nuisance. It would be frightfully dangerous in this country if everybody ended up the war with £5,000 in their pockets, far more so than if they all had rifles and ten rounds of ammunition each.

Hon. Members opposite know why I emphasise that we should tackle this prob- lem, if not in this Budget, at least in the next. We do not want full employment and a regiment of slaves marched from industry to industry under a sort of glorified Beveridge plan. We want full freedom of opportunity to employ our capabilities and to receive the results of our labours and not to have unnecessary taxation, either direct or indirect. The only way to do that is to tackle the fundamental issue, and that is the ownership and control of the land and raw materials.

At present no less a sum than £500,000,000 a year could and, under the present law should if the land was used properly, find its way into the landowners' pockets. My constituency covers an area of 7,000 acres. It is all industrial, and of that 7,000 acres 3,000 acres are idle and make no contribution to the rates. It is so-called agricultural land, though in the middle of the town and de-rated, not even cultivated, and if wanted for development you would have to pay through the nose at the start. Any person who has studied the matter will see that the biggest obstruction, if you want to go ahead, is the ransom price you will have to pay for the land. Anybody who has had anything to do with local government knows this.

I appeal to hon. Friends, if I may call them that on the opposite side of this House, and to business men, if there are any there, and say that this is the business way in which to tackle it. What happens to-day? The Government or local authority clear a slum area, and the result is, what? Up goes the price of the neighbouring land and they have to pay more for the next bit. Why? Because public funds have been expended. All over the country you are building obstacles for yourselves by allowing publicly created values to go into the private pockets of the registered owners of land. I do not dispute the registered owners' right to own land, but I dispute and protest against a law which allows them to collect for themselves values which inherently, absolutely and justly belong to the people. The methods of taxation ought to be changed round so that the people could get it back again. Look at the absurdity of dwelling houses. You improve a dwelling house and up go the rates. The dwelling house falls into disrepair and down go the rates. You could, by a proper method of taxation, take rates off houses and put them on site values, and you would stimulate trade all over the country, not depreciate the value of increased earnings, and would assure to the worker the full result for the effort he has made and not deprive him of what is really justly his by allowing it as you now do to run right away into the pockets of the landlords.

5.22 p.m.

I do not propose to follow the hon. Gentleman the Member for Ipswich (Mr. Stokes) in any detail, not because I had any difficulty in following his mind, but because I think that what he said was not very relevant to the very grave problems which face this country and which we ought to be considering when discussing the present Budget. Perhaps after what the hon. Member has said, I ought not to express any appreciation of the Chancellor of the Exchequer or of the Treasury and the people who have been responsible for the White Paper and so on. But I should be dishonest if I did not do so. The Chancellor in his two Budget speeches has marked a great advance in the way we have had the picture presented to us in this House, and the progressive improvement of the White Paper is a remarkable example of how the presentation and understanding of complex matters can be helped by continuous study of a subject in an applied and intelligent way. I hope that process will go still further. I also think we can look back on the handling of war finance and congratulate the country on having done a very fine job. While I congratulate the Chancellor, I must put in a word too for John Citizen, who, perhaps, has done even a better job than John Anderson.

But that has been the job of war finance. We have now a different job confronting us. We have shown in this country that we can "take it," that we can exercise self-restraint and go through hardship. But now we have to look forward and have to ask ourselves: Can we create? Can we produce the productive effort necessary to sustain the tasks that lie before us? I want mainly to deal with that one aspect of the matter and to talk in terms of the Budget as it was envisaged in the White Paper on Employment Policy, when we were told that Budget Debates "in the future will provide an annual opportunity for Parliament to review the financial and economic health of the country as a Whole and to consider prospects for the coming year."

I want to raise some main issues with regard to the position of the country as a whole, and also looking ahead at the prospects. But before doing so, I want to mention one or two specific points to which I hope my right hon. Friend will give his attention. I want to plead most urgently for an early lifting of the statistical black-out. It is an essential feature of the policy involved and envisaged in the White Paper on Employment Policy that private enterprise should plan in co-operation with the Government. Private enterprise is very restricted in making its plans now through the absence of full information, and I would like to support the representation which was made to the Chancellor a short time ago by prominent industrial concerns asking for the publication of certain figures of foreign trade, especially analytical figures of imports of other countries and how their markets have moved; and also, which I believe would be possible, some sort of quarterly estimated statements of national income and expenditure on the lines on which we get them annually in the White Paper. I believe that that would be practical and very valuable.

Then I want to say a word on the system of taxation The Chancellor, in his speech, recognised, of course, the vital importance of production and we have to consider taxation from that point of view. With the present heavy rates, we ought always to be asking the question, Do our methods of taxation restrict productive enterprise? Many of us have been pressing this question for some time. We have had some recognition of our case. We have certain improvements which we shall be discussing on Friday on the Income Tax Bill. But I want to emphasise the view that the steps taken do not go nearly far enough. I want to put forward again the request I have often put forward before, that we need a comprehensive independent review of the effects of our system of taxation on the country's economy. I am not satisfied that the inter-departmental discussions which have led to the present Income Tax Bill have reviewed the whole matter in a sufficiently broadminded and independent way. I very much hope that the present Chancellor, before he goes on to some other form of activity, will initiate an inquiry of that kind.

The third particular point I want to mention is that of double taxation. I very much welcomed what the Chancellor said on that and what he has been able to achieve in the agreement with the United States, but I wish to represent that those efforts must continue. We have not yet achieved anything like satisfactory arrangements with the Dominions, nor with India, and it is also necessary to consider arrangements with other countries. This matter is becoming of increasing importance, because one of the ways in which we might help to support the export trade in the future is by thus extending development of production by British concerns in overseas countries. That may, from the national point of view, appear to be an undesirable development. But it is a development which will be forced on us by actual conditions and I am convinced myself that it is along those lines that we can look for building up a solid foundation for a continuing export trade. I would like to call my right hon. Friend's attention in that connection to some statements and records of experiences which appear in a book published a few weeks ago by Cadbury's, called "Industrial Record, 1919–1939." There he will find an extremely interesting chart showing how double taxation vis-à-vis the Dominions works out, as well as an account of that firm's views on establishing manufacturing production overseas.

I now want to turn to what I said would be my main theme and the questions: Can we create? Can we produce what is necessary to fulfil our commitments, to preserve our own security and give satisfaction to our people? I can put the position very shortly by saying that, looking ahead, the bare fact is that we have the hell of a job of work to do in this country after the war. [ Interruption. ] I do not apologise for that phrase. It is used in Shakespeare's sonnets. The Chancellor has indeed recognised the importance of this but I would have liked to have seen the emphasis different on certain points. The question of the job of work which lies before us means much more than telling trade unionists that they will have to work hard. It means good brain work at the top, courage, planning, leadership.

We have to see that the workers get the right tools for the job, that they are put on to the right jobs. They must have the chance of training themselves and rising to higher posts. To turn to another point, I am not fully satisfied with what the Chancellor said about the export trade. Again, it is a question of emphasis. Talking about our international solvency he stressed two main needs: first of all, a sense of urgency about increasing exports, and, secondly, limitation of our external expenditure. I wish he had added in that context a third essential—the most vital of all—the increase of our productive efficiency. I think it is a great mistake to treat production for export as something by itself. Manufacture for export is only a part of our general industrial activity, and what we have to concentrate on is the need for obtaining the highest productive efficiency for all purposes. Then our exports may be expected to look after themselves. There are dangers too in the line of thought which concentrates on this export sector of our trade. I do not want to see us concentrating our attention on special spots, saying, for example, "These are export goods, this is an export industry, therefore it must be helped," or, as was said in another connection recently, "These are distressed areas, therefore they must be helped." It seems to me that is like trying to cure measles by making dabs at the spots, or, if I may quote the classics, it reminds me of Demosthenes' description of the bad boxer who is constantly changing his guard to some place where he has been hit and then, of course, gets hit in some other spot. What we have to do is to consider our position as a whole, to make the whole body of our economic structure healthy, and that means getting down to the foundations of national productive efficiency and starting with the basic industries.

The Chancellor's second point, his emphasis on restricting overseas expenditure, is liable to be misunderstood. We must, of course, restrict wasteful overseas expenditure, but I do not want to see us standing out before the world and saying that we want to restrict imports. We want an expanding economy, we want to increase our exports. We want also to be able to increase our imports, and the only way we can do that, to support an expanding trade, is to have a first class British productive machine. Just the same point of emphasis occurred in what the Chancellor said about the burden of national debt measured as a percentage of national income. He looked to low rates of interest as a way of keeping that down. While I agree that low rates for money are most important, the real way to diminish the percentage burden of the national debt is to increase our national production. That is the creative way to attack the matter. What you can achieve in the way of keeping interest rates down is a negative method and must be limited in its effect.

I may be told that all this is obvious; but I want to ask what we are going to do about it. When shall we get anything like a complete conspectus of the position, and when shall we advance from the stage of analysing the past to that of settling our tasks for the future? By settling our tasks for the future, I do not mean merely general phrases like "Work harder and keep your belts tight"; I mean settling our tasks in concrete terms, concrete plans which say, for example, "Here is the coal-mining industry. It is in a bad shape. Our first priority is to get that right, and this is what we are going to do to get it right." That is the sort of thing I want to hear from the Government. I was interested to see in a leader in "The Times" on Friday a very good phrase: have had put before us. I feel we owe a great debt of gratitude to the Minister of Mines for having seen that job carried out. Then, too, we have had a partial survey, by comparison with American standards, of our cotton textile industry; and another, still more partial, survey of our building industry. Those two partial surveys have, to my mind, established unanswerably the case for going further and completing those surveys so that we may know where we stand. I want to ask for a further complete survey of the iron and steel industry, a similar objective survey of our transport organisation, and I think, too, of distribution. All those things could be done. I want to ask, when are we going to get what I can describe as the "new style budget," when we really can have this discussion and review of the economic health of the country which is envisaged in the White Paper?

My second demand is that, on the basis of the knowledge that we shall get and of our needs, we should settle our main tasks. I wonder when and how that is going to be done. It seems to me that if this complete survey of the position, when we are to get a conspectus of our main tasks in economic terms, is to be taken at the same time as the annual Budget, when we are also asked to review the position in its financial aspects and consider matters of taxation, Parliament may be landed with a very unmanageable job. I want to suggest to the Chancellor that he may possibly have a chance of initiating a new procedure if he takes advantage of the possibility which he has thrown out to us of an interim statement some time later this year. I should like to feel that in that interim statement we should get the sort of conspectus for which I am asking, that we should have put before us a definite programme of the tasks that have to be carried out. We want to know—we must know if we are to handle our affairs rightly—how our resources in materials and man-power are to be allocated in the first period after the war. What ever the Chancellor may do in his interim statement, I submit it is urgent above everything else that now we should get some ideas on this subject, particularly in connection with getting the flow of man-power after demobilisation into the right channels.

The main issues, I submit, ought to be clear. It seems to me that the broad estimates ought now to be available covering the post-war years of the man-power that will be required in different forms of employment to fulfil our major post-war tasks—the remodelling of our coalmines; the rehabilitation of our factories; getting our transport back to an up-to-date state; the building of 4,000,000 houses; the maintenance of agricultural output; the manufacture of what we can allow ouselves to manufacture of consumption goods; the production of adequate goods for export; and the provision of sufficient personnel for education and defence services. I want to ask the Government what plans they have for guiding the general flow of man-power into different occupations in accordance with such national needs as I have outlined. We shall get into a very bad mess if that flow goes wrong. All the financial estimates will go west. And there would be much worse results than that. How is it to be prevented? We are told, and every party agrees, that this country will not tolerate the continued compulsory direction of labour. Yet, if we are to get the main flow of our man-power into the right channels by voluntary effort, how can we get it unless the public is told where that man-power is wanted? That is what I am asking for—a review of the future needs which will give that sort of guidance.

In all my approach to this matter I am assuming that the technique of the White Paper on Employment Policy will be carried out, that there will be a synthesis between Government guidance and individual enterprise. I submit that no other system is possible, at any rate in the years that follow the war. Government guidance must be given and, in certain cases like coal mining, it may have to be forcible guidance.

I have been talking in terms of domestic policy but I recognise, as the whole Committee recognises, that we can never get our domestic policy right unless we get the international setting right. I want to plead for just the same sort of realistic study of the economic position in the international field as I have been pleading for in the domestic field. The Chancellor talked to us of the difficulties of our international indebtedness. We all recognise the difficulties of settling in peace international obligations on the scale that they have to be incurred to meet war requirements. But what I want to submit is that we cannot treat that as a problem that we ourselves can settle alone. For example, we cannot sit down and discuss with a country like India how we are going to settle our indebtedness to her without involving reactions on the rest of the world. I want therefore as early as possible to see set up a realistic international economic conference where each country will place its factual position fairly and squarely on the table and we shall endeavour to work out a regime which will make the various positions fit in together.

I believe that can be done. I believe that it is fully recognised in the United States that it cannot be to their interests to see this country get into disaster. We want them to face up to what is necessary to avoid that. It is equally to our interests to see a prosperous United States. We too must consider what is required for that. So I should like to see at an early date frank discussion round a table at which all matters, including our international indebtedness to other countries, are discussed in order to evolve a co-operative plan. What is giving me concern is that I see no signs of any realistic approach on those lines. We hear about all kinds of sectional discussions going on. For instance, there is sitting now a Commonwealth Conference on the wool situation. I submit that we cannot in this country, between ourselves and the Dominions, settle how the stocks of wool at the end of this war and future production are to be dealt with. We cannot settle that as a domestic matter. It must be taken as part of the general international economic set-up. Therefore I emphasise my plea that we should, at a very early date, get into the stage of realistic discussion of which I have been speaking.

But no discussions of this kind can really help us, nor can we play our right part in the international set-up, unless we get our British industrial efficiency on to a sound basis. That must always remain our first job. I submit that if we start with that, all these taxation problems will fall into their proper place. I do not believe it is much good to-day working out calculations showing just how many hundred millions we can afford on this or that. One thing which is absolutely cer- tain is that we shall fall short of even the most modest standards of expenditure on social services, or on the other things which public opinion and national interest demand, unless we increase our industrial efficiency and tackle our tasks in the right order, and with determination. It is on this positive policy that we ought to concentrate. I am left with this final question: Where is the man who will say, as was said in our war emergency before the invasion of Europe, "Do not argue. It must be done." It is in that spirit that these matters must be approached, and if we have leadership for tackling our problems in that spirit, then all the pessimistic talk we are hearing will fade away. Without that leadership and determination we shall get bogged in difficulties more serious than any that have come upon us in our long history.

5.47 p.m.

I do not propose to accept the advice recommended to the Committee by the hon. Member for Ipswich (Mr. Stokes) when he suggested that it was undesirable to throw bouquets at the Chancellor of the Exchequer. A Government is much more responsive to bludgeons than bouquets, and I certainly should not throw bouquets at the Treasury Bench, especially since I happen to support them. But I was taught, when I was very, very, young, that it was a civil thing to say "Thank you" for favours received, and, so far as I am concerned, the Chancellor in this Budget has certainly "seen the light." I would like to congratulate my right hon. Friend on two counts. The first is a relatively small item, namely, the alteration in the standard of the remission of Entertainments Duty on the living theatre; and the other is a much more important factor—indeed, one might call it the major factor of the Budget—the abolition of double Income Tax. Since I have been a Member of this House, for little more than two years, I have pressed with all the force at my command for this latter reform. Today I am in a position, which I think must be unique for one of the backest of back benchers, in that I can say, "Thank you," to the Chancellor for two helpings of pudding in one Budget.

Many minds much more able than mine, will deal at length with this question of double Income Tax. I should like to touch very briefly on the proposed new standard for the remission of Entertainments Duty. I speak as one of the Council of the League of British Dramatists, which, as the Committee will know, is the dramatists trade union. The present system is this: Non-profit-making theatrical organisations are exempted from Entertainments Duty if they present a play which figures on the Board of Customs and Excise list "A," that is to say, "partly educational," but they incur it if they present a play on list "B," which is "not partly educational." I have never understood the meaning of the term, "not partly educational." To this day I do not know whether it means "wholly educational" or "wholly entertaining." Now, these lists are compiled by a committee of three gentlemen appointed by the Chancellor in October, 1943, whose word is as the law of the Medes and Persians which altereth not. A glance at lists "A" and "B" will reveal the critical mentality of these three gentlemen, which has led the League of British Dramatists to make an emphatic protest to the Chancellor of the Exchequer. The setting up of that committee was from the outset utterly indefensible. Freedom from taxation ought not to depend upon individual or committee judgments of the educational merits or demerits of any cultural work. Some idea of the power which this committee wielded can be gauged when I say that the "A" list of plays, plays exempted from Entertainments Duty, has cost the Treasury, it is computed, something in the neighbourhood of £250,000 per annum. Freedom from taxation must rest upon some other, and more rational, basis. The three gentlemen who composed this committee—fortunately, none of them is in any way connected with the theatre—have performed a thankless task most assiduously and peculiarly unskilfully. They are known familiarly in the profession as "the three blind mice," and a fitting epitaph to their labours would be "See how they run!"

He has. The remission of Entertainments Duty on the living theatre is an extraordinarily vexed question. We dramatists would like to see it abolished altogether, but we do not think that this is the time, when the theatre is relatively flourishing, for it to be done. Moreover, we feel that the theatre ought to help play and pay its part in the war effort, like any other honourable industry; but what we have aimed at is some system which will do the least injustice and will also create the smallest possible racket. The present system is intensely unjust, and it has created a racket in the plays on the "A" list, the "partly educational plays," which have been performed widely, up and down the country, regardless of their merit, but merely because they were exempt from Entertainments Duty. We told the Chancellor that we would rather see no play of any kind exempted from Entertainments Duty than have this arbitrary and odious discrimination as between one creative work and another. Perhaps I might be allowed to give the Committee a small personal instance. It happens that certain plays of mine are on the "A" list and that—alas!—quite a number are on the "B" list. I have noticed during the last 18 months that my income from the plays on the "A" list has gone up and up and up, and that my income from my plays on the "B" list has gone down and down and down—which proves, beyond a peradventure, that there exists a definite racket.

We, the dramatists, have maintained that the basis for exemption must depend upon the organisation presenting the play and not upon the play itself, and the Chancellor has "seen the light." We contended also that bona fide non-profit-making theatrical organisations should be exempted from Entertainments Duty whatever works and of whatever character they may produce, and Mr. Chancellor has "seen the light." Of course, it is for the Treasury to satisfy itself as to the bona fides of the organisation. We do not want to see non-profit-making organisations piling up huge reserves at the expense of the commercial manager who—never let it be forgotten—has to bear the full brunt of the duty. Nor do we wish to see any one connected with any non-profit-making theatrical organisation, whether it be as author, actor, producer, manager, stage-hand or landlord, getting more out of such an organisation than he or she would have done if they had been operating in the ordinary commercial theatre. That would merely create another racket.

At the same time, we do want to see non-profit-making theatrical organisations allowed to accumulate reasonable reserves in order to enable them to undertake experiments in new forms of drama, or to put on plays of merit which no commercial manager would dare to venture. By allowing this, the Treasury could protect itself and also give impetus to the vital impulse which the theatre always feels for advance and experimentation. It is a strange and ironical thing that the weight of modern taxation to-day is turning the Treasury, which is a prosaic and most unscientific institution, into a patron of the arts and sciences. I rejoice that it should be so; and I consider that the Chancellor is to be congratulated, not only upon having been thrust into the position of Maecenas, but on having risen, so artistically, to the heights of the advice we have offered him.

5.59 p.m.

I do not wish to delve into the realms of the Financial Statement which was presented to the Committee yesterday, although I certainly would like to congratulate the Chancellor on the speech he made in its presentation. I would like to travel from Britain across the Irish Sea, and to look at the contribution which the area I have the honour to represent has made, and is making, towards the war effort and victory.

The only thing I can see in the White Paper affecting the Six Counties of Ulster is a payment of £9,000,000 made to that area by the Exchequer. Ulster is not a poor relation of this part of the world. Ulster is an area that has paid its way. If the statement is allowed to continue in the White Paper that we are always receiving and giving nothing, it will be not a true and correct statement. I want to try to clarify the position. We pay our way for anything we receive from this Parliament. From the beginning of the war to the present time, we have made a contribution of approximately £160,000,000 from a population of a little over 1,000,000 people. We have also exported to this country and to other countries the produce of our land, and the skill and ability of our workmen has been seen in the ships and other transport which they have produced. The Chancellor would be well advised in future Budgets to give a detailed statement of the financial position of Northern Ireland towards this Parliament. I feel that is an omission that ought to be made good, and that there ought to be a declaration on this matter in the reply from the Front Bench.

We have been classified by the Prime Minister as "the Ulster bridgehead," and if we were responsible for saving 30 nations from being overrun by a conquering enemy, we should certainly be brought more into the limelight than has been the case in statements such as that which has been made by the Chancellor. To-day, Northern Ireland is drifting back to the situation of 1933 to 1936. We are drifting back into the position of a depressed area. We are getting into a position in which we cannot find work for our willing workers to perform, we are getting into the position of an area which has to be exported in order to find employment. There are 30,000 of our workmen in London at the present time clearing the debris caused by the German bombers. Why is there no work for them at home during the war? We have had an army of unemployed from the beginning of the war to the present day, and that army is now increasing to an extent which makes one hesitate to prophesy the number it may attain. We have played our part in helping to bring this war to the point it has reached; we have played our part by our savings, our contribution of manpower, and our Imperial contribution. If the Chancellor were prepared to make an overture to Northern Ireland by cancelling the Imperial contribution for the coming year, I think we would have some compensation for the services we have rendered.

Why do I ask that? It is because we have at the moment a demand for 1,000,000 homes, a demand for a new educational system, a demand to provide work for the workers, and we require money. I think it would be unfair for the Chancellor to receive £35,000,000 from Northern Ireland when that area itself requires that amount of money for the re-organisation of industry and reconstruction. If the Chancellor would do as I have suggested I do not think this country would be any the poorer. The cancellation of that Imperial contribution of £35,000,000 would be very acceptable in Northern Ireland and would help to tide us over the trying period which lies ahead. A letter was sent by a responsible Minister thanking the workers of Belfast for their great service to the war effort; at the end of the letter—the sting is always in the tail—he told them that there would be a dispersal of labour required over a period and that one firm in particular would close down in three months' time. That was the gratitude shown to about 12,000 workmen in the city of Belfast. I feel that we in Northern Ireland will have to justify ourselves so far as the equal distribution of revenue is concerned. I know for a fact, from information I have, that the taxation per head of our population in Northern Ireland is far in excess of that in any other of the areas composing Britain. Scotland may say that they are equal with Northern Ireland, but they are not, and their contribution per head of the population is lower than that of Northern Ireland. I claim that we are entitled to the same consideration as any other part of the country, and we are not receiving it.

The Chancellor has made no allowance for a very important thing in the lives of the people in Northern Ireland. We have neither building material, nor timber, nor the money to build houses. We are having to impose upon the local authorities a burden which they ought not to bear and which ought to be borne out of taxation. We have got to get the money from somewhere, and the local authorities have been overburdened with demands from the Government. When we are a partner in making up the revenue which has been collected, I think we should be a partner in its distribution. I ask that in future Budgets, and in the interim Budget that is to come, the White Paper should show the amount of money collected from the different services in Northern Ireland in each financial year and the amount of payments made to Northern Ireland. I think every hon. Member will then find that my statement that Northern Ireland pays her way will be justified and that there will be a surplus, and I always feel that when a surplus is available it should go back to the source from which it came. I ask that something be done to give financial help in the erection of homes, and in providing new industries for a large army of unemployed that is gathering at the present time in the Six Counties of Ulster.

6.10 p.m.

I have not the experience to reply to the two last speeches. My hon. Friend the Member for Ashford (Mr. E. P. Smith) dealt with the profits and losses of the "A" and "B" lists, but unfortunately I am not concerned with either list, never having written a play. The hon. Member for West Belfast (Mr. John Beattie) dealt with the problems of Northern Ireland, which I am sure the Chancellor will consider sympathetically. Having heard his speech as a casual listener, I think it is rather too much to expect that the only thing which should be taken into account is the actual receipts from Northern Ireland and the actual payment made to Northern Ireland. Surely, there are many services rendered in addition—Naval, Air, Army and so on—which would require to be taken into account in arriving, at a fair balance between the payments which they make and what they receive from the rest of the United Kingdom.

I do not dispute the hon. Member's point, but merely say that I think these things would require to be taken into account. To return to the Budget, I think the Committee generally feels that the Chancellor was wise in doing what he has done. I think that at this stage, when the war with Germany is not yet ended and the war with Japan still goes on, he is right in not making any material reduction in taxation. On the other hand I disagree with the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), who seemed to disapprove of an interim Budget. I agree that there might be a great difficulty, if there is to be a General Election, as to when such a Budget should be brought in, but leaving that point aside, I think the country would undoubtedly want another Budget. When we were going through the difficult years and taxation was going up, there were two Budgets a year, and now that it is the other way, the country will certainly want an interim Budget. At the present time the Chancellor is much more than the man who makes up what we have got to pay and how to tax to pay it. The Budget is an instrument of policy as well as an instrument of taxation. When we turn from a war economy to a peace economy, it will be necessary for us to have some lead as to what taxation is to be and some relaxation of taxation. We will require to make the reductions which will best help us in the difficult period ahead.

The right hon. Gentleman the Member for East Edinburgh said that he did not think it would be necessary to have an interim Budget because he did not think there should be a reduction in taxation owing to the danger of inflation that would result from increased purchasing power. One of the things which I am sure the whole Committee has welcomed more than anything else is the Chancellor's statement that he is going to re-impose Treasury control. I hope this is going to mean a vigorous attack on unnecessary waste. I think no hon. Member will disagree with the statement that waste is always bad from the country's point of view. If we can reduce expenditure by more than £500,000,000 I am sure my right hon. Friend will agree that it is far better that there should be a remission of taxation of the amount saved than that amount should have been wasted. I believe it is better that, say, £100,000,000 should be added to purchasing power by remission of taxes due to a saving of £100,000,000 previously wasted than that £100,000,000 should be wasted which would equally increase purchasing power. I hope every effort will be made to cut out any unnecessary extravagance.

I said the Chancellor was budgeting on the assumption that there would be a reduction of £500,000,000, and I thought that in the most favourable circumstances it would not amount to more than £1,000,000,000 in all. But even so there would be a very considerable deficit and, in view of the shortage of goods, I did not think that would leave much margin for a remission of tax in the present fiscal year.

I think what the right hon. Gentleman said was that it would probably be about £500,000,000 and that the most that could be expected was somewhere about £1,000,000,000. The point that I am making is that if, by economies and real control of expenditure and the prevention of waste, that could be increased and a corresponding remission of taxation made that would be a better protection against inflation than no remission of taxation and that amount of waste.

What would the recipients do with the money if they were granted relief from taxation?

I do not know, but I hope they would put it into Government securities or some other investment and I hope we are going to have a changeover from a war economy to a peace economy with goods available for purchase. This country cannot go on indefinitely with the shortage that we have at present. We have to increase the amount of goods available. The moment the war with Germany is over we must turn over to peace production in earnest.

There is a leading article in one of the papers to-day which I think the Committee should consider. It contains this passage:

The Chancellor did not refer to Post-war Credits in this Budget or give more information as to his intentions with regard to these. In the 1941 Finance Act it was said that these would be repaid subject to such conditions as Parliament might thereafter determine. In the 1942 Finance Act the promise of repayment was made more categorically. The conditions governing the payment would be those relating to they are entitled to take them into account in their future financial calculations. We have no indication at all as to when they are likely to be paid. All we are told is the conditions under which they will be paid. It would be of great benefit to the business community if the Chancellor could give some indication as to when payments are likely to be made. I do not know of any balance sheet or trading account of an industrial company which takes them into account. They are excluded from consideration in any calculation of the financial future.

The Chancellor again referred to his desire to maintain low interest rates. I think that is a matter on which we should all agree, but it may not be altogether an easy thing to do. It is however going to be particularly important, in view of Government stocks which are maturing at an early date. My right hon. Friend did not deal with that problem at all but it is one which he or his successor will have to face in the next year or two as to how we are going to fund these Government stocks which are maturing at an early date. I do not know whether the Committee feels that the Chancellor was wise in introducing recently the 1¾ per cent. Exchequer bonds with a short date of maturity. I think the policy of the Government at this stage should not be to have new issues of short-dated stocks. The policy should now be changed to funding those which are falling in irredeemably or with a long date of maturity. The large number of stocks which will mature in the next few years as going to be possibly a serious problem.

Another point that I hope the Chancellor will consider is the position of the Capital Issues Committee. It is necessary to have something in the nature of a Capital Issues Committee during war-time but I would appeal to him, now that we have got to this stage of the war, to consider some change. It was quite right that the Government should canalise all surplus money into Government stocks and prevent it being invested outside them without consent, but, once the war with Germany is over, it will be necessary for industrial businesses to have capital for expansion, modernisation of plant and many other purposes. With E.P.T. as it is they have not the opportunity of building up reserves. I am convinced that we must do nothing to prevent progressive firms getting the capital necessary to bring their businesses up to date and make them efficient. I hope my right hon. Friend will do all he can to relax the conditions laid down by the Capital Issues Committee and give more opportunity for investment and industrial expansion.

There undoubtedly has been in this and the last Debate a considerable expression of confidence in the future of the country, and I think it is quite right that we should have confidence, but I am inclined to think that we are rather prone to overlook the very grave dangers which lie ahead, particularly with regard to our balance of trade. This is going to be a problem of the very greatest urgency. Before the last war we were the largest creditor nation and between the two wars we managed more or less to retain equilibrium. Now we have lost millions of our overseas investments and we have to pay for our imports by our exports, and our export trade will suffer under very grievous handicaps. One of our exports pre-war was coal. At the present price, and in present circumstances, it is going to be very doubtful how far that will be a good export. In the past merchant fleets were run on coal but they are rapidly changing over to oil. Many of our invisible exports, shipping insurance and so on, have disappeared, and many of our previous markets will be closed to us by the industrialisation which has taken place. I am convinced that we are facing a very grave situation.

I want to understand the hon. Member's argument. Does he regard as a favourable balance of trade, a situation where you send more out of the country than you bring into it?

The hon. Member is hardly meeting my point. Unless we can pay for our necessary imports of food and raw material, what are we going to do? The position is perhaps the most serious from a financial point of view that the country has ever had to face. I am also convinced that we have the technical skill and craftsmanship and the ability, if we are given the lead, to overcome these difficulties, but anyone who pretends that it is going to be a simple proposition is making an enormous mistake. I hope that all parties will unite to try and bring back prosperity and to restore our standard of living, and if possible improve it. That will not be done by talking and sitting back; it will require definite effort by Government, employers and employees alike.

6.31 p.m.

One of the advantages of sitting here throughout the two days' Debate is that one is able to make a short speech, and I propose to do that. The right hon. Gentleman who opened the discussion to-day referred to the Budget as a pedestrian Budget. I do not quite know what a pedestrian Budget is, but if he means that we are taking in our stride, as it were, these huge sums, which are unprecedented in any Budget, I agree with him. The chief feature of the Budget which, according to to-day's papers, struck the imagination of the public, is the promise of an easement of taxation. The prospect of a reduction in taxation has caught the public imagination, and the business man's imagination has been caught by the prospect of some easement of Excess Profits Tax. It is very commendable and a tribute to our genius that we are able to swallow a tremendous Budget like this, and our ability to do so is now helped by the prospect of falls in taxes. The people are now becoming more and more widely concerned with the Budget. That is one of the things which Pay-as-you-earn has achieved. It has made the people realise that they have to find the money, and that when we talk glibly about Exchequer grants and Treasury grants, as we are prone to do, we are up against the hard fact that those grants come out of taxes.

If we are to do some of the things which are necessary to re-establish ourselves financially, we must see that we get our export trade back. It is on the difficulty and the urgency of doing that that I want to speak. It seems to me, and I do not suppose that this has escaped the Chancellor's attention, that if we are to make a return to prosperity in our trade overseas, the two years immediately following the European peace will be of vital importance. That will be the time for our business men to get a foothold in the world's markets. I am anxious that there should be some easement of Excess Profits Tax so that our business men shall have the money, as they have the enterprise, to get into the world's markets and take their right and proper share of them. If that is not done quickly, I am afraid it will be too late, because we have not only these taxes on industry crippling the business world, but we have the controls of which the Chancellor spoke, and in regard to which he held out little hope of easement for some time. Speaking on this subject in another place, a Noble Lord warned his fellow peers, that if we did not do something we should be outbid by other countries. The exact words he used were—

I do not know who the noble Lord is, but we cannot have quotations from another place, except on Government policy by a Minister.

I bow to your Ruling, Mr. Williams. What I was pointing out was that, if we in this country have no relaxation from Government control of our great industries, and if a country like the United States or any other country continues to use and exploit its freedom of private enterprise, it will outbid us in the world's markets. In the next two years that would be a disastrous thing. I want to impress on the Chancellor the necessity for easing our burdens in that way. I am not one of those who think that it does not matter whether we balance the Budget or not. We have had excellent examples of great Chancellors in the past who have shown how necessary it is that the Budget should be balanced. Therefore, while I congratulate the Chancellor on bringing in a Budget which meets our difficult position, I want to pay a tribute to the people of the country who have borne such Budgets in the cheerful way they have done.

6.37 p.m.

I would like, first, to get rid of one small personal grievance which relates to the White Paper on National Income. This Paper has been issued for some years, and each year it gets better, but more indigestible, and I find it impossible in the short time between the Chancellor's speech and the Budget Debate to read, let alone digest, the vast amount of important information that is contained in it. When I find time eventually to read it, I always finish with the thought that, if I had only known what was in the White Paper before my Budget speech, how much better a speech it would have been. There is nothing in the White Paper which precludes it being issued at least a week before the Budget, and it would be an immense advantage to the Committee and, I hope, to the country, if the Chancellor saw that we got it sufficiently early to enable us to digest it and to discuss what is really based upon it in a more informed and intelligent manner.

So far the Chancellor has come in for very little criticism, but I must say that his statement on motor taxation depressed me considerably. He had already stated that he proposed to continue the mechanical tax, and that is notoriously a bad tax. Nobody denies it. There was some hope, however, that by his gradation of the tax, that is, increase according to the capacity of the engine, he would, in some way, mitigate the evil of the mechanical tax. Instead of doing that, he has merely repeated the situation which has dogged the British motor industry from its inception. What he has given in the change from the diameter to the capacity tax is a mere technical triviality. It enables the manufacturer to make a square instead of a long engine, and it probably makes for smoother running. That is all.

The trouble with bur motor industry is that in the past they have produced an infinitude of different models. It is well known that the optimum run for any model is about 45,000 per annum. Over and above that number the manufacturer has to duplicate the plant. With our multiplicity of models and our comparatively small home market, instead of getting a run of 45,000 per model per annum, we get runs of 5,000 to 10,000. The result is that our motor cars cost proportionately nearly four times what American motor cars cost. We paid in this country before the war as much for a little Austin Seven as you could in America buy a 30-horse-power saloon, in spite of the fact that American wages are double ours. The fact of allowing the motor manufacturer to continue his multiplicity of small models means that there is no possibility of our competing in the overseas market.

The Chancellor said he could not get any agreement in the motor industry. The unfortunate thing is that there was sufficiently wide agreement to get him to repeat the grievous blunder of the capa- city tax and the small gradations. The vast majority of the manufacturers welcome this form of taxation because it gives them an absolutely impassable protection against American importation. They are content to exploit the home market which has given Morris his millions, enabled Austins to pay 100 per cent., and made Standard a wealthy firm. At the same time, they are prepared to throw away the export market which will be of such vital importance to this country in the post-war years. If that is to be the attitude of British industry as a whole, this country will have a very thin time. I am surprised that the Chancellor, who is regarded as a strong man, should have allowed himself to be bamboozled by the motor industry into giving them this inordinate protection.

The right hon. Gentleman and almost every other speaker have referred to the need for reduced taxation. The Chancellor said it would come when we had succeeded in achieving sufficient world security to obviate the enormous burden of armaments and when we had a larger national income. That looks rather a long way off. At any rate, the Chancellor himself, although he calls himself an ex officio prophet, did not dare to give us a date. I am afraid that the possibility of any serious reduction of taxation for some time to come is very remote, and it is no use our pretending that a second Budget this year will make any material difference to the burden of taxation.

This burden of high taxation is undoubtedly a serious matter. We can bear it in war-time for a short time, just as we can bear any other number of conditions which, in the long run, would be disastrous. Because it is so important to discuss exactly the effect of our taxation, and because the sheet-anchor of our taxation is the Income Tax, I desire once again to invite the attention of the Committee to the whole problem of Income Tax. It must be admitted that as a tax, our English system of Income Tax is probably the most perfect instrument of taxation which has hitherto been devised. It fulfils completely three very important criterions of taxation. It is extraordinarily efficient and economical, it is extremely flexible and I think it fulfils the majority of the canons of equity. Those are three very important criterions. There is a fourth criterion which is equally important in the perfect tax, and that is, does it cause the minimum of economic damage? If our Income Tax rates were low, unquestionably the answer to that would be yes, but with the standard rate of 10s. in the pound or anything like it, I think it is very questionable whether we can say yes.

The Chancellor referred to the depressing effect of high taxation, and very few taxes are more depressing when they are high than Income Tax because it searches into every nook and cranny of the nation's cupboard. Psychologically, it has a greater impact than any other tax. My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) in his speech to-day referred very effectively to the effect of Income Tax upon incentive, not only on the incentive of industry but also of the workers. I do not propose, therefore, to traverse again ground he covered so well, but I do wish to quote one other example of the evil effects of a high rate of tax. I quote it not because it is new but because it has been discussed in this House so many times and we are all familiar with it. It is the impact of a high rate of tax on industrial reserves. The accumulation of industrial reserves is a matter of very considerable importance because it so happens that it is from industrial reserves that industry draws the funds for new plant and fresh development. That means that the adequate provision of industrial reserves is the very basis upon which we must found a growth in the national income, from which we can look forward to an increased standard of living. This impact of a high rate of tax upon industrial reserves has been discussed in this House many times. It has been suggested—and I have been one of those who supported the idea—that there might be a differential rate of tax upon reserves which were ploughed back into industry, thereby giving a double good effect both in the protection of the reserves and stimulus in its use.

Speaking a fortnight or three weeks ago, my right hon. Friend the Member for East Edinburgh, on behalf of the Labour Party, said that he could not support any such differential taxation on the grounds that it was inequitable as between taxpayer and taxpayer. Strictly speaking, I think the right hon. Gentleman is right. On pure grounds of equity, and certainly according to the present canons of Income Tax, there must be inequity when you get a differential rate of that type. Frankly, we have to face the problem of industrial reserves, and under the present structure of Income Tax I do not see how we are going to protect them save by differential taxation. If the right hon. Gentleman says that this is inequitable, it means this: we have two important canons of taxation which apparently are irreconcilable—those are, equity and minimum damage. In that case there seem to be three courses open to us. First, we can revise our opinion of what equity means in regard to taxation. It would not be the first time we had done that. For example, when we changed from a flat rate to a system of high graduation, it was a very drastic revision of what was considered equitable in taxation. When we introduced the differential rate between earned and unearned income, we made another very drastic reconsideration of what was or what was not equity. Every time we vary personal allowances, surely we are doing nothing more nor less than revising our opinion of what is equitable. That is the first course we can take. We can take a second course. We can recognise the impasse and make a compromise, having a small amount of inequity and at the same time giving a certain amount of protection to industrial reserves.

There is a third way, and that is better still. It is to recognise that it is time we submitted the whole Income Tax system, principles and machinery to a drastic and fundamental re-examination, particularly as regards its social and economic effects. It is high time that we had another Royal Commission upon Income Tax. We had one after the last war, and certainly since then the need for another re-examination has not vanished. But I suggest that a fresh re-examination should be of a much more fundamental and drastic kind. The Royal Commission of 1918 broadly accepted the principles of the Income Tax then existing, and their recommendations were detailed, growing as it were out of a logical development of well tried principles. I do not think that is necessary. What is necessary is a much more fundamental examination, not of what I might term the internal logic of the Income Tax so much as its effect upon the economic and social life of the country.

Perhaps I might give an example of what I mean. I am not suggesting that this example should be adopted. I am quoting it because it was a suggestion put forward by a high economic authority. The present basis of our Income Tax is, of course, the standard rate. The standard rate is modified by personal allowances which are deducted on the one side, and it is modified by the addition of Surtax on the other side. In other words, our Income Tax system is basically a tax upon income which is adapted to individuals. The suggestion has been put forward that we should very greatly reduce the level of the standard rate, but that we should maintain the efficacy of the tax by a very great extension of the Surtax principle, bringing it much lower down the scale. The effect of that would be a complete remodelling of the tax. It would then become not so much a tax upon income adapted to individuals, as a tax upon individuals based upon their income. It would be a fundamentally different approach. That may or may not be good; I am merely suggesting it as the type of modification which may be required—something outside the present structure and outside the present logic of our Income Tax system.

Income Tax is now so vital and powerful a thing that we should examine not merely the question of how far we can mitigate the evils that it brings in its train when the rate is high, but how far we can use this tremendous power for valuable social ends. There is at the present moment before the House an Income Tax Bill. I do not propose to discuss it in detail because that would be entirely out of Order, of course, but I want to refer to it as an example of how a modification of Income Tax principles could be utilised positively. This Bill deals with depreciation allowances. It is little more than an extension of the present Income Tax principles. I admit the Chancellor has introduced a few timid modifications which he hopes will be a stimulus to modernisation, but if the whole system of depreciation allowances were entirely recast, they could be made a very powerful spur to industrial progress and at the same time they could be made a very compelling weapon against all that is obsolete in British industry, and there is a great deal. Not only could a recasting of the depreciation allowance system be utilised both to spur and to impose penalties where we require them, but it could also be used as a very flexible control of the rate of private investment, which is a fundamental matter if we are to control the trade cycle. It is not for me to indicate the changes which I think ought to take place in our Income Tax system. If I or any other hon. Member of this Committee were capable of doing that, there would be no need for a Royal Commission, but I do think there is a very vital and immediate need for a Royal Commission. After all, our Income Tax is still fundamentally Pitt's war tax of the 18th century. True, it has been modified by adaptation. Many of those adaptations have been drastic, but it remains, fundamentally, a machine for raising revenue. I suggest that a tax which grows so greatly in weight as the Income Tax has grown shows a change which is not merely quantitative but which is also qualitative.

When we realise that the present Income Tax imposes on every unmarried worker earning over £2, 7s. 6d. per week a tax of 6s. on every additional pound and a tax of 9s. upon every pound he earns over £5 a week, when we realise that last year it took a sum equivalent almost to one-third of the whole consumers' spending in the country, I think we must realise that the Income Tax is more than a tax; it is a fundamental interference with the life of the people. That interference may be necessary—it is necessary in war-time—but let us realise that it is an interference. Let us realise that now, when we are on the verge of the change from a war economy to a peace economy, it is high time that this vast engine of taxation should be examined fundamentally as to its effects, as to what they are and as to what they can be made.

7.0 p.m.

I listened with interest to the speech of the hon. Gentleman the Member for Chesterfield (Mr. Benson). I agree with him in regard to motor car taxation, that the change which has been made from a tax based on the diameter of the cylinder to a tax based upon the cubic capacity is a matter of importance. But it is but a trifling improvement on the situation. The arguments put forward by the hon. Member were very good. I should like nevertheless to bring to the notice of the Chancellor of the Exchequer another point arising out of motor car taxation and that is the study of the question of accidents, and the consideration of safety on the road in so far as taxation can increase that safety. We are faced with a situation creating a tremendous number of accidents on the roads. I think road accidents account for 600 deaths a month, which is nearly 8,000 deaths a year, and if anything could be devised by way of motor taxation to reduce this toll of accidents, it ought to be considered very seriously, nay as a primary matter, by the Chancellor of the Exchequer.

With this aim in view I want to put forward again a plea for a tax upon petrol consumption in substitution for the present heavy horse-power tax. In nearly all other commodities which we consume, such as gas and electricity, we are not charged in our homes with a fixed charge according to the number of points or the power of lamps we have fitted or by the number or size of the gas rings we have installed, but by the units of electricity we consume or the amount of cubic feet of gas which has been burnt. There is no better measure of the use of a car or of the use of the road than the amount of petrol consumed. Many years ago, a previous Chancellor of the Exchequer gave us as an argument, while he agreed that the petrol tax was the best tax, that it was too difficult to collect a tax on petrol. That argument has now disappeared because since then a small petrol tax has been introduced. It is possible and quite easy to raise this tax in such a way as to secure the maximum amount required to substitute the petrol tax for the horse-power tax. Flexibility is there and the increased Petrol Tax would not be more difficult to collect than the present one. I do not suggest that there should be any reduction in taxation as a whole, because I realise that the Chancellor of the Exchequer has to acquire a basis for getting the same large sum out of the motoring public. I suggest a tax on petrol worked out at so much per gallon, so as to bring in to the State approximately the same amount of money as the present tax on the fixed horse power of the car.

I would like to point out to the Committee the numerous reasons why, in my opinion, the tax on petrol would render motoring safer and be conducive to fewer accidents in the streets and on the roads. If a car is heavily laden, or is of greater horse power, it automatically uses more petrol than a smaller or lighter car. Therefore, a tax on petrol is also, indirectly, a tax on horse power, but it is also a tax on the use of the road. Everybody knows that if you drive your car faster, you use more petrol, and therefore, the petrol tax would be a deterrent against driving dangerously or too fast. If you pay your tax as you go, on petrol, you will tend to take your car out on the road less often. If petrol is to cost round about 4s. per gallon, as it would if the tax were based upon it, many motorists would hesitate to take the car out for a trifling reason, and thus the high taxation on petrol would relieve road congestion, thereby causing fewer accidents. There is also the question of the manner in which you drive. When the reckless driver accelerates very quickly, or brakes very quickly, that driving is translated into greater consumption of petrol and therefore there would be greater taxation for him. High taxation on petrol would hold him back from reckless driving.

Further, there is the question of owning more than one car. If there is no fixed taxation on cars there is greater incentive to possess two cars. When your car remains in the garage now, you are paying taxation for it, but if we were taxed entirely on petrol, we should pay nothing for the car while it was in the garage, and there would not be the same obstacle to motorists possessing more than one car. A man with two cars can keep his cars in better condition. Most accidents are caused because cars have not been kept 100 per cent. in good order. A small thing overlooked has often caused a death on the road. With two cars, the owner can choose the car which is more suitable for the prospective drive. For short runs in town you would use a smaller car, which consumed little petrol. For a long run, say up to Newcastle-on-Tyne, you would us a larger car, which consumed more petrol. You would not use the unsuitably large car in town, and that would tend again to greater safety in the crowded streets since the smaller car is easier to handle in traffic and takes less place in the traffic jams. At present, when you possess only one car, you are naturally reluctant to send it to the makers to be repaired when it is in slightly bad running order because you know that during all the period of repair, you are paying the heavy horse-power tax for it. Many people tax their cars for the whole year, and some people tax them only quarterly. It is an effort to ask for a refund for the time during which your car is being repaired or reconditioned and during that time you are paying tax for nothing. There is no opportunity of asking for a refund on your taxation if the repair is under one month. There again, the result of the petrol tax would be more safety on the roads, because people would be more willing to have small repairs done, even if owning only one car. I have known many people hesitate to send their cars for repair, even though the brakes were not working well, and when the engine stopped and stalled they have said, "I cannot put it in the repair garage because I have not a second car. To own a second car would be to pay twice the tax while using only one car. That would be too expensive. Moreover, I should have to pay the tax while it was being repaired, because I have already paid a year's tax on it. I had better wait another couple of months and so I will save a month's taxation on the quarter." The badly conditioned car goes on the road and that is bad for safety on the roads and then the accident occurs, maybe a little child pays the price. Does the Chancellor value the life of a little girl? If he does, he can save many little girls.

Further, there would be great advantage in using roads at night. This relieves traffic generally and there are fewer accidents. If you travel at night, you use less petrol because you come across fewer traffic jams and light stops and you can go for a long time at a uniform speed, with no sudden acceleration or braking and little overtaking. There is not so much traffic on the road at night. If you make a journey between here and Oxford at night you use less petrol than you would use for the same journey during the daytime, when you have to stop at red lights and stop for other traffic. Petrol is the true thermometer of the use of the car and of the road. That is where we should find our taxation. The petrol thermometer gives it to us. By adopting it we should save many lives and that is the most important point that the Chancellor of the Exchequer can consider. He would get the same amount of money by the taxa- tion I suggest, and he would prevent the considerable loss of life which at present takes place on the roads. If the tax were on petrol instead of on the fixed motor horse-power of the car he would save the lives of hundreds of people. I go so far as to say that 8,000 people alive to-day are doomed to be killed before next year ends. If the Chancellor of the Exchequer would put the taxation on petrol, instead of on the fixed horse-power, on the use of the car instead of on its size, I say that a quarter of those people would continue to remain alive. Surely the Chancellor does not want to have those lives on his conscience. Will he take all I have said into account?

But there are many other considerations which enhance the value of the taxation of petrol instead of horse-power. Enabling people to own two cars would be, for instance, much better for the industry. The industry can be protected against foreign imported cars by tariffs. Many people who want a second car cannot afford to pay for a small car to go next to their large car. They would not have to pay extra taxation for the car in the garage. They would save money by using the small car when they were not using their large car if taxation were only on petrol. There is another point in favour of taxation of petrol. There would then really be no restriction on design at all, and it would be better for the cars and their efficiency. Probably the best motor car is the one which uses as little fuel per horse-power or per mile as possible. That is a great incentive to designers where petrol is expensive. In all countries where the petrol is very expensive the British car, and its engine, designed entirely for low petrol consumption, in view of the high petrol taxation, would have open before it large foreign markets. Another consideration is that, except for tyres, the only thing in the motor-car industry which is imported into this country is the petrol. It is the only thing which we do not make ourselves on a large scale. By low temperature carbonisation we make a certain amount of oil, but the great bulk of the petrol consumed by the motoring public is imported. Any taxation which tends to reduce the consumption of a commodity which is imported into this country can only be to our great advantage.

There is a further point. If there is a tax on petrol, then people will not run away and leave their engines idling so much as they do at traffic stops. In these days, when petrol is in short supply, you often notice that a driver cuts off his engine at a traffic stop, and starts the engine up again when the green light shows; but before the war it was a common thing to see a driver jump out of his car and run into a shop, leaving the engine running for five or ten minutes. It would not pay him to do that if there was the tax on petrol. I feel I have put points which I would like the Chancellor to consider, and I would specially lay stress on that of accidents. It is a thing that he really must consider, and I would like to have his views on the subject, if he would be so good as to give them in his reply.

The next point I wanted to raise refers to the depreciation of machinery in factories. The relief for depreciation of machinery is at the rate of 7½ per cent., or the total depreciation of the gear in 15 years. That proportion may be a correct assumption of the depreciation of mechanical parts in engineering concerns, but it is not an appropriate rate in the case of a chemical factory. In a chemical factory, where you have machines which are in continual contact with acids which corrode, depreciation is very rapid. New machinery has to be purchased and the proportion should be based more on an assumption of the order of two or three years for total loss. Despite this, the chemical industry is still receiving a depreciation allowance, spread over 15 years, for the mechanical devices which they use in their factories, and which come into contact with the chemicals which cause the gear to be ruined. This is particularly hard at the present time, when the industry has to buy secondhand gear. Will the Chancellor give favourable consideration to this matter in the light of my remarks. It is not a big question, but it is certainly a just request. I suggest to the Chancellor that he should consider a special concession to the chemical industry for gear which comes into contact with chemical products, and I also suggest that the depreciation should not be 7½ per cent. but much nearer to 33⅓ Per cent. or 40 Per cent. in those special cases.

I come to my last point. I want to ask the Chancellor of the Exchequer what steps he has taken to deal with the money which will form the war indemnities from Germany after the war. In past years we have had included in peace treaties provisions for large indemnities, but under modern conditions, such provisions upset the great economic systems of the world. It is very difficult to make countries pay large sums of money of the order of the sums spent in this war. This was possible in the time of Napoleon. When France paid 5,000,000,000 gold francs, it was paid in gold over the counter at once, but there is no such possibility in these days with our fantastic figures of cost because it would upset the whole economic balance of the world. I want to ask the Minister whether he has received any suggestions or has any plans in mind in that direction. In passing I would like to ask the Chancellor what we intend to do with the £100,000,000 of gold which was recently discovered in the salt mine in Germany. I would like to see that gold distributed by a kind of reverse Income Tax, among the taxpayers in this country.

I take it that it will be distributed among all the United Nations. It may have been 100,000,000 dollars—one is very liable to be confused between dollars and pounds nowadays when one reads newspapers quickly. But my hon. Friend will find that my figure is right. Nevertheless gold there was, and gold there is. I would like to see a reverse Income Tax scheme. In regard to the question of indemnities from Germany, I would suggest to the Chancellor a possible alternative to operate concurrently with an international air force to maintain peace in Germany, and that is the commercial concession by Germany to the United Nations, of all its means of transport and communications for a certain period of years—which I would suggest as three generations, amounting to about 100 years. The greatest advantage to any person or company has been in the past a specific concession obtained from a certain country. In the days of Queen Elizabeth, the concession for wines in this country was given to a noble peer, who made a lot of money out of the concession. I see no reason why our ships should go to Germany with cargoes and come back empty, and that the Germans should send us goods in German ships. Germany should not operate ships. We should have given to us by Germany the concession of all her means of transport and communications—shipping, flying, railways, waterways, telephones, telegraphs, broadcasting stations, post offices. All that ought to be operated by the United Nations for a certain period of time. That would be a flexible way, by peaceful methods, of making it impossible for Germany or the Axis countries to start another war. Everything starts with a word, and that word would be heard over the telephone, or noted in some other form of communication, and it would not be possible for a country in that position to prepare to wage a war.

The hon. and gallant Member is getting rather too wide of the Debate.

I will not in that case pursue the point of security, but I will limit myself to the financial side of the suggestion. That is the nucleus of a thought which I hope the Chancellor of the Exchequer will examine more thoroughly, as a means of how to get money by small quantities over a long period of time as against large sums at once. It is not possible to get large sums quickly. I should like the Chancellor to give me some opinion on the scheme which I have put forward, and which I think would be the safest and the most just to save us all from another war—to see to it that those who started it would spend their lives in working to pay for it. There could be no better lesson to prove that crime does not pay.

7.17 p.m.

I hope the hon. and gallant Member will forgive me if I do not follow him into the great scheme he has propounded. I admire his courage in presenting to the Committee a complete plan for reparations from Germany. I would like to refer to the speech of the hon. Member for Chesterfield (Mr. Benson). I am sure that hon. Members of the Committee who heard that speech will agree with me when I say that all listened to him with great interest and if I may I would like to compliment him upon it. He referred to this admirable White Paper, "An Analysis of the Sources of War Finance and Estimates of the National Income and Expenditure." I certainly endorse his suggestion that it would make our future Budget Debates more practical and interesting if it were possible to issue that White Paper a week or so in advance of the Budget Debate. I agree with him in not seeing any reason why that should not be done. I cannot see any object in holding it back until after the Budget has been presented. I glanced at the White Paper last night. Like my hon. Friend I have not had time to study it as I would have liked, but while glancing at it last night, I had a dream that the future economic control of this country would be very much more efficient if it were possible to be sure that every candidate of every party at the forthcoming Election, could pass an examination on that White Paper. In that event, I think this House would exercise very efficient control over the finances of the nation.

I also support the hon. Member for Chesterfield in his plea that it is time that there should be another Royal Commission on Income Tax, to go thoroughly into the matter. He discussed various aspects of the reform of that tax, a subject in which I have been interested for many years. I do not know if the hon. Member saw in the "Statistical Journal" a few years ago an admirable paper by the late Mr. Romney Green, pleading for the reform of Income Tax. There have been other schemes put forward. For instance, Lady Rhys Williams has put forward an admirable scheme, combining the reform of Income Tax with social security, a scheme that was adopted at one time by the National Liberal Party. That scheme should certainly be considered by any Royal Commission.

My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) used a phrase in his remarks to-day to the effect that he was a little doubtful about a second Budget, because he was doubtful about the release of additional purchasing power through reduced taxation, before goods could come on to the market. This question of a second Budget during the coming months, involving a reduction of taxation, is a highly controversial one, with a great deal to be said on both sides. It would certainly be most popular if, in a few months time, the Chancellor could come to this House and propose a reduction in taxation, but I wonder whether my right hon. Friend the Member for East Edinburgh might not be right in his doubts about the wisdom of that course, taking the long point of view. One of the most disastrous mistakes made after the last war was in 1920. There was a boom in progress, prices were rising rapidly, and the Government of the time brought in a budget which drastically reduced taxation, thereby adding to the purchasing power available and forcing "up prices at a, yet more rapid rate, leading inevitably, a year later, to deflation.

It would be disastrous if the effect of a reduction of taxation was to accentuate the danger, which we all recognise is a very real danger in the year or two after the war—the danger of inflation. My right hon. Friend the Member for East Edinburgh pointed out that the amount of purchasing power in the country at the end of this war will be colossal. There are War Savings Certificates, which can be cashed at any time, there are the vast sums in the Post Office Savings Bank, which can also be cashed. There are also the post-war credits in connection with Income Tax, which cannot be cashed. There is another aspect. The Government have, quite rightly, issued 3 per cent. Defence Bonds up to a maximum of £1,000 per individual or firm, which the holder can cash from the Government at six months' notice. There are a great many of these bonds about. The right hon. Member for East Edinburgh did not mention them. If there is to be any reduction in taxation during the coming months when there will be a great scarcity of goods on the market I would like to see the reduction most carefully made. I would, for instance, like to see these forced loans, these deferred payments, abolished. I would like to see a reform which will appeal to the hon. Member for Chesterfield, that of ploughing capital back into business in order to re-equip business quickly for it to get ready to turn out goods for civilian consumption, not to increase the purchasing power of the individual.

I welcome in this Budget the relief from double taxation. One thing in particular which I welcome is the concession regarding Excess Profits Tax given to small businesses. That is so important to my mind, because I am one of those who do not believe that efficiency is found in the big businesses and the big combines. I believe that the small business which works its way up, which ploughs back nearly all its profits year by year, building it up and up in quite a small way, is the business which learns to be efficient in the hard school of experience. High Income Tax is a deterrent to that type of business. A young enterprising man will say, "I will live in a meagre way, ploughing back every penny into the business for the next ten or fifteen years," but if Income Tax is 10s. in the £ he will think twice before doing that.

There is another reason why I welcome this concession so much. Farmers have been very hard hit by Excess Profits Tax. Many farmers started this war heavily in debt, with heavy bank loans, with their farm premises in a terribly bad state of repair. This concession will help the farmer to accumulate reserves, to equip his farm properly, to provide proper farm buildings. That will be more than ever necessary, now that the £10 limit has been put on repairs, because I am sure that in many parts of the country that limit will cause appalling deterioration in the farm buildings. The E.P.T. concession will also help another industry which was depressed before the war, namely, the fishing industry. In my part of the world companies are small, often with one boat, or two or three boats. They had hard and bitter years, when they could not provide for depreciation, when they could not accumulate finance for replacement. New boats now cost nearly three times the pre-war price. This concession will not provide funds for that but it will encourage those companies to commence to provide funds. Therefore I welcome the concession, in particular because it will help these two industries which are so vital to our future as a nation—agriculture and fishing.

Reading the White Paper and listening to modern Budget speeches, compared with those of the past, I, who have been connected for some 15 years past with the movement for financial and monetary reform, feel how much we have gained, how the old, rigid, orthodox finance, which caused such bitter suffering in this country after the last war, has been displaced by new economic conceptions which have now actually penetrated the portals of the Treasury. I think it is generally realised that the old slogan of monetary reform: "What is physically possible should be financially possible," has been accomplished in war. What has been physically possible must be made financially possible in peace. But, while we talk about money as a symbol, money as a symbol must represent a reality. If we create money and the reality in goods is not behind it, money will depreciate in value, and we shall have appalling inflation. In the years immediately before us there will be grave physical difficulties in preventing inflation, grave physical difficulties in producing the goods to equal the amount of money, the national income, that we desire. We shall have to overcome those difficulties; otherwise, we shall have inflation.

What are those difficulties? We have to achieve sufficient export trade to pay for the necessary imports. Let us face the fact that that is going to be very difficult in the post-war years, to begin with. The first thing we must do is to produce everything we can at home. Never again must we let British agriculture go down. Leaving aside all the national reasons, I take purely financial grounds. The strain of paying for our imports will be so great that we must reduce that strain by producing as much as possible at home. Therefore we must maintain our agricultural production at at least double that of pre-war years. There is another appalling strain: that is, that debt of £4,000,000,000, which, as the Chancellor warned us, we owe outside this country. There is a great difference between a debt owed outside a country and a debt owed inside a country. The debt owed inside the country you pay out of one pocket into another, but where you owe a debt outside the country it means a dead loss of national wealth. The figure of the debt will probably be more. There are Lend-Lease and those liabilities that we have undertaken, quite rightly, for Colonial development. Put the figure at £4,500,000,000. That means that every man, woman and child in this country owes £100 overseas. Leave aside the money—it means £100 worth of goods overseas. Every adult of working age in this country will have to produce goods to the value of £300 for overseas debt payment. That means a year's work, a year's production of each worker for which we get no return, which we have to give away before we even commence paying for our imports.

It is no use pretending that that is not a very grave strain on the country. I think we can manage it, but we have to realise that the one thing of which we must be careful is not to enter into any international financial agreements which will make the payment of that colossal debt more difficult. Let us be sure that that debt will be paid, as we know that it can be, by the export of British goods or services, and not in international money, not by exporting pounds, which can be sold on the international market in exchange for dollars, thereby forcing down the value of the pound and causing inflation. There is another difficulty as regards payment for imports. We exported a great deal to all the nations of Europe before the war. Can we export to Europe after the war, and be paid for those exports? What countries will be in a position to pay? Holland, Denmark, Italy? They will not be able to pay. That will add to the very grave difficulty of paying for the necessary imports that we must have.

I come back to what is physically possible. We want to do a lot in this country. We have got the labour, but, even in house building, we cannot build houses unless we have the physical materials. Throughout the whole range of national life there are certain things that we must import to produce the things that we urgently require. We have to pay for them by export, and I have pointed out how very difficult the problem is going to be. We must face the fact that all dreams of achieving a great favourable balance, and building up more foreign investment, must be abandoned. Personally, I do not think that the abandonment of those ideas will be a loss, as healthy international trade is, or should be, an exchange of goods for goods, services for services, and not exporting in order to get the other fellow into your debt.

My right hon. Friend the Member for East Edinburgh said that we had to face the burden of post-war taxation, which will be terribly heavy. Many Members have referred to Income Tax, and that one-third of the national income goes in taxation. Let me take a very simple illustration to show how heavy the burden of taxation is on the ordinary working man. In 1914 an ounce of shag cost 3d.: now it costs 2s. 4d. You may say that that is a trifle, but tobacco is an essential to most men. That one fact shows what an appalling burden taxation is. I think that we can bear the interest on the National Debt, provided, as other speakers have pointed out, that we work up a great national income, that we get the greatest possible production; and, of course, the real difference of opinion will come between hon. Members on those benches, and myself and other hon. Members on these benches, as to how we are to produce the biggest national income. They believe in nationalising industries, and so on. I say that the United States and this country—considering its population—have done better than Russia in the way of production in this war, especially the United States.

I said "in this war"—for the purposes of the war. I believe that, while certain controls must remain, to prevent inflation while goods are scarce, if we summon up in peace, as we did in war, the unity of our people, their courage and their endurance, and give free rein to that extraordinary capacity for initiative and enterprise which has always characterised our people, we can build up that great national income, a great national production, which will enable us to bear that heavy burden of taxation.

I want to say one word about interest rates. I was very glad to hear my right hon. Friend the Chancellor point out that it was the Government's policy to continue low interest rates; and he took pride, quite rightly, in the very low rates which had been maintained. I think that the figure he gave may cause us an undue feeling of elation. There are vast amounts out in Treasury Bills and Treasury Deposit Receipts, and when they are funded, as they must be sooner or later, the actual percentage cost of financing the war must be increased. Still, compared with the last war it has been a very great improvement. But for years past I have argued that, good as has been the performance of the Treasury, it might have been still better, and that this war could have been financed more cheaply than it has been. I know that such a statement is apt to give the impression of some wild scheme, but in the past three, four, or five years, in advocating that scheme I have not used my own words but I have, year after year, used extracts from the sober columns of the "Economist."

The "Economist," the year before the outbreak of war and for the first two or three years of war, kept pegging away, saying, "The gap can be financed at ½ per cent." What did they mean by "the gap"? The "Economist" pointed out that between expenditure and what is received in taxation plus genuine saving there was a big gap, which had to be bridged by the creation of bank credit, and they put forward year after year, for three or four years running, the technique of how that gap could be bridged at a cost which they put at ½ per cent.

What is the procedure to-day? Treasury Deposit Receipts at the Bank are 1⅛ per cent.—very cheap. They take credit for it, quite rightly. But later on those are converted into long-term loans, at 2½ per cent. Therefore, 1⅛ per cent. is a purely temporary rate: the payment rate is 2½ per cent. The "Economist" kept urging that it should be done at a half per cent. I admit that the late Mr. McKenna said that the actual cost of servicing the new deposits was about 1⅛ per cent. Of course, I accept that statement, but I would only reply that the servicing of the deposits includes paying a low rate of interest on long-term deposits and payment for the many admirable and valuable services which banks render to their depositors. But interest on deposits is not really necessary and services rendered should be paid by the depositors themselves and not by the taxpayer. I put forward that scheme of the "Economist" for four years running, until I am tired of doing so. I sometimes wonder why the "Economist," after years of advocacy of that scheme in its leading articles, suddenly dropped it, but I hope that one of these days it may return to the attack and try to show that the necessary creation of credit in peace should be done on some such system that will not cast an intolerable burden of future generations.

I think that, like all other hon. Members, I must pay my tribute to the wide sweep of the Chancellor's speech yesterday. The right hon. Gentleman gave us a broad view and general guidance for the future, and told this country frankly that there are dangers and difficulties ahead, but that we can surmount them. I am sure we can do so, and I feel that, with the help of the very full information given in this Paper we shall go forward to the future years of peace with confidence that, though in the first two or three years to come, we must endure many burdens that we have had during the war, once we get over those two or three dangerous years, we can go forth to better and freer conditions and improvements in the standard of living.

7.48 p.m.

I do not propose to follow the very interesting lines pursued by the last speaker, but I would like to say one or two things. Having listened to the Debate right through, I think one is very much impressed by the fact that there is a real attempt in the House to try and place the Budget, so to speak, in a new setting. We are very conscious of the fact that this yearly statement only represents a part of the picture, and that now, when we are entering upon a very difficult period of reconstruction, it would be well if the Treasury could see its way to issue information with regard to capital expenditure in addition to what we get in the Budget, so that, when we visualise the claims we are making for reconstruction in various aspects, they could be placed against rather a fuller background.

I thought, also, that the claims made by the hon. Member for Walsall (Sir G. Schuster), who is not in his place at the moment, really represented a fundamental change of attitude towards these problems. The hon. Member spoke at great length and in some detail about the necessity of having before us—a favourite word nowadays is "blue-print," but I do not know whether we can use it in this case—a bold outline of the way in which we are expecting industries to develop in this country. I agree with him entirely that it is about time that we should finish with mere exhortations. We hear people say, again and again, that we are facing a period when we must work much harder even than we have ever done before, but what are we going to work at? What are the means of producing wealth that are going to be placed in our hands by the Government? What plans have they got, and is there any reason why some of the bigger industries should not be tackled in that sense and why we should not say that something has to be done to improve the coal industry fundamentally? I think most people are agreed upon that by this time, but I do not know that the Government, even yet, is convinced sufficiently to draw up a scheme upon which we could work, although, in a way, we could, of course, utilise the Budget in order to achieve some of the objects that the Government have in view.

In common with other hon. Members—I think it is due, and I do so wholeheartedly—I feel we should congratulate the Treasury and the Chancellor upon producing the Budget that was produced yesterday. I ought to put it in another way, perhaps, and say that circumstances have forced the Chancellor to produce the Budget that he did produce. The right hon. Gentleman was not in a position to make any great alterations, and he repeated his performance of last year, and we wonder sometimes whether he is not going down in history as the "No Change Chancellor"; but that remains to be seen. There is to be another Budget, the right hon. Gentleman suggested yesterday, which may be introduced shortly, and, seeing that he is one of those men of good will who is not very strongly attached, I take it, to any party in this House, I should think he stands quite a good chance of introducing a third Budget, when he might have the opportunity of bringing about some of the reductions to which he referred yesterday.

Taxation has attained something like a position of equilibrium, and, in view of the fact, as the right hon. Gentleman pointed out quite fairly, of the great uncertainty of the demands in the immediate future, it would have been very unwise to alter the basis of taxation as it is at the present moment. Consequently, he very wisely agreed that "No change" was to be the motto of the Budget this time. Amongst the uncertainties, of course, are the two wars. No one knows when they will finish, and we know another thing—that the war in the Far East is, of necessity, going to be a very expensive undertaking. The distances are great and the conditions under which our men are and will be fighting are very difficult, with the result that the cost of equipping that war will be very high indeed. Neither must we forget the fact that most of the men who are fighting, and the people in this country too, are anticipating very considerable expenditure by the Exchequer in future on what we call social services. We have had a number of White Papers, and one or two Acts of Parliament have been placed upon the Statute Book, and they are not going to be carried out without a very considerable expenditure of public money. Consequently, the Chancellor has been quite right in saying that it was difficult at the moment to estimate what the charges upon the Exchequer are likely to be in future. I think the men who are fighting and the people of this country, who have displayed such wonderful heroism in the last five years, are entitled to what they like to speak of as a new world, with new opportunities, new houses, a wider vision and greater opportunities for developing their personalities than they have ever had before.

I know that there is an attempt, and there will be an attempt in this House and elsewhere, to get taxation reduced, and we have heard a great deal about that to-day. Reducing taxation, I should say, is just as difficult a task, perhaps, though a more pleasant one, as imposing taxation, and I was very glad to note that the Chancellor emphasised the fact that reducing taxation by 6d. here or 1s. there is not the way to do it. If there is to be a reduction in taxation, it must be based upon a wide survey of the taxable capacity of our people and of the legitimate demands which they are going to make on the Chancellor in future. I can foresee a very intensive struggle on this plane between the people who want taxation reduced, particularly the Income Tax, which case has been put up several times to-day, and the people who really want to continue the very considerable expenditure on social services in the future. I think the Chancellor referred to the fact that we cannot have these things unless we are determined that we are going to economise on personal expenditure and are going to live the kind of life we have been forced to live during the past five years. I am not prepared, no one in this House is prepared, to deny that our people deserve a considerable amount of liberty in the near future, but liberty to spend on articles of consumption may be the ruin of this country in the course of the next four or five years.

I think it is important that the Chancellor should, as he did yesterday, emphasise that we are by no means out of the wood yet, nor shall we be even when we have conquered these two enemies. We shall then still have to face the very terrible burdens to which the hon. Member who spoke before me referred—the terrible burdens of the foreign debt, upon which we must pay interest for many years; and, of course, at the same time as we are paying that interest, we must struggle to have as many commodities brought into this country as we can for the purpose of keeping our people alive and giving them employment. The Chancellor, I thought, was most illuminating in that part of his speech in which he referred to the great expenditure that has been incurred by this country, and by this country alone, in Asia and Africa. He pointed out that the campaigns that have been waged in these two Continents have been very largely paid for by us, with the result that an expenditure of nearly £2,000,000,000 was incurred in that part of the world alone. It is that expenditure, of course, that has really consumed the whole of the assets that we formerly possessed, and that is why we have got into debt.

In addition to that, the right hon. Gentleman made the very interesting point that even some of our own Dominions find themselves in a much more difficult position as a result of the war. Australia and New Zealand have pointed out that, for various reasons, they could not give us the services which America gave us when she introduced the Lend-Lease system. They are producers of primary products and those must be paid for, and the interesting result is that Australia and New Zealand find themselves, as the result of our purchases, in a much more favourable position than they ever were before. This is a matter which will have to be discussed, as the Chancellor suggested, not merely internationally but with our Dominions as well. The war, as I have tried to point out, has left them in a more favourable position economically than it has left us. One is very glad to note throughout the speeches we have heard to-day that, despite the deep realisation of the heaviness of the burden that will immediately be facing us, the resolution and the ingenuity of our people are as great as ever. We have come through a very dark period and we can face the future with great confidence, and a part of that confidence is the belief in the hearts of most of our people that they deserve well of the community of which they are a part. We must not be content with the White Paper that has been produced; we must push on from White Papers to legislative acts, and when our people feel they have not fought in vain for a better Britain the prosperity and the future of the country will be assured.

8.2 p.m.

; I shall not detain the Committee for more than a few minutes and I shall only refer to two points in which I am particularly interested. A great many hon. Members have referred to the crushing burden of our overseas debts. There is another side to them which is most advantageous to us, and that is, that, when you owe somebody money, sooner or later he wants it paid back, and that fact will tie many of our customers to us with quite a strong bond. They obviously cannot be paid back their principal immediately and some arrangement will have to be come to by which we pay them a small percentage of the debt, and for the larger percentage they will be supplied with goods. That will be highly beneficial to us and it will get trade moving. The advantage of these debts will be that they will bind our customers to us. Unless they stay with us in many ways they cannot look for repayment of their debts.

There is another point which I hope the Chancellor of the Exchequer will study with rather greater attention—I know that he has already started on it—and that is, the price at which we sell abroad. We have had to bear not only the losses of the war—and they have been heavy—but also the financial burden. Many countries have not had to bear either, and consequently we shall get no credit from them and will not be doing ourselves justice if we sell too cheaply to them. It is obvious that we shall have to send a certain amount of our products away for no return, but it is in our interest to sell at as high a price as we can. It will not be exploiting anybody. The only effect of selling too cheaply will be that the middle man in other countries will secure a profit which is legitimately ours. I know that the Chancellor is doing something in the matter, but I hope it gets around to the export groups and so on and becomes known as Government policy.

My second and last point is, that I was very apprehensive of a phrase used by the Chancellor yesterday when he said the Treasury must assume control. From the industrial point of view the Treasury is an accounting branch, and what you want from your counting house is honesty and accuracy, and any firms who put their accounts department in control are heading immediately for bankruptcy. In the same way if the Treasury think they have to control industry our national industry will go bankrupt. In many ways Treasury control looks only to the cost and not to the result. The management of a firm know what they want to do and then find out how cheaply they can do it. There is quite a different emphasis there.

To give an example, I believe we have spent some £200,000,000 on rehabilitating our land which could have been done very much more cheaply and expeditiously if it had been done over a number of years with very small payments. I know that the Treasury like to say that they have changed all that now, and that they are all expansionists, but I can assure my right hon. Friend that they have not changed perhaps as much as we would like. During the war I have had a good deal to do with putting machinery in factories on a Treasury assisted basis, and too often the Treasury would only support the cheapest model because, they said, it would do as good a job. But they failed to take into account that perhaps the repairs were higher, or that one man could only run one machine whereas one man could run three of the more expensive type of machines. That is the practical approach which I want to see the Treasury develop, and in so far as they only control from the aspect of making the industrialist more progressive then I shall be happy, but if they start to control industry from the rather restrictive outlook which has been so evident hitherto, I for one will be most apprehensive.

8.8 p.m.

As a comparatively new Member of this House I must say frankly that I have been disappointed with what I have heard in the Debate during the last two days. What we have heard up to now, and especially from the Opposition benches, has been about the effect of the Excess Profits Tax, and, as recently as half an hour ago, the regret that rich people in this country could not in existing circumstances operate two motor cars instead of one. I want to say, without any hesitation whatever, that I do not know what the lads who are now probably linking up with the Americans will say if these are the greatest proposals that this Budget can bring about for the new world that we have heard so much about in the last few years. The men and women who have done so much for us, both on the battle front and on the home front, deserve something greater from this House than anything we have heard either in the speech of the Chancellor of the Exchequer or in any speech from the Tory benches during the past two days.

I want to deal first with a question that was raised by the hon. and gallant Member for Chatham (Captain Plugge). He was applauding the Chancellor's promise of taking off controls at the earliest possible moment. I want to know if some of these hon. and right hon. Gentlemen will be more explicit and tell us which controls they wish to take off. Do they want to take off the controls of rent restriction? Do they want to take off the controls of food? Do they want to take off the controls of clothing? If they do, why not be honest and say so? Do they want to take off controls in connection with building? In my younger days I served some time as a carpenter's apprentice, and I will give an illustration of the vital necessity of retaining controls so far as the building industry is concerned. Prior to the last war, the productive capacity of the builder and contractor was based on the number of his employees. If he employed 30 men, his productive capacity in the year was 30 houses; if 50 men, 50 houses. I see in the White Paper that this House considered some few weeks ago that we had a million building operatives in the last year before the war, but we had only 300,000 houses. That computation was made prior to the last war, and the figures prior to the last war should be improved through the process of mechanisation, so that instead of having 300,000 houses in the last year before the war, with the number of building operatives we had, we should have had more than 1,000,000.

I have heard lots of excuses for that low production-of houses in the last pre-war year, but I contend that it was because of the lack of control of investment and because money was spent in that last year before the war and labour was used for purposes other than the building of houses—the building of cinemas, large hotels, dog tracks and other things. If the controls go off before the housing problem has been settled, we shall have just the same difficulty that we had before this war. So I say, and I say it with all the humility in the world, that the sooner we hear something definite as to the Government's attitude towards controls, the better it will be, and the more encouraging it will be to the men and the women who have done so much for us.

The hon. and gallant Member for Chatham also made a somewhat pitiful lament about the export trade. Hon. Members talk as though the export trade had only disappeared during the years of the war. They do not realise that some of us on these benches know from experience that between the last two wars it was not a new experience to have between 2,000,000 and 3,000,000 unemployed. That was allowed to develop, despite the greatest monopoly that any political party has ever had in this House; with the exception of three years, the Tory Party had an absolute monopoly in this House, and an absolute monopoly in the Government. Let us say quite frankly that despite all their talk about encouraging export trade, all their talk about control, the men and women who have done so much for this country will want some assurance that there is something greater in the Tory Party than there was previously before they will be entrusted with this great task of reconstruction.

I know it is the custom to congratulate the Chancellor on the introduction of his Budget. I congratulate him most heartily on the able way he did it, but I cannot congratulate him on the proposals and the provisions of his Budget. Not a word, not a single word, about the ending of that iniquitous means test which is applied to the mother of the discharged soldier or sailor or other Service man. I know I am debarred from going into the question of pensions but I say that while such iniquities and anomalies as that exist, we cannot congratulate ourselves in this Committee, on keeping faith with the fighting men and fighting women of this country.

We have another matter to consider. I see that the papers—especially the London papers whose full fire I shall no doubt receive in the next Election—are lamenting the high wages some of our people are getting. I asked in the House not many weeks ago what it cost to keep our poor unfortunate people who live in the public institutions in certain counties in this country. Up to date as this Tory Government is, the most recent figures I could get were those for 1938. As my own county was the one for which I specially required the figures, and, being connected with the county council there, I get the figures every April, it was somewhat surprising to learn that those figures had not percolated through to London since 1938—the year before the war. But on the latest figures I was given in reply to my question, the cost per, week for every inmate of a public institution in Derbyshire was in the neighbourhood of 25s. That was reckoning the average of the eight institutions we have in the county. In the last completed year, the cost per inmate was £2 3s. 10d. Reckoning two adults in every home and three children, and if £2 3s. 10d. per adult is the best that can be done in a public institution in an enlightened county like Derbyshire—which became more enlightened about 15 months ago—if that is the best that can be done with collective buying and centralised administration, are we going back to the £3 per week prior to this war? Because of the altered conditions and the altered cost of living, instead of pleading for a man to have two motor cars, is it not time we pleaded that the men who will shortly be demobilised should have some assurance from some Government source that they are coming back to something better than they have ever known before?

Agriculture was mentioned by the hon. Member for Lowestoft (Mr. Loftus). I want the Committee to carry their minds back to the intensified efforts that were made during the 1914–18 war. I want hon. Members to carry their minds back to the fact that, despite the tremendous efforts made by the tenant farmer during that war, in the first ten years after the end of 1918 sufficient land had gone out of cultivation in this country—governed by a Tory Government for most of the time—to make a road from London to York three miles wide. The Tory Party did nothing to restore agriculture until the war broke out, when the farmer had to be specially appealed to—and they responded nobly—with the result that that industry did as much as any other in saving this country in its most critical days. I should have liked some gratitude expressed from the Treasury Bench to that industry, in the form of greater protection of its interests in future than it has had in the past. The agricultural industry should have had a better crack of the whip than it has ever had before. In this, one of my not too frequent interventions in Debate, I want to say with all sincerity that I would like this Budget to have given greater encouragement to the men and women at the bottom of the ladder, rather than to the wealthier classes.

8.22 p.m.

With that part of the speech of the hon. Member for West Derbyshire (Mr. C. White), which dealt with agriculture, I find myself in very hearty agreement. I have asked the Government Front Bench at least seven times in the last six months when we may expect to hear from them a statement as to their long-term policy for agriculture. Up to now that question has been treated as if it were a joke. I have only this to say about that matter, in a Budget Debate which must cover much more ground besides that, that the Government would be ill-advised, from every point of view, to consider a request for a statement of long-term agricultural policy as being in any sense of the word a joke. Agriculture is our oldest, and still our biggest, industry, and in it there is deep and intense anxiety as to what is to happen to it at the end of this war. Although I take it that the farmer will receive a modest measure of benefit under the E.P.T. concessions which were announced by the Chancellor yesterday, those concessions are in no sense an answer to the question which agriculturalists are asking all over Britain: what is to happen to the industry when this war comes to an end?

In the few minutes available to me I cannot say more about agriculture. I want, if the Chancellor will give me his attention, to attack his Budget. When a Budget such as this is brought before us there are three tests that can be applied to it. The first is, granted that we have incurred bills for certain amounts, and that we have to raise certain sums of money, are the methods proposed in the Budget, on the whole, the most convenient or easy way of raising the necessary cash? That is one of the tests to apply to a Budget. The second test to apply to it is to treat it as an instrument to effect social justice between one class of the community and another, and to ask the question: Does this Budget go as far as we could legitimately expect it to go in using the instrument of taxation to rectify social injustice in Britain? That is the second test. The third test that can be applied is the test of how the Budget will operate as an instrument of economic policy. Given the economic situation prevailing in the country now, and which is likely to prevail for the next year, does this Budget use the instrument of finance in the way best calculated to assist the total economy of the country? That is the third test.

It is legitimate to apply any one or all three of those tests to a Budget, and I want briefly to apply those tests. First, is this the most convenient and handy way of raising the money required to be raised? I would like some other time to deal at length with that subject, but all I want to say about it to-night is this: that there ought to be an answer from the Chancellor to the case made by my hon. Friend the Member for Ipswich (Mr. Stokes) in this House this afternoon. My hon. Friend made two points, to which I beg the Chancellor to give his attention. I know that it is often said when my hon. Friend speaks in this House that he is concerned either with "tanks or banks." This afternoon he was engaged on the subject of banks, and whenever he speaks on the subject of banks and finance it is usual for a derisory smile to spread over the faces of the Front Bench. But the charge remains. This is the charge: It is that people of this country are being levied taxation to the tune of millions of pounds per annum to pay interest on money created by the banks out of nothing, and then lent to the Chancellor at interest.

Yes, and whenever that charge is made here a slightly scornful, contemptuous, and derisory smile spreads over the faces of the orthodox financial people in this House. But, as I have said, that charge stands. People are beginning to learn enough of the circumstances under which the Bank of England secured the monopoly of the right to issue credit to know that it is time that that racket was exposed and dealt with in this House. We want an answer to that part of my hon. Friend's speech. We want an answer to another thing. How can any of the Measures proposed in this Budget be justified while the Chancellor leaves untouched one of the biggest sources of possible taxation in the country, the year by year increment in site values in Britain?

I have my office on a site owned by the Duke of Westminster. Year by year, leases on that property where my office is situated fall in, and every time they fall in the lease to the newcomer is 1½, 2, 2½, or 3 times what it was to the outgoing tenant. Vast fortunes have been made, the fortunes of great families have been made in this country, out of the increment in site value year by year, to which the landlord contributes nothing, and which is the creation of the people who go to live in the area concerned. There can be no justification for taxing old age pensioners' beer and tobacco, while leaving the Duke of Westminster alone on the increase of the site values of the land which he controls. On another occasion one would like to develop this further, but, applying my first test, I cannot pass a favourable opinion on this Budget while the Chancellor leaves undealt with those two points—the creation of money by the banks out of nothing and the lending of it by them to the State at interest; and the failure of the Government to deal with the problem of increases in land values.

I now apply the second test. Does this Budget go anywhere near as far as we might expect, to remedy social injustice within Britain? There is one body of people in England, the most helpless of the whole lot, to whom the Exchequer has been as mean as an Exchequer could be for years past. I refer to the old age pensioners. Again and again the House has begged the Chancellor for a little less mean treatment in dealing with that most helpless section of the community. The standard rate of old age pensions remains what it was a quarter of a century ago. If the Chancellor cannot increase that rate, at least he can mitigate the severity of the taxation levied, when dealing with that section of the people. The truth is that the effect of tax increases on the circumstances of those old people has more than nullified the miserable increases in supplementary pensions that we have been able to extract from the Chancellor from time to time. On the basis of the second test this Bulget is not a good one.

The third test is the economic one. Here I may differ from my hon. Friend the Member for West Derbyshire. I take the view that, whatever the merits or demerits of the existing order of society, it is that order of society to which the men will come back when the war is over. That is an important remark to make. Whatever may be the merits of a Socialist commonwealth, it plainly will not exist when the peace is signed and the men come back from Europe and elsewhere. They will come back to the existing capitalist order of society. Therefore, the test I must apply to the Budget is, does it do the best that could be done with that state of society from the economic point of view? The Chancellor has referred to the possibility of reducing Income Tax. I beg him—not because I am an enthusiastic apostle of this order of society—not to reduce Income Tax. If he has any money to spare at all when the next Budget comes along, let him use that money in the way most calculated to assist the transition from a war economy to a peace economy in Britain. The way to do that is not to reduce the Income Tax, The way to do it is to deal with the problem of the Excess Profits Tax. Income Tax exercises a certain deterrent effect on production. Nobody doubts that. I could take hon. Members to factory after factory where men will not work overtime beyond a given point because the State takes too much of what they earn. I could take hon. Members to people on the other side, with more money, who have deliberately refrained from earning money, and have lived on capital because it is a cheaper thing to do from their point of view.

The hon. Member knows more about E.N.S.A. and comedians than I do. I take his word for it. There is no doubt at all that Income Tax alone has exercised, at 10s. in the £, a highly deterrent effect on production. But however big the deterrent effect of that has been, the deterrent effect of Excess Profits Tax has been even greater. There are hundreds of firms in this country which, however much they produce, cannot get a single penny more profit than they were getting in their standard year. The Americans were a bit wiser. They limited their Excess Profits Tax to 75 per cent. They did not quite kill the goose that laid the golden egg, although they drew the noose quite tightly round its neck; but the Chancellor strangles the goose, and draws the noose so tightly as to make his Exess Profits Tax a positive deterrent to production. And it will be a positive deterrent to employment when the war ends, unless something is done about it.

I come now to my last remark. The Chancellor yesterday talked about the necessity for re-establishing Treasury control and cutting out unnecessary expenditure. That struck a reminiscent chord in my mind. I remember what happened after the last war when, in pursuance of the same thesis, we had economy committee after economy committee slashing at public expenditure. There were the Anderson Committee—not the Chancellor's Committee, but that of his namesake — the Geddes Committee, and a succession of other committees, which simply slashed at public expenditure regardless of the effect upon the total economy of the British people. That was a powerful contributing cause to the collapse of employment from 1923 onwards and the precipitation of that vast unemployment problem from which we subsequently suffered. Money during this war has been subordinate to men. Money has been subordinate to the needs of the war. I detected in what the Chancellor said the possibility that men and measures might once more become subordinate to money. And, believe me, that is the road that leads to economic collapse in Britain.

I would like to say these things at greater length, but I have said the substance of what I wanted to say. It is too late to do anything with this Budget. When the Chancellor produces a Budget, it is produced, and a minority in this Committee can do practically nothing more to it; but the Chancellor has held out the possibility of a later Budget. When he comes to that later Budget, I hope he will apply to the proposals the test I have suggested—not only the first, is this a good bookkeeping Budget?, but the second, is he using the Budget as an adequate instrument for effecting social justice? and thirdly, are his proposals the best calculated to help the economic situation which the country finds itself in, the best for facilitating a reasonable transition from a war economy to a peace economy?

8.38 p.m.

We are drawing to the conclusion of the second day of the Debate on the Budget, and it is customary for the Financial Secretary to the Treasury to intervene at this stage. A great many points have been raised, and of course I cannot reply to all of them, but, as everybody knows, my right hon. Friend the Chancellor will be speaking again before the Debate closes, and if I leave some points unanswered it is either because I think them of such importance that my right hon. Friend ought to deal with them, or because I feel he would be able to deal with them more adequately than I can do myself. I think we may claim that my right hon. Friend's Budget has been well received not only in the House, but in the Press and in the country. I doubt if there has ever been a Budget which has been the subject of less controversy than this one.

My right hon. Friend spoke, with considerable gravity, of the change in our position from being a great creditor nation before the war to being a debtor nation to the tune of £4,000,000,000 by the end of the current year. The thing that has surprised me most in these two days of Debate is that so few hon. and right hon. Gentlemen have referred to this matter. It may be that my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) and his colleague, the right hon. Gentleman the Member for Wakefield (Mr. Greenwood), made no reference to it for fear of causing some embarrassment or difficulty to my right hon. Friend the Chancellor. At the same time I hope that hon. Members will keep this important fact foremost in their minds, in the months to come, because it is, of all the subjects to which my right hon. Friend referred, the one which gives the Government the most cause for anxiety.

I should like to deal with two or three specific points which have been raised in the course of the two days' Debate. The hon. Member for Leigh (Mr. Tinker), who always makes an interesting speech on the Budget, asked whether it would not be possible for the staff of the Board of Inland Revenue to continue, and to extend, the practice of giving explanatory lectures in regard to the Pay-as-you-earn tax system. At no point in our history have the staff of the Board of Inland Revenue been so hard pressed as they are at present. They well deserve the tribute paid them by the Chancellor and I would ask hon. Members, and the public generally, to endeavour to make their task as light as possible because they are undergoing as heavy a strain as any Government Department can stand. My right hon. Friend and I are deeply grateful to them for the way they are tackling what is really a very heavy task.

The hon. Member also asked a question with regard to the Agreement on double taxation with the United States. We are anxious to extend Agreements of this character not only to other foreign countries but to our own Empire as well. We want to see such Agreements operating over as wide an area as possible. The hon. Member asked whether the double taxation Agreements mean that some people get out of paying their due quota or whether, he said, they mean that we shall pay some other country some additional taxation. I think the Agreement with the United States can be best illustrated by means of an example. If one of my hon. Friends had a business in the United States, on every £100 of profit derived from it there would be payable at present £40 in tax to the United States Treasury, and then, on the balance of £60 remitted to this country, 10s. in the £, or a further £30, would go to the British Exchequer; that is, £70 out of every £100 would go in tax in one country or the other. Under the Treaty the position will be this. The business will pay £40 to the United States Treasury and only £10 to the Exchequer in this country, making in all £50, which is the standard rate of tax in this country. The result is that a person does not get out of paying his fair share. It is simply that he ceases to pay more than his fair share. In regard to other kinds of profit slightly different arrangements operate. Suppose, for example, that the hon. Member for Ipswich (Mr. Stokes) had written a book which was a best-seller in the United States and derived £100 in literary royalties therefrom.

I was taking £100 by way of example. I know that the hon. Member sometimes gets his noughts wrong in dealing with larger figures. He would at present pay £30 tax in the United States and a further £35, being 10s. in the £, on the balance remitted to this country. Under the Treaty, he would pay no tax at all in the United States but he would make a contribution of £50 on his £100 profit to the Exchequer in this country. I hope those two examples will enable hon. Members to appreciate the effect of the Agreement.

The hon. Member for West Fife (Mr. Gallacher) attacked my right hon. Friend for using a phrase about vested interests in free spending and for saying that we had thrown good housekeeping to the winds. The hon. Member took those phrases as applying to our domestic economy. In point of fact they were drawn from parts of the speech which were concerned with expenditure by our military authorities overseas, mainly in Middle Eastern countries, and it was in respect of that class of expenditure that my right hon. Friend indicated that we must get back to the principles of good housekeeping and must not allow vested interests in free spending to grow up. I can, perhaps, offer some comfort to the hon. Member by pointing out that the greater part of his speech was misdirected.

The hon. and gallant Gentleman the Member for Ormskirk (Commander King-Hall) asked if we could not illustrate the admirable White Paper, "The Sources of War Finance," by means of diagrams and coloured pictures. We should be very happy to consider that suggestion. It is a most fascinating document. The hon. Member for Chesterfield (Mr. Benson) asked if we could not publish it a week earlier, and thereby enable hon. Members to make even better contributions than they do at present to the Budget Debates. I say again that we will consider the suggestion, but the intelligent reading of that White Paper might enable shrewd people to form some opinion as to what was going to be contained in the Budget. [ Interruption. ] It is true that they might have to be exceptionally shrewd people, but my hon. Friend knows that the rules regarding Budget secrecy are very strict and have to be very carefully enforced.

If I may say so, I thought that one of the best contributions to the Debate yesterday was that made by the hon. Member for Scarborough and Whitby (Mr. Spearman). What he said in regard to the apportionment of the national income between capital expenditure and Government expenditure interested the whole Committee. There was an article in the "Economist" in February which contained somewhat similar reflections. I think that what my hon. Friend wanted to get at was whether we could form any opinion as to what a typical post-war Budget would be like as far as the economic activities of the nation as a whole are concerned. My right hon. Friend indicated the difficulty which he experienced in estimating even for the coming year. Mr. Kaldor, whose figures my hon. Friend quoted, took 1948 as the post-war year for which he would attempt to forecast. I really think it is very difficult to take any year as likely to be a typical post-war year, because each of the years immediately following the war will, I consider, bear a very different budgetary aspect to that either of the preceding year or of the immediately following years. Our economic affairs will be passing through a period of very rapid change and transition for the first five years after the war, but I think that the conclusion to be drawn—the right conclusion—from my hon. Friend's observations is that there will be a choice before the country in the immediately ensuing years. The choice will be between restraint in expenditure in the immediate future, with a view to prosperity at a reasonably early date, and, on the other hand, a possible orgy of private spending which would bring in its train inflation and disaster—in which case the day of recovery would be indefinitely postponed. Hon. Members in all quarters of the Committee ought to be conscious that that kind of choice lies before us in the immediate future.

The right hon. Gentleman the Member for Wakefield, quoting, I think, from the White Paper on Employment Policy, referred to the fact that the maintenance of employment depends on maintaining total expenditure. That is a truism which, I believe, has now come to be very generally accepted. It is founded upon a good deal of economic research which has taken place into the events surrounding the early 1930's. I think, however, as my hon. Friend the Member for Kidderminster (Sir J. Wardlaw-Milne) pointed out, that we need to be a little careful in applying to 1945 the economic theory applicable to 1931. The immediate anxiety in the future will not be to find jobs for men; it will be to find men for jobs. We have, in fact, turned full circle since 1931. The economic conditions now are almost in every respect completely opposite to those operating at that time. If you apply to a man suffering from high blood pressure the remedies applicable to a man suffering from low blood pressure, the results may be disastrous, and of course the converse case equally holds true. I therefore hope that we shall not tend to apply too much the economic theory which would have been sound in 1931 to the position at the present time. Labour then was plentiful; to-day labour is short. Goods were plentiful then; to-day there is the greatest shortage of goods of every kind. Total expenditure at that time was undoubtedly too small; to-day there is no doubt that total expenditure is too high. We are a free people, and a free people demands to have a choice of whether it shall save or spend, but that choice carries with it a grave responsibility.

There has been a great deal of discussion in the House and in the country about the continuance of enonomic and other controls after the war. A great deal of that discussion, in my view, is academic. I think that, willy nilly, we shall have quite as much control in the first three or four years after the war as any of us would desire. It will, in fact, in the early post-war years, obviously be a question of priorities. Priorities will really determine policy in the post-war years.

Perhaps in our election struggle we shall be more concerned with ultimate objectives than with the immediate future.

The hon. Gentleman will be making his speech to-morrow, and perhaps he will deal with that point.

I want to say a few words about the Savings Movement, which will be as important in the early years of peace as it has been throughout the war. The hon. and gallant Member for Ormskirk talked about the bamboozling of the public by the propaganda put forward on behalf of the Savings Movement, and then, thinking that he might cause some offence, possibly, to the good ladies who have walked the streets collecting savings from the people, he spoke of the yeoman work of the women in the street groups. I must say that I noted that as one of the things that might have been more happily expressed.

I would draw the attention of the Committee to the figures which my right hon. Friend quoted. The total which the Government have spent since 1939 is £27,000,000,000. Forty-nine per cent. of that, throughout the five-and-a-half years of war, has come out of revenue. In the last year 53 per cent. of our expenditure came out of revenue. If hon. Members work out the figures for the Budget now before the Committee, they will find that the proportion of expenditure to be drawn from revenue works out at 58½ per cent. That still leaves a very large gap between revenue and expenditure of no less than £2,300,000,000. Unless that gap is closed, there is the danger of inflation. Therefore, savings on a high level will be necessary after the war to avoid the inflationary effects which would follow if an unduly large volume of purchasing power were applied to the limited volume of consumable goods which will be available. The volume of such goods will be limited because a large proportion of the physical resources of the country will for some time have to be devoted to these various objects: first to the needs of the war with Japan; second, to the reconversion of the capital equipment of industry to normal peace production; third, to overtaking arrears of maintenance; fourth, to the production of as large a volume of goods as possible for export; and fifth, the reconstruction of war-damaged areas and the building of schools and houses.

My hon. Friend can arrange his priorities as he pleases. There are these five separate objects to which money will have to be urgently devoted in the post-war period. So long as our national resources have to cope with such large capital demands as those that I have mentioned, the production of consumable goods and services must inevitably be limited. Unless people are still prepared to continue putting aside some part of their earnings, one of two things must happen. Either labour and materials and production capacity will have to be diverted to increasing the supplies of consumption goods, so that the schemes which I have mentioned will be delayed; or, alternatively, the scramble to buy while there is still a shortage of goods will mean rising prices and an inflationary boom. The result of such a boom will be not merely the social injustice and economic disturbance which inevitably accompany inflation, but also considerable difficulty later on in maintaining stability in the general price level and so avoiding the alternation of boom and depression which is so harmful to industrial and social prosperity. It is, therefore, perfectly clear that the continuance of what we have come to know as war savings will be of absolutely vital importance in peacetime. [ Interruption. ] I can assure my hon. Friend that what I have said needs saying, and that the continuance of savings is of very vital importance if we are to avoid profound economic disturbance. It would be a sad thing if at some time in the future my right hon. Friend came forward with proposals for reductions in taxation and subsequently, owing to the great growth of expenditure on consumption goods, had to restore taxation again to a higher level in order to check an inflationary boom.

Several of my hon. Friends have spoken of the necessity for tax relief, and this has, I think, been common to both sides of the Committee. I would agree that if we are to give free play to the industry and skill of our workers and to the enterprise and integrity of our business managements, it is essential before very long to achieve a reduction in taxation; but I think we are all agreed that to-day is not the time to give individual remissions. When remission can be made it should be of a comprehensive character, and it must be accompanied by, and may well prove to be conditional upon, the maintenance of personal savings at a high level.

In conclusion, I would only say this. We have an informed democracy. As my right hon. Friend said in his Budget speech, the public want objective and indisputable facts. In our White Paper and in the Budget Statement those facts can be obtained. I would remind the Committee, if I may, that so far as I am aware an election in this country has never been won by promises of jam today or even jam to-morrow. On more than one occasion the electors of this country have voted, where they were convinced that it was necessary, for sacrifice. The electors, in my view, will want the true facts of the position put before them by those who stand for Parliament at the next election. For my part, I can say that if the spirit of restraint, moderation and realism shown in these two days of the Debate is reflected when we submit ourselves and our programmes to the electors in a few months time, I shall look with some confidence to the future, whatever the result of the election may be.

Ordered: "That the Chairman do report Progress, and ask leave to sit again."—[ Mr. Pym. ]

Committee report Progress; to sit again To-morrow.

National Debt (Permanent Annual Charge)

Considered in Committee under Standing Order No. 69.

[Major MILNER in the Chair]

Resolved:

"That it is expedient to authorise—

Resolution to be reported To-morrow.

The remaining Orders were read, and postponed.

Ploughing Grants Regulations

9.8 p.m.

I beg to move,

I would remind the House that this is a matter of importance, because, in most cases, and certainly in this case, the Order is operating. In other words, it becomes part and parcel of the law of the land as much as any Statute, from the moment when it is signed and dated. That is why the House has always appreciated the importance of promptitude of publication. It must be promptly published, because although it is legally effective from the time it is signed and dated, it should be brought to the notice of those who are affected by it, and it is important that it should be promptly published in order that this House may be in a position to examine it at the earliest possible moment.

Furthermore, in this case, the Order is made under the Agricultural Development Act, 1939, a peace-time Measure, passed shortly before the outbreak of war. This, with amending Acts, made it possible for the Minister of Agriculture, by Order, to make grants for ploughing and to decide the times within which it had to be done, in order to qualify for the grants. That Act contained, in Section 37 (3), this provision:

The Ploughing Grants Order which we are considering was signed on behalf of the Ministry of Agriculture, the Scottish Office and the Home Office. It is in common form, which had been adopted in previous years. It was adopted by those three Ministries and was in the hands of the Ministry of Agriculture on 31st January of this year. There was therefore nothing whatsoever that remained to be done except to get it printed. It had been signed by the three Departments. It was not possible for it to be amended or corrected. It was the completed document which bore the three signatures and there was nothing to be done. It was in common form and embodied fewer than 700 words. It had to be printed and laid before this House. That was the position on 31st January. Let us follow its travels.

It languished on a tray in the Ministry of Agriculture until 3rd February in London. Then, on 3rd February, because the Ministry of Agriculture has branches in other parts of the country, it started its travels and went off to St. Anne's, Lancashire, where it went to the Subsidies Branch of the Ministry of Agriculture. Nothing that the Subsidies Branch could do to it could alter it. It did not go there marked "urgent" or "immediate." In fact, all that happened to it during its sojourn in the Subsidies Branch for a whole week was that somebody, we know not who, put a date on it, and picked the date "1st February." The placing of a date upon an Order of this kind is a most important function, but the date ought to be put on at the time when the last signature is put on. It languished in the Subsidies Branch at St. Anne's.

I am sure the hon. and learned Member is not drawing upon his imagination. Will he tell us whether this information is generally public?

I am trying to help the hon. and learned Member. Will he tell us how one can find out the course taken by these Orders?

For the time being, I hope the hon. Member will take it from me, and that the House will assume, that I would not be mentioning these dates if I had not good grounds for so doing.

From the 3rd to 10th February, this completed Order, waiting for printing, languished in the Subsidies Branch at St. Anne's. From there it was sent to another branch, the Stationery Section, also in St. Anne's, in order that some proofs might be taken of it. After two days there, at last it travelled to His Majesty's Stationery Office in London, the office which was going to print the document. With commendable promptitude that office sent it back to St. Anne's on 16th February. The Stationery Office had it, in fact, only one day in order to complete what they had to do to it. It went back again to the toils of the Ministry of Agriculture at St. Anne's.

After all the examination which had been made of this completed document it was suddenly discovered in St. Anne's that it had not got on it the seal of the Home Office, one of the Departments concerned, so four more days were consumed in getting the seal of the Home Office. Eventually, on 21st February, the proofs which the Stationery Office had sent with such promptitude were sent back to London to be printed. Having been printed in London, they were sent by the Stationery Office back to St. Anne's and St. Anne's sent them to the Ministry of Agriculture at Whitehall, where they arrived on 3rd March. Three days afterwards the document was duly laid before Parliament.

There we have a history of the turning of an elaborate machinery spending five weeks to do what I am informed on good authority could have been done and completely accomplished in five days. They tell me that the simplest culinary operation is the boiling of an egg. I remember years ago seeing a diagram drawn by Mr. Heath Robinson of a mechanical egg-boiler. It portrayed a series of pulleys, and levers, and wires and strings, by which the egg went from the cupboard and eventually, after going through devious routes and methods, watched by anxious men wearing spectacles, it eventually reached the egg-boiler. That is exactly the type of machinery which the Ministry of Agriculture employed in order to get this Order from its concluded signed draft form, into position upon the Table of this House. This matter was considered by the Select Committee, as it was its duty to do, and the Committee reported to this House its finding that there had been unjustifiable delay in the publication of the Report.

That might have been enough, but there are two other factors which made it necessary that this step should be taken to bring the matter to the attention of the House. The first is that apparently the Ministry of Agriculture does not regard this matter of the time spent as being important, on the ground that there was, in the event, no great urgency for the Order to be made, and, in any case, that by the delay no one was damnified. I put it to the House that it is not for any Ministry, any rule-making authority, to judge whether they should press on with the publication of an Order, or whether anyone is or is not likely to be damnified. The duty placed upon them, is the duty to bring it before the House "as soon as may be." In fact, the Select Committee, faced with this problem last Session, reported to the House, at the end of the Session, that it thought a specific time limit should be pressed, in order to avoid any Department seeking to exercise its discretion in this matter, from seeking to judge whether it ought or ought not to exercise any speed in carrying out the duty placed upon it.

The second reason is that the Ministry of Agriculture apparently still thinks that there was no unjustifiable delay. They regard this mass of departmental machinery, this labyrinth of red tape which I have described, almost with pride. They pat themselves on the back because they have gone through the laid-down motions so properly and so completely. They seem to revel in this useless machinery and this entangling red tape. Regulations we must have. Farmers in the agricultural community want them sensibly designed and intelligibly drafted, and I submit to this House that they are entitled to have them promptly published.

9.24 p.m.

I beg to second the Motion.

My hon. and learned Friend has explained fully to the House the reason why this Motion is being moved, and I need add only a very few words. As he has said, there is no objection at all to the substance of this Regulation. The reason why the attention of this House has been drawn to it in this way is entirely one of principle—the great importance of the observance of the law, which enjoins that this Regulation should be laid "as soon as may be" on the Table of the House, and the great importance, especially in time of emergency, that the customary procedure that has been adopted for years, and has been extended under wartime emergency conditions, should not be allowed to delay the operation of a business-like act, which in itself ought to take a very short time.

It is surely unanswerable that a document like this, which occupies only a single sheet of paper, should have had to go through all these peregrinations from office to office, Department to Department, and that at the end of some 17 days, only after all this examination which it presumably received, a mistake is discovered which involves a still further delay—the mistake of another great Department of State in not having sealed the original document. It is surely an example of the inefficiency of such a mechanical method. It is no help that there should be a Regulation that a document should lie upon some table for one or two days, and then be transferred to another Department and lie on some table there for another one or two days and then be transferred to another place, and lie on a table there, and then to another and lie on a table there, if in all this while, all the able men there have not been able to find, in looking at this single leaf, the flaw which some efficient civil servant eventually found, when the proof was received at St. Anne's.

I beg the Minister, when he comes to reply, to give us the assurance that he will do something to cut away the red tape, to encourage a great Department to organise its work in such a way that a decision may be reached promptly, and that a little document like this, which contains only an alteration of a word or two from something which has been issued a year before, should be dealt with promptly. If it is necessary to have a number of stages to check the progress of the document, then those in a responsible position in such stages should not be content to leave the document on their desks for a certain period, but should, at least, look at it, as one efficient civil servant who has dealt with this evidently did, when he had the proof in his hand. I hope that the bringing of the matter before the House may result in some diminution of red tape. We all honour our Civil Service. We are proud of it. It is a magnificent example of integrity and contains men of the highest ability and devotion, but it has had, in past years a besetting defect, a certain tendency to fall into a routine and do something just because it has always been done, to avoid making a sudden decision. I think that ought to go, above all in time of national emergency.

On a point of Order. Two hon. Members have recounted to the House the itinerary of a certain document, what happened to it and when and where. I understand that the information upon which they based their statements was gained through membership of a Select Committee, and that this information was rendered to that Committee and not to them individually. I understand further that the evidence of this Select Committee has not been published or communicated to the House. I put it to you, Sir, that this is a breach of the Privileges of this House; and, although I have no wish to be obstructive in any way, I submit that attention should be called to the fact that it is not permitted.

I came to the Chair during the hon. Member's speech, and did not quite follow the argument that had been pursued by the hon. Member. It is the Rule that if you quote from any document which is a paper that should be laid before the House, it must be laid before the House. Evidence from a Select Committee should not be quoted to the House unless that evidence has been put before the House; otherwise, the House is likely to be given a one-sided picture. What is quoted should be confined to what has been put by the Select Committee before this House in its Report.

9.31 p.m.

May I first apologise for the absence of the Minister, who is, unfortunately, confined to bed, and had almost lost his voice when I saw him this afternoon? He regrets very much not being permitted to be present to-day because he regarded the reply to this Prayer as being his very special responsibility. My hon. and learned Friend the Member for Carmarthen (Mr. Hughes) rather enjoyed himself. I make no complaint of that; I believe he was acting for the Committee of which he was a member, and I am sure he feels that he has performed a very useful public service. That also applies to my hon. Friend the Member for the Combined English Universities (Mr. Harvey). It is right and proper that Departments should be kept up to scratch, and it would appear, on the face of it, as though there had been unnecessary delay in issuing this Regulation. But I shall try to show that there was no unjustifiable delay.

Hon. Members will appreciate, and my hon. and learned Friend will perhaps appreciate more than most, that Parliament demands such an elaborate system of records and accounting that these things must go through various stages for accuracy. It is not merely a question of the production of a single sheet of paper, with very little print; it is a question of preserving such accuracy as Parliament always demands of each Government Department. How has this case arisen? Under Section 27 of the Agricultural Development Act, 1939, power was given to the Minister to make ploughing grants for the year 1939 and to make Regulations specifying the conditions under which grants can be paid. Under Section 37 of that Act the Regulations are to be laid before Parliament as soon as may be. By Section 11 of the Agriculture (Miscellaneous War Provisions) Act, 1940, the Minister was authorised by Order made with the consent of the Treasury, to make ploughing grants for each year during the period of the war. These Orders are not required to be laid before Parliament. The Order this year was made, as my hon. and learned Friend said, on 1st February. It might just as easily have been dated 10th February, and my hon. and learned Friend's period of five weeks would have been diminished to that extent. There was no particular virtue in a date. However, the Order was made on 1st February.

May I interrupt my right hon. Friend? The point which seems to stand out very much is that he says there is no virtue in a date. The date on which an Order is made, as I understand it, is, in law, the date on which the last signature necessary to validate the Order is appended to it, and that seems to be a very big point of controversy in this matter. It is a question of fact on which date did the last of the three Departments sign, and anybody can put on any date, other than that date, on what is, in effect, a legal document. Will my right hon. Friend consider that?

I can assure my hon. Friend that the statement I made was strictly correct, and that either 1st February or 10th February would have been equally applicable in this case. The Order was therefore made on 1st February. Regulations were laid on 6th March. I want to make this point, because I think it is relevant to this matter. Each year, a public announcement has been made, in the farming Press, the national Press and on the B.B.C., that ploughing grants are to be continued and specifying the conditions under which the grants are made. I hope my hon. Friends will take note of these dates to show the relevancy of March 1st or 4th or 14th. In 1940, on 16th March, an announcement was made through the agencies referred to that the grants were to be continued for another year and the conditions were referred to. In 1941 an announcement was made on 22nd March, in 1942 on 26th March, in 1943 on 24th March, in 1944 on 22nd March, and in 1945 the announcement was made on 20th March, because any date about this period is suitable for the purpose, and gives the persons to whom the Regulation applies ample notice that the ploughing grant is to be continued for a further year.

It is difficult to see, therefore, how any particular date for laying the Regulations could be of any material importance. I know that no hon. Member wishes to abolish the ploughing grant or to abolish the conditions under which the grant is made, but my hon. and learned Friend suggests that there has been unjustifiable delay in publishing these Regulations. I can only infer from that that they regard the laying of these Regulations as a matter of urgency. This has never been treated by the Department as a matter of urgency, and this is, I submit to the House, the whole point. If it had been regarded as a matter of urgency, it both could and would have been speeded up, and in many less days than five weeks the Regulations would have been laid upon the Table. If an Order is really urgent, special steps are taken to rush it through, and I could quote to the House several occasions where the matter has been regarded as particularly urgent and where other work has been set aside so that the Regulations could be made at an early date.

I have already explained that the date of making the Regulations is of no material importance, except to farmers, and, since the announcement was made to farmers through the usual channels all in good time, I do not quite see the point. Similar Regulations have been made on five different occasions already, and, on each occasion, a month or more has elapsed between the making of the Order and the laying of the Regulations. What has happened in 1945 is more or less identical with what happened in 1940, 1941, 1942, 1943 and 1944. If this House is really of the opinion that the Regulations, though of no urgency at all, have to take pride of place and other matters of Departmental urgency are to be set on one side, then, quite naturally, we should act accordingly. I am quite certain that the last thing my right hon. Friend would desire to do would be to run in conflict with the wishes of this House.

The Department has been working under very great pressure for many years, as every hon. Member would know. Staff, as my hon. and learned Friend has indicated, are dispersed not only all over London, but in the provinces. They occupy no less than 12 separate buildings and they have occupied many more in the past, and for filing, recording and accountancy it is unfortunate, but none the less necessary, that these documents should pass through the various stages.

Perhaps for the benefit of my hon. and learned Friend I ought to say to him that during the past five years the Department has been up against very grave difficulties, like many other Departments, through shortage of staff. In peace time when it was a very peaceful Department there were something like 1,682 members on the staff. They were all more or less housed together and it was easy to transmit from one room to another room documents of the description already mentioned. To-day the staff is 2,224 of which not less than from 55 to 60 per cent. are temporary, many of the permanent staff having joined one or other of the Services. New blocks of work arising from the war dealing with such things as machinery, fertilisers, rationing, labour supplies, cropping plans, lime, military service, propaganda, dig-for-victory, and so forth, had to be housed wherever accommodation could be found for them. I think that on the whole the staff have done a very great job of work and are entitled to the very highest commendation.

Nevertheless, I would say to my hon. Friend the Member for the Combined English Universities that my right hon. Friend is on this occasion and, indeed, at all times, very anxious to meet the wishes of the House. I hope that they will accept the explanation I have given as a very reasonable one in all the circumstances. We have no desire for unnecessary circumlocution or to deprive hon. Members of this House of the sight of a Regulation of an urgent nature as early as that Regulation can be produced, but in this case, as long as the hundreds of thousands of farmers who were alone involved received an early enough announcement, it was never felt that there was any need for urgency at all, and I hope that my hon. and learned Friend and the House, as a whole, will accept that as a very reasonable explanation.

9.43 p.m.

As my name is down to the Prayer with that of my hon. and learned Friend, and that of my hon. Friend the Member for the Combined English Universities (Mr. Harvey), and as it seems that we are likely to get into some hot water for having raised the point, I feel that it is only fair that I should stand up and say that, if we have been wrong, then I, too, plead guilty. I put a point to the Minister while he was speaking about the date, because I was not sure that I followed him, and he satisfied me on the point. I hope that I am not acting unfairly in following him, and I shall confine my remarks to what he himself said on the point about the date. I have not been very active in the law for a number of years; like many other people I have been engaged on other affairs, but it rather horrifies me as an out-of-date lawyer to hear that the date of a Regulation under which men's rights and properties are affected is a matter of no importance whatever except, said the Minister rather generally, with a wave of the hand, to farmers. I do not know that I have any farmers in my constituency, but, after all, there are a good many thousands of farmers up and down the country. They are a very large class of the community, and to say it is of no importance except to farmers really rather horrifies me.

I joined in this Prayer not because I wished to make a nuisance of myself—I dislike intensely being a party to bringing a Minister here, and I dislike intensely appearing to be obstructive or causing trouble to anybody, for I am one who tries to live peaceably with his neighbours—but because I think there is here a point of great substance. It may be that in this particular case no harm is done, but this power of proceeding by Statutory Rule and Order is a very high power. Our ancestors would have thought it a very high executive power indeed. This House, in order to control that power, set up a Committee. I was put on that Committee. It is not a very grateful task to serve on any Committee of this House, but we all have to take our turn, and when one serves on a Committee, one tries to do the job to the best of one's ability and according to such understanding as one may happen to possess. It seems to me that if we did not call attention to this matter it might well be thought by this Ministry or some other Ministry that this question of dates is a matter of no importance whatsoever, and we might find in other cases men deprived of their goods, or even deprived of their liberty, because, an Order having been made, some quite subordinate clerk then has the power to put a date upon it. Speaking with some memories of the law of this country, I should have thought that if under an Act of Parliament an Order shall be made by three Ministers, the date on which the last of those three Ministers appends his signature, or affixes his seal, is the date at which that Order comes into effect, and the act of printing or publishing it would not make the Order effective. Here, I think, is where the Ministry make the mistake. You merely print the Order, not to make it law—it is law when it is signed in manuscript or in its final proof—but to give notice of it to the general public and to those who are concerned. That is why I have joined in this Prayer, because it seemed to me that here, wrapped up in a small compass, is a very big point of substance, and if we do not do our job in watching these matters, it may well be that on some matter of greater importance we shall find that some Government Department has been guilty of perpetrating a gross injustice and we, the Members of the Committee and the Members of this House will have been guilty of gross dereliction of duty in not spotting it and bringing it to notice.

9.47 p.m.

May I say before my hon. and learned Friend withdraws his Prayer, as I hope he intends to do, that we make no complaint of the matter having been raised in the House? The only other thing I would like to say is this. My advice—and I can only take advice on these matters from those capable of giving it—is that the date can be any date the Department decides, and is not determined by the date of last signing. That, however, is no excuse for unnecessary delay where it is a matter of urgency.

9.48 p.m.

I hope neither you, Mr. Speaker, nor the House will think I am guilty of pettiness in returning to matters I raised just now on a point of Order. It seems to me that the last part of this Debate has been grossly irregular, and that the last part of the arguments adduced have, in fact, constituted a breach of Privilege. I think the attention of the House should be directed to that, and I suggest that the least the members of this Committee can do to put the matter right is to report to the House as soon as possible—not as soon as may be—the actual evidence upon which their speeches were based. I think it is a very serious thing indeed if privileged communications are made to this House by members of a Select Committee, and the substance of those privileged communications is reproduced to this House, in the course of a Debate regarding which the vast majority of the House is completely ignorant of the evidence. I do not think it is a small matter. I hope it will be put right as soon as possible.

Adjournment

Resolved: "That this House do now adjourn."—( Mr. Beechman. )

Adjourned accordingly at Ten Minutes to Ten o'clock.