Orders of the Day — Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 21 April 1955.

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Photo of Mr Michael Maitland Stewart Mr Michael Maitland Stewart , Fulham East 12:00, 21 April 1955

The hon. Member for Scotstoun (Mr. J. R. H. Hutchison), coming to the rescue of the Chancellor by quoting from "The Times," said it was not a solid supporter of the Conservative Party. Experience shows, however, that whatever deviation "The Times," in the interests of truth, may be guilty of when an Election is far away, it can always be relied upon to come down solidly behind the Conservative Party line when an Election is close at hand. Therefore, we cannot feel that the hon. Gentleman has quoted an impartial witness.

No doubt "The Times" takes the view that any concessions through indirect taxation would have been unadvisable, but I am sure it takes the view, which has by implication been put forward by several speakers from the benches opposite, that if in the process of tax concessions we give away money to poor people, that is inflationary, but that if in the process of tax concessions we give away money to rich people, that is an incentive.

That, broadly, is the argument which hon. Members opposite have been trying to put before us, and, indeed, if they are going to attempt to defend this Budget, that is the line of argument they must follow. Among all the welter of figures in this debate there are, I think, certain results and certain facts which cannot be denied, among which are that this Budget gives nothing at all to the poorer sections of the population who are not now paying Income Tax at all, despite the fact that some of those sections of the population have been severely hit by the continuing rise in the cost of living and by the increase in social insurance contributions. The Budget does not even give anything to the old-age pensioners.

The family man of moderate means, for whom, it is claimed, this Budget is specially devised, gets remarkably little, scarcely anything more than has already been taken from him by the rise in the cost of living or in social insurance contributions. That is the more regrettable as equal pay is now approaching. I welcome the approach of equal pay, but I believe that with the approach of equal pay the Government should have paid particular attention to the problems of the people, whether they are married couples or widowed persons, who have family responsibilities. A considerable range of those people with moderate incomes will get very little, if anything, from this Budget.

As one moves to the higher ranges of income the amount of advantage given by this Budget gets bigger and bigger. As was pointed out very forcibly by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), if one's income arises not from work but from the ownership of property, the advantage one gets out of this Budget is greater still. In effect, therefore, this Budget tends to widen the gap between the richest and the poorest in the community, and tends to add to the advantage which those who get their incomes without working get over those who obtain their incomes from any kind of work, whether by hand or by brain.

We are told that this kind of thing is necessary in order to give incentives. We were told that when we had the same kind of Budget in 1952, the first Budget of this Government. Then also there was generosity to the people with large unearned incomes, and the line of argument then was that by giving these gifts to the comparatively wealthy we should provide such an incentive to production that in time we should all be better off. What has in fact happened? There has been much throwing to and fro of figures, but these results will not be denied. As a result of the incentive policy which was put forward in the first Budget of this Government, we have had an increase of production. The most that can be claimed for it is that the best figure, which is now reached, is somewhat below the average increase during the years of the Labour Government.

The hon. Gentleman the Member for Scotstoun admitted those figures, but advanced this argument in reply. He said it was easy, of course, if one started from nothing, as he put it, to have a rapid increase of production. He implied that it was easy, during the years of the Labour Government, to obtain an increase of production.

However, when one comes into office at the end of a war one finds that plant and machinery are very gravely out of date because there has been no replacement of them during the war years, and that a considerable section of the labour force consists either of men whose skill has been unused and become somewhat rusty because they were in the Armed Forces for years, or of young men who, owing to the impact of the war, have very little experience of industrial work. One has, in those circumstances, to do the job of production with instruments, human and material, some of which are out of date and some of which are untried.

That was the situation which we faced when we became the Government immediately after the war, and it was in those circumstances that the Labour Government built up production at a faster rate of increase than has ever been achieved since. So the record of production does not suggest that the incentive policy advocated as an excuse for the 1952 Budget, and advocated again now, has really justified itself.

As to investment, it is not in dispute that the rate of investment, the proportion of the national resources devoted to the needs of the future, is not as satisfactory now as it was during the years of the Labour Government.

If we look at the problem of the balance of payments, there is one figure which the hon. Member for Scotstoun was very careful not to mention, and that is the figure of the gold reserves at the time when the Government took office and the figure at the present time. When all is said and done, no amount of argument can alter the fact that the figure is now about 600 million dollars less than it was when the Government took over.