Orders of the Day — Finance Bill.

Part of the debate – in the House of Commons at on 19 May 1927.

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Photo of Mr John Wheatley Mr John Wheatley , Glasgow Shettleston

My hon. Friend asks, "Would we get them for nothing?" I have no doubt he would get them as cheaply as the cheapest labour in the world could produce them, and that if I invited him to give to the British workers the standard of wages that would enable them to maintain a decent standard of existence he would tell us that they could not have that decent standard of wages because the goods with which they were competing in the home market had been produced by labour employed at less than half the wages that they were seeking in Great Britain. I think it is all nonsense to think that you can have one standard of living here and another standard of living in that part of the world which is competing with you, while the incomes of the people here are necessarily decided by the selling prices in a free competitive market. As I have said, if I saw any serious attempt here to organise trade, I would have no difficulty at all, I think, in supporting the Government. But there is none. I think the whole Empire basis of organisation is fallacious. You have no economic Empire; you have only a political Empire. The people from whom we buy goods in the Colonies may be Germans, Belgians or Americans. There is no such thing as Colonial trade with Great Britain. There is a trade between people in the Colonies and people residing in Great Britain, but the trade is all individual for individual profit. It is not conducted by a colony for the benefit of a colony, or by Britain for the benefit of Britain. When you come to consider the Empire you get all sorts of conditions. If you want to get goods produced under decent conditions you will undoubtedly obtain them from Australia. If you want to keep up your standards here, you will give preferences to Australia on the ground that they are keeping up their standard there, and that you want to have something in the nature of reciprocity. But you will find the very cheapest labour in the world within the Empire. You will find the very worst working conditions in the world within the Empire. So that you are driven back to the fact that being in the Empire is no guarantee that it is going to help us raising our standards of living here, or raising the general standards of living in the world.

When you come to consider this question, if you are viewing it from the mere standard of raising conditions, all this idea that you can raise conditions by imposing tariffs or duties, or whatever term you like to use, is, I think, wrong. It is the old Free Trade argument. It is one of the few Free Trade arguments with which I agree. The imposing of a duty or a tariff designed to protect your trade at home does not do so, because the article is in before the duty is payable. If you want to protect your trade you want to keep your article out, and if you keep the article out it will not pay any duty, and it will not pay any tariff. The only way to keep it out is, having ascertained your national or trade requirements, to proceed by a system of licensing to prohibit the importation of the undesirable goods or the goods likely to interfere with your conditions at home. When you turn from what we might term the foreign trade aspect of this Bill to the home trade aspect of it, you find exactly the same thing. The object of your Bill, in so far as it is not a revenue collecting Bill but helpful to industry, should be to relieve industry at home. Everyone admits that under the present competitive system your industry requires considerable relief at the present moment, in order to enable the country to attain even to the pre-War standard of prosperity. If you proceed on the assumption that you are helping industry when you cut down the Income Tax, may I remind the House and the Financial Secretary that people were more prosperous here when the Income Tax was high and when wages were higher than they are to-day? Industry was doing better when the Income Tax was at 6s. in the £ than it is with the Income Tax at 4s. in the £.

The whole idea of relieving Income Tax emanated from conditions that have now disappeared. In the earlier years of the development of this country trade suffered from a shortage of capital, and there grew up in those conditions the idea that if the people who were to provide the capital, or who were to own and control the capital, were given more of it, they would invest more deeply or seriously, and that industry would benefit and that trade would prosper. I believe that there might have been some slight foundation for that half a century ago, but there is no foundation at all for it in Britain to-day. There is no industry to-day that is depressed because there is a shortage of capital in the country. Every industry in this country is depressed because there is a shortage of markets for the goods produced or the goods that might be produced in that industry. The trouble of manufacturers or merchants, to-day is not to find capital for the goods that they can sell, but to find a market for the goods that they cannot sell. Therefore, the national effort to-day should be directed, not to providing more capital for that section of the com- munity who have already more than they can employ, but to finding a market, an outlet for the goods that our factories could produce if they were allowed to run freely, were allowed to employ all our people and were allowed to devote all their brains and energy to more production.

To-day, we want to relieve industry. Our industries are burdened, and we want to find markets. Our industries are burdened largely by local rates. Local rates do much more injury to industry than would a high Income Tax. The Income Tax, like a tarff, is not imposed until the goods are delivered; that is to say, you have made your income before you pay your Income Tax; but you have to pay your local rates before you are allowed to make your income. I have no doubt that a careful analysis of the industrial situation would show that in the depressed industries, in our heavy industries, the burden of local rates goes a long way to handicap them in the competitive markets. The object of the Government should be to reduce these burdens on the localities, with a view to relieving industry, and that could be done by reducing the local rates; but the whole policy of the Government is in the other direction. They are more and more throwing burdens upon the localities. That would be excusable if there was no other way of finding the money, but when we have this surplus national income to draw upon, there is no justification for continuing to increase the burdens that are already handicapping locally the struggling industries of the country.

If we want to help our industries in getting markets, we must not proceed on the assumption that we should, as far as possible, reduce the Income Tax. We should render assistance to the people who to-day have unsatisfied wants. We have an industrial population, I suppose running into two-thirds of the whole, who would consume more goods to-day if they had the power to purchase those goods; but we have a national situation in which those people cannot buy the goods, and our industries cannot find a market because the people cannot buy the goods. It all comes back to that. It is the purchasing power of the people at home that is the governing factor in trade. No nation will continue to produce more goods than it can sell, and no nation will continue to import more goods than it can sell. Our foreign trade is not the consumption of goods but merely the exchange of goods. It is the purchasing power of our people at home, no matter how long you analyse it, that is the determining factor in the trade of the country. We find that two-thirds of the people could buy more goods if they had the purchasing power. I cannot see how you are gaining by not giving them the purchasing power. We have a million unemployed people standing idle, who have to be fed, whether you like it or not, for doing nothing. Would it not be much better so to frame your national policy that the product of the labour of those million people would be available for the nation in raising the general standard of living of the toiling masses?

In so far as a Finance Bill can contribute to that policy, it should do so. If you wish to contribute to that policy, you should not go along the lines of this Finance Bill. I do not think taxation should begin until we have had our breakfast. I do not think that you should tax a man in a country like this, with all its surplus wealth, until after breakfast. You ought to abolish all the taxation which is now imposed on the daily lives of the working classes. I think from the capitalist point of view there would be great advantage and from the point of view of the people who have to depend upon industry in this country, apart from a small group of financiers, it would be sound national policy to abolish the taxation now imposed on the daily lives of the working classes. Instead of putting taxes on tea, sugar, and the piffling and pilfering things that are done in the Finance Bill, you ought to relieve these people from the burdens of taxation altogether. To that extent you would increase their purchasing power, and to the extent to which you increase their purchasing power, you will provide an outlet for the goods which we can produce in ever-increasing quantities.

I take a very serious view of the present situation, I can see the whole outlet for British goods being closed up. During the nineteenth century we had a great outlet for our goods in the development of the country itself, in putting down railways, in constructing docks, in sinking mines, and in the general development of the nation, but in the twentieth century we have no outlet for goods in that direction. The door is closed, bolted and barred against us. We have now to find an outlet for our goods somewhere else, and the only way in which we can get that outlet is by a general raising of the standard of life of the working classes of this country. That ought to be the first object of any Government, and that is why I cannot agree with those who think that everything in regard to the standard of prices and wages should be fixed by free competition. We want national organisation. The Government is grappling for Empire organisation, but they are going the wrong way about it. Instead of making their basis the standard of living of the majority of the people, they are making their basis a geographical one. I think they are on entirely wrong lines.

I am opposed to this Finance Bill because it does nothing at all to relieve the very serious difficulties that confront British industry to-day. Those difficulties arise entirely from an insufficient outlet for our goods. They do not arise from any difficulty in producing all that we need, or in importing in exchange all that we require. We can only get that greater market by organising the purchasing power of our own people, and controlling prices in such a way as will provide that any advantage granted to them in wages is not taken away by profiteering in the way of high prices. If the Government in this Finance Bill gave us a glimmer of hope that we might expect them, in view of the difficulties of British industry, to do something in the way of the national organisation of industry and trade, I could sympathise with their proposals, but, as things are, they give no indication that they have the slightest appreciation of the troubles, difficulties and obstacles that confront the nation, and therefore I and my party will oppose this Finance Bill.