Amendment of Law.

Part of Orders of the Day — Ways and Means. – in the House of Commons on 22nd April 1936.

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Photo of Mr Stuart Russell Mr Stuart Russell , Darwen

I should like to ask the Committee to extend to me that indulgence which is always shown by hon. and right hon. Members to a Member who rises to address the House for the first time. Yesterday I listened with very great interest to the speech of the Chancellor of the Exchequer, and I am certain that hon. Members share with him the very great disappointment which has been occasioned on account of the sums required for the rearmament programme of this country, which have so rudely and so swiftly shattered the hope which the Chancellor entertained of giving a substantial remission of the heavy burden which has for so long been imposed upon the taxpayers of this country. The alteration of the equilibrium has been practically entirely due to the money which has to be found for the defence programme. That programme, some of us feel, was postponed too long. The sums required for it should have been more evenly distributed over recent years. Be that as it may, the money has now to be found.

I wish to dwell for a few minutes on the position primarily of the direct taxpayers, and also of the indirect taxpayers of this country, but, before doing so, I think I should make it abundantly clear that, unfortunately, I am myself a man of very slender means—I am a very bad friend, I fear, to the Chancellor of the Exchequer. I must also make it perfectly clear that I sit for no safe seat in the south of England, but, on the contrary, I have the honour and privilege of representing in this House a great industrial constituency of the north. There is no direct taxpayer in this country, in my belief, who would not, and, indeed, has not, shown his willingness to bear all the burdens that are necessary in order to finance proper and legitimate expenditure by the State. Indeed, I think that the story of the last four or five years in this country has shown with what endurance and loyalty the direct taxpayer has borne a burden of taxation which has become almost predatory in its character. But it is not with the apportionment of various forms of taxation, or with the burden of taxation, however heavy, however onerous, however grievous that burden may be, that I am primarily concerned; it is with the economic aspect, which, in my humble submission, is the one aspect that we have to study, and to study with extreme care.

Employment in this country depends on industry, and the development of industry depends both on the ability and on the willingness of individuals in this country to take risks—to put their money into various concerns, faced, as they may be, with a very grave risk of failure. If either that ability to invest money or that willingness to invest money is absent, there is bound, in my opinion, to be a slowing down of the whole economic machine, immediately stopping that very expansion of industry on which alone the employment of the people of this country depends. Since the War, the taxpayers of this country have been subjected to an enormous burden. Since the War vast sums of money have been spent by the State, money which otherwise would have been invested in productive enterprise. It is not only that matter on which I desire to dwell; there is something which, to my mind, is even more important—the fact that that high level of taxation has given rise to a certain mistrust, a certain apprehension, a certain feeling of insecurity on the part of capitalists in this country. In short, it has created an adverse psychological effect, the results of which, I venture to submit to the Committee, are sometimes very gravely underrated.

As I have said, I speak on behalf of a great industrial constituency in Lancashire. What a spectacle that town presents to-day—what a picture of misery, of despondency, of desolation and despair. I have always, when I have been in my division, maintained that the fortunes of that particular town can never be rebuilt on the cotton industry; I have always taken the view that the coming of new industries into that area is the only means by which we shall be able to break down that hard and persistent unemployment which is characteristic today of so many large towns in the industrial North. We talk about new industries, but what incentive is there for people to go and start new industries in any of these hard-hit and depressed areas? In my submission there is no incentive at all to do so. The position, as I see it, is simply this: A man who goes in and invests his money there has to take all these risks, and, if he loses it spells ruin, while on the other hand, if he makes a success of his industry, there is very little material reward left for him, for expropriation by direct taxation very swiftly falls.

In this country to-day, in my humble judgment, no person is doing more good for his country than that very man who is prepared to go forward and take risks in order to build up some new firm, to explore some new invention, and to give employment to his fellow people. The result of all this predatory taxation is that enterprise is killed and all initiative is atrophied and numbed, with the result that we see to-day this hideous spectacle of people willing and anxious to get work and yet unable to obtain it. Then, in the last stage, we see the irony of the whole position, when the State itself, having created the very conditions under which private enterprise cannot work successfully, is then compelled to come in with special schemes of its own—financed again out of the taxpayers' money—in order to rectify such a terrible and tragic position. I do not believe that the great problem of unemployment in this country will ever be successfully solved, I do not believe that, with a few exceptions, real prosperity will ever come to these great towns in the North of England, until the British entrepreneur is allowed what, after all, is only the very primitive and elementary right of reaping where he has so precariously and hazardously sown.

We are now faced with increasing demands by the Exchequer. I think I should make it perfectly clear that, unlike the two right hon. Gentlemen who have spoken before me, I most resolutely, and, indeed, most ardently, support the Government in their rearmament programme. We have to pay a very heavy insurance premium, but it is a premium which has got to be paid, and which we cannot possibly neglect. But I feel that there are fields in which the national expenditure could be very drastically cut down. I feel that the disbursements which are made by the State to-day in certain directions have grown to a figure which is truly fearful in its magnitude. I do not wish to use extravagant language; that is the very last thing I would wish to do; but I think that some of those disbursements are profligate in their character. Bearing these matters in mind, bearing in mind the fact that this expenditure on rearmament has to be met, but also bearing in mind the very grave injury that is done to the trade and industry of this country by direct taxation, I would make two very humble suggestions to the Chancellor of the Exchequer. Neither of these suggestions, I fear, will be popular either in this House or, certainly, in my constituency, but I am not going to be put off from making them by that. The first is that the Chancellor should consider once again setting up a committee on the lines of, and with similar terms of reference to those of, the May Committee, to investigate ways by which expenditure, except for the purposes of the rearmament and defence programme, might be cut down; and the second, on which I know I shall meet with very great opposition from Members of this House and also from people in my own division, is that the Chancellor should consider the advisability of broadening the basis of direct taxation in this country.

There were at the last election some 31,000,000 electors, and, according to the latest figures that I have been able to obtain—and here I am open to correction—there are approximately 3,000,000 direct taxpayers. I must say in all sincerity that these figures appear to me to be exceedingly unbalanced, and, anyhow, I see in this position the very gravest danger, which, indeed, has already manifested itself, of certain sections of the electorate in this country voting to themselves, either consciously or subconsciously, benefits and amenities at the expense of other sections. It is perfectly true that there must be control of finance somewhere. Since the passing of the Parliament Act, which took away the right of veto from the House of Lords, there has been no control over finance except that which has been exercised by the House of Commons itself, and I think many hon. Members will agree with me when I say that it has been very hard sometimes to exercise that control. To lower the basis of direct taxation would surely give a far greater stability to our democratic system; and to draw within the ranks of the direct taxpayers many millions who do not at present pay would surely strengthen the foundations of our financial and taxing system. I know it may be argued that the poorer people would find it too heavy and onerous a burden, but in order to counterbalance that burden I would rather remit a corresponding amount of indirect taxation, so as to secure the principle of every man as far as possible having to pay a certain amount in direct taxation to the State, and thus bring into clearer relief the correlation between cause and effect.

I quite understand that both these proposals will be very unpopular in many quarters, but, after all, we are living under a great democratic system, which is the greatest, the finest and the noblest system of Government. There is not a Member of the House who would not fight to preserve that system. In many countries of Europe since the War it has been swept away, and I submit to this Committee very humbly and respectfully, but at the same time with the most profound conviction, that unless in the future there is some greater control over finance, unless there is some revision of the basis of our direct taxation, we shall, owing to the increased demands that are going to be made upon the Exchequer, find ourselves again going down that slippery slope. We have already been through one financial crisis, and have just pulled through; we might not pull through a second. I believe, unless something is done in that direction, it is not impossible that even in this country we might yet see democracy shipwrecked upon the hard rock of finance, and my great fear of the financial dangers that I see ahead must be my only excuse for speaking as I have done.