I have listened to a great deal of the Debate of the last few days, and there are some peculiar features about it. The first is that while everybody has been saying what an enormous Budget this is in aggregate and what a large proportion has to be provided not by taxation but by loan, how very little interest has been shown in the Debate by the majority of Members of the Committee. I must say, on behalf of my hon. Friends who were associated with me in the so called financial crisis of 1931, that as my mind goes back to the night of 8th September of that year and the Debate in this House, with its tremendous excitement and great interest in the late Lord Snowden by the packed benches opposite, as to whether or not this country was going to disaster over £100,000,000 or so, I am extremely surprised at the small volume of interest which has been shown in the extraordinary Budget we have now to debate. Yet it is right to say that when on 2nd September of last year a decision had to be taken as to whether German aggression was to be allowed to take its next great step unopposed or whether it was to be resisted, our records show that the decision taken was not so much by the Government as by Parliament. It was the decision of Parliament. I do not think there is any case in our modern history where Parliament has been so near to complete unanimity as on that occasion before entering on war.
The reception of the Chancellor of the Exchequer's first war Budget for a complete year of war in prospect, has indicated that the degree of unanimity in Parliament for the objective which we have in this war is in no way reduced. It is just as well the world should understand that. I. may say a few very critical things, perhaps not unassociated with the kind of remark with which I opened my speech, but, behind it all, let the world understand that, while we value freedom of speech and the right to criticise, we are going to use what resources we can mobilise to reach our objective. A substantial part of the criticism of the Budget has been that, if anything, it is not sufficiently drastic to provide the maximum effort which should be made in the direction of bringing a speedy and complete achievement of our objective. The Chancellor of the Exchequer will hardly need to be assured that whatever criticisms I may utter to-night must be taken in conjunction with the general objective to which I have referred. Many sacrifices have been made by the taxpayer in the last 12 months, many references have been made to them in the Debate, and just tributes have been paid to the manner in which the taxpayer has responded, but let the Committee observe that there is no part of the sacrifices which the taxpayer has made in the last 12 months or of the increased sacrifices he must make in the next two or three years, that has not been faithfully prophesied from these benches year after year; and hon. Members opposite have taken no notice. I want to rub that in.
Year after year we have warned the House as a whole that if the Government and its weak-kneed supporters went on in the same old path of a stupid and weak foreign policy and sacrificed the benefits of collective security, certain things were bound to eventuate. They have eventuated. I remember standing at this Box and saying that unless they changed their policy, and changed it quickly, they would stand inevitably without the support of the nations in the League of Nations and would probably stand alone with France. We are not very far away from that position now. I pointed out to the House the kind of taxation sacrifices which would have to be met in those circumstances. We went into war with a debt of £650,000,000 in 1914, and to-day the debt is £8,000,000,000. Of course, in those circumstances sacrifices have to be faced. We are up against a major war, and the achievement of the objective which we all desire in the interests of liberty and freedom must tax the whole of our available resources.
We are, indeed, entitled to say from these facts that the Labour party's policy, financial and foreign, which was ridiculed and trampled upon year after year, has been proved by events to have been sound. The Chancellor of the Exchequer himself, in a speech which he made on 1st May last year, could find no argument to utter against the type of capital levy which the Labour party proposed immediately after the last war. I remember quoting to him on that occasion the various technically correct and firmly held views stated by the present Secretary of State for the Home Department when he, as Chairman of the Board of Inland Revenue at that time, was in the witness chair answering the Royal Commission on War Wealth, and how at that time he, as a civil servant, undoubtedly proved the rightness and soundness of the policy of a capital levy to deal with the debt left after the last war. On 1st May of last year the Chancellor said that there was a great deal that could have been said for it at that time. I mention this to-night simply to show that Labour's advice upon financial and foreign policy is not so unsound, after all. Events have proved it, and it will have to be recognised more and more if the resources of the country are to be properly organised and used.
I should like to give another illustration of that sort. When one hears talk about the sacrifices that are required not only from the direct taxpayer but from the indirect taxpayer at the present time, my mind goes back to that period in the Cabinet, in August, 1931, when the first proposals were being made for balancing the Budget, when the first Treasury draft, as far as it had been considered in a preliminary way, was sent for consideration to the other parties because they were in a majority in the House. I remember the messages which were sent back by the present Prime Minister, who was acting at that time for Lord Baldwin, then leader of the party, and Lord Samuel, acting for the Liberals. It was a great and heroic beginning to a balancing of the Budget, but not sufficient; it was imperative, they said, to demand further sacrifices from the unemployed of £100,000,000; there was great fear unless we should go off the Gold Standard. I mention these things because I think they need to be put on record before we can come to a sound assessment of the present policy. Having said this, let me add that, in these circumstances, and in the middle of a war which we are determined to carry to success, hon. Members opposite must not imagine that the great mass of the working class, especially the Labour voters, will forget 1931 or expect, after having been called upon now to make sacrifices, personal or financial, to win this war, to be treated in that way again. The loyalty with which they have responded to the national call in this war, in these circumstances, is an enormous tribute to the British working classes.
Having got that off my chest, let me recall to the Committee that last year, when the Budget was being discussed, I asked the Chancellor whether the proposals which he then submitted could be regarded as adequate, fair in their incidence, sound in their basis, or constructive for the future. I want to argue to night that, drastic though this Budget appears to be to many people, its pro- posals are not really adequate; at any rate, they hardly appear to me to be so from the ground covered in the Chancellor's very able and lucid speech. I recognise, of course, that with the mass of data which the right hon. Gentleman had to mobilise and put to the Committee, he could hardly have been expected at that stage to cover much more ground than he did. But the extent to which the Revenue can be obtained and expanded—and I regard this as essential—depends upon the economic direction by the Government of the utilisation of the whole of our productive resources. The difference between the Chancellor's standing in opening the Budget this year and in previous years is that at present we hold him as the responsible leader in the War Cabinet for the economic direction of the policy of the country. I rather missed, in the very able and lucid speech he delivered, any encouragement as to what is really happening in that larger economic field.
Of course, the extent to which the heavy borrowing, involved in the Budget now before us, is not to lead to a disastrous inflation must be governed, not only by the amount of genuine savings of the people lent to the Government, but also by the amount of increased production which can be set off against the increased borrowing. I have also held that if it were possible to adhere to a currency policy and a Budget policy in which you could remain tied to gold without any difficulty, that is a sound policy; but I have also held the view that there was nothing very miraculous about the tying of currency to a particular commodity like gold. What is really essential, however, is that in our national economy the amount of currency which you issue for spending in relation to your Treasury issues and total borrowing must, if it is to remain sound, be accompanied by an increase in production. It seems to me that we have not heard anything like what we might have expected from the Chancellor of the Exchequer with regard to the general economic position.
My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence), in what I think was an admirable speech yesterday, stressed the failure, for example, to harness in support of the task with which we are faced the masses of unemployed persons in this country, or to utilise to the full the reservoir of productivity which exists in the skill of retired persons and women not usually employed in peace-time in industry. In the light of that labour problem to which my right hon. Friend referred, I am bound to say that, in spite of the great task we obviously had to face before the war broke out in rearmament, it will be increasingly found that we must obviously face not only the question of materials, but also that of goods for export. I am not satisfied that there has been a sufficiently adequate survey of our productive establishments and of the controlled mobilisation of their resources in support of the national effort. In fact, not only am I assured by people who know, but I know myself, that at this moment we have idle men and women, and also idle mines and factories, large and small. I knew, for example, last autumn, when some men in the Army, ready for active service, were without overcoats, there were establishments capable of making them, which were not being given work. That kind of thing is still continuing, although I hope in a lesser degree than last year. It is that kind of thing which, as no doubt the Chancellor of the Exchequer will realise, makes Members attack the Treasury and say, not so much that the total expenditure in this Budget is not enough, as that in the general economic planning of the Government the Chancellor is not being pressed to put the full effort of the country into running this war.
In the face of such Budget proposals as we have before us a position like that is not justifiable. We are coming to a period of major war when the expenditure of material in the field must grow by leaps and bounds. We had a comparatively quiet period from September to March. Lots of people said what a great thing it was that the front was going to be widened and that instead of our sitting for long periods behind the safe fronts of the Magi not and Seigfried Lines, with only occasional raids, we were now to have fighting under conditions when we could make the enemy use up his stuff. Let us not forget, however, that we are using ours as well, and we must take into account other contingencies and be prepared for increases in output by the mobilisation of our resources. We recognise that in the last few weeks, all too late, the Government have been making efforts to mobilise our productive resources for the export trade. Generally speaking, I feel that a great deal remains to be done. I hope that in the course of his reply the Chancellor, as the Minister who, after all, is responsible for the War Cabinet to the House on the question of economic organisation, will be able to give us some further picture of the situation.
I would next ask whether the Chancellor's proposals for increasing the revenue are fair in their incidence. Let me say at once that, in my view, there are some features of his war-time plans for taxation which command respect and agreement. My use of those words may perhaps be qualified in the minds of some of my hon. Friends, but, looking at it from my own point of view, knowing what the difficulties are, I should say that, compared with the Budgets of 1914–16, the Chancellor's plans for direct taxation have on the whole been far more realistic than might have been expected from the Chancellor of a Conservative Government. Income Tax at 7s. 6d. in the £, and Surtax on incomes of the lower level of £1,500 are to be commended. It was refreshing yesterday to hear that delightful and humorous speech from the hon. Member for Hastings (Mr. Hely-Hutchinson), who showed us that he could look from a Conservative seat in the House almost with equanimity on the possibility that the present drastic rate of direct taxation would be largely increased during the war. When an hon. Member on those benches who is such an expert on financial and economic questions takes that line, I do not think the Chancellor cancriticise my hon. Friend the Member for Bishop Auckland (Mr. Dalton) too severely.
On the other hand, it must not be forgotten that the increases in indirect taxation which the Chancellor has levied over the last few months have already placed a sore and heavy burden on the poorer classes, especially those with fixed incomes and those in receipt of pensions, unemployment pay and public assistance. The Financial Secretary to the Treasury seemed to think that we have not those problems very much in mind in this Debate because there have not been many references to such taxes as those on beer and tobacco. Believe me, we always have that in mind. If hon. Members will do me the honour of looking at my remarks on 1st May last year, they will find that the first steep increases in the duties on tobacco, sugar and tea were the subject of very pointed references; and although in view of the special circumstances of to-day we recognise that the workers are prepared to do something in this matter, that does not mean to say that, after these heavy increases, you can with equanimity levy further indirect taxation upon the incomes which they have left. That is what the Financial Secretary must bear in mind, and we must look at all the other proposals in the Chancellor's Budget from that point of view.
My hon. Friend the Member for Bishop Auckland spoke, for example, of the postal charges. It is not merely the fact that there are to be increased charges for postage, which will fall heavily on the working class, but the fact that it is an additional impost upon them after the £46,000,000 taxation on tea and sugar, and the largely increased taxation on tobacco and beer. It is the cumulative effect of these increases, one by one, which must be taken into account. We have often had to remind the Committee that in the case of all these indirect taxes four-fifths of the money is paid by the working classes. The Chancellor, before he begins to talk about his Purchase Tax, is estimating to get this year £466,000,000in Customs and Excise Duties, as compared with a humble £245,000,000 which the Labour Government could get when it was charged with causing a financial crisis. That is £221,000,000 more from indirect taxation.