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The Chancellor's Budget having been opened, it is usually the pleasant practice of this Committee to enter into a rather general discussion and make certain observations upon it before we get to grips with the proposals in detail. This year the right hon. Gentleman has broken the record. He broke a record with his last Budget, and he has broken it again this year. He has presented a Budget relating to the largest expenditure in the history of the nation and imposing taxation reaching the highest peak that has yet been achieved. The right hon. Gentleman explained his proposals and generally carried through his task in such a disarming manner that it was, at times, difficult to realise the magnitude of the figures with which he was dealing. He is Chancellor of the Exchequer at a time when bold measures are needed, and the present Budget will not be criticised on the ground of timidity as other Budgets have been in the past. The right hon. Gentleman has included in it many novel features which will make our Debates this year of a great deal more than usual interest.
As far as the actual figures of expenditure are concerned, the higher they are the more the nation will welcome them, because they mean equipment for carrying on the war. When we have the same equipment as the Germans, so that we can meet them on equal terms, as man to man—on that day the end of the war will be in sight. Undoubtedly, the largest features of the Budget, and in a way the most novel, are those contained in the new scheme of Income Tax which the right hon. Gentleman explained. We shall discuss that scheme in detail and give our views upon it later, but at this stage one may say that the whole world can now see that we in this country, down to those with very small incomes indeed, are making great sacrifices, and that we are willing to bear, not only the physical burden of the war, but its full economic consequences.
The other specific large-scale tax in which the right hon. Gentleman is making changes is the Excess Profits Tax. That, again, we shall have to deal with in detail later, but I think that he has been wise in not making an immediate diminution in its scale because it is a tax involving many psychological as well as purely physical considerations. We think it is a good tax, and indeed an inevitable tax, but everyone will agree that it ought to be fair as between one company and another, and that it ought to be levied, not on any surplus which arises but on real excess profits, because many surpluses which arise in ordinary financial transactions are necessary for the extra depreciation due to war circumstances, and for reserves of liquid capital which will be needed when we change over from war to peace. Those who use their surpluses for that purpose ought not to be taxed on the same level as others.
The Chancellor made a Budget Speech of a kind which has not been made before, because he dealt with the very intricate subject of inflation, and he made inflation the central problem of his Budget. Indeed, he based the whole of his taxation proposals, not upon the usual considerations but upon the necessity for avoiding inflation. I would, therefore, say something about the Budget from that point of view. I remember when the war began being greatly impressed by the predictions of many financial pundits that we were embarking upon a period of inflation which would get beyond control. Those predictions have all been unfulfilled. One of the reasons why there has been an excessive fear of inflation has been touched on by the Chancellor, namely, the great variety of interpretations of the term "inflation." I have felt for some time that there was no evidence that inflation of a dangerous character was reaching a high level. I agree with the Chancellor that it is not inflation merely because prices rise. If the rise is due to increased freights, increased insurance chargers or increased raw materials, that is a natural phenomenon of an inevitable economic character. There is not inflation merely because there is an increase in the amount of money in circulation, provided that the increase is due to the needs of increased trade. In my view, you reach inflation only in so far as money is deliberately manufactured and newly created for the purposes of meeting a Budget deficit. That is my definition of inflation and, according to that definition, such figures as I have been able to investigate led me to the conclusion, before the Chancellor spoke, that the amount had not been dangerously large.
I will put the figures in the ordinary way to which we are accustomed in these Budget estimates, and give my adherence to the view that we have not yet reached any dangerous degree of inflation, in the sense of the creation of credit merely for the purpose of financing the Budget. It is in that area that the predisposing causes of inflation will be found. Calculations show that the gap last year between expenditure and revenue was £2,500,000,000. War savings, taking individuals, companies, etc., amounted to about £1,300,000,000. The sale of American securities, according to Mr. Morgenthau's statement not long ago, came to a good deal over £500,000,000. That gives a figure of £1,800,000,000 towards the gap of £2,500,000,000. That is not inflation. There were various other non-inflationary items mentioned by the Chancellor for which he gave no figure, such as the Dominion balances, the surpluses in the insurance funds, etc., and all these undoubtedly come to something not far short of £400,000,000. If you add all that, you get, from non-inflationary sources, a sum of at least £2,200,000,000 towards a gap which was only £2,500,000,000. I know that the Treasury will not commit itself to estimate within one or two hundred millions, but that left a sum of only £300,000,000, which is certainly very small, when you consider the immensity of the figures with which the Chancellor has been dealing. When I made these calculations for myself I was therefore not surprised to find that the amount of inflation in the real sense of the term has not been in any way excessive.
The Chancellor went on to discuss next year, in regard to which, of course, the figures are more problematical still. Looking at the figures for next year, I can see that one non-inflationary source will probably be far smaller. Our American securities, I presume, are becoming exhausted and we shall not be able to draw as much from them as in the past. I am, however, inclined to agree with the Chancellor that in spite of the increase in Income Tax, the immense extra expenditure of the Government in the forthcoming year will mean an extra income in the hands of the community at large, which will leave an extra margin for responding to the appeal of the National Savings Committee. I, therefore, anticipate that next year there will be larger voluntary savings towards covering the gap between expenditure and revenue. Further, there is the immeasurable fact that in the next year our imports from the United States will not have to be paid for immediately. The figures I have read indicate that these alone have lately been at the rate of as much as £800,000,000 a year. They will be more next year, and if we take this enormous saving into account, I do not see any reason why inflation should pass out of our control.
There was one feature of the Chancellor's speech to which I gave some attention, because the possibility of limiting inflation will depend upon the determination with which he carries out what he has proposed. In a Budget like this I am willing to regard a certain amount of inflation as almost inevitable, and certainly a small degree of inflation would not alarm me, provided it was kept under control by most determined rationing and price control and by subsidising the necessities of life for the poorer sections of the community. With those controls I think the problem can be reduced to manageable proportions.
One remark of the Chancellor's leads me to make some observations on a subject which has been a good deal in my mind in connection with our future Budget problems. He spoke of the aggravation of our post-war financial problem on account of the burden of the Debt. I think we could usefully devote part of our Budget discussions to some kind of preliminiary consideration of what is likely to be our Debt position after the war, because that is the precursor of all reconstruction. The war began with a National Debt of £7,000,000,000. I imagine that should the war last three years, it is a fairly safe estimate that the Debt will be increased each year by an average of £3,000,000,000. That will create a total Debt of £16,000,000,000. But—and this is the fact to which I wish to draw attention—I do not think that that will be the end of the creation of National Debt in this country. When the war is over, unless we are to be faced with the most frightful unemployment, we shall have to finance, by loans comparable to those we are raising during this war, great schemes of rebuilding and reconstruction, in order to make the transition from war to peace.
I would say that we must look forward for three years after the war to raising £2,000,000,000 to £3,000,000,000 a year, unless we are to be left with the kind of situation which will face us if we do not solve, this time, the problem of the transition from one stage to the other. If we add that sum to the National Debt created during the war, there will be a National Debt of certainly over £20,000,000,000. At 3 per cent. interest, that will mean £600,000,000 a year, as a first charge on the Budget. With that first charge, I do not think it possible to devise any Budget which will, not merely meet the expectations of the men in the Armed Forces, but will maintain even the elementary apparatus of our civilised life. That is the key to the post-war problem. There would appear to be no road out, except some form of capital levy, by agreement. Any scheme of reconstruction will, I hope, include an agreed capital levy. Let us face the fact that it will have to be a capital levy of a very high level. The most careful calculations that I have seen of what is likely to be the national capital after thewar—by authorities whose views, I see, the Chancellor has taken into consideration in framing this Budget—put the figure at about £25,000,000,000. If you have a national capital of that amount, and a National Debt of certainly over £20,000,000,000, it is clear that if you are to wipe out any large proportion of the National Debt, you must have a capital levy amounting to, on an average, between half and two-thirds of the capital of the average individual.
I am just finishing. I have merely given those figures because there is a Minister appointed to deal with post-war reconstruction and the House has begun a series of discussions on postwar reconstruction. I think that in our Budget Debates we ought to discuss this problem, because it is the key to postwar reconstruction, and unless a solution is found to the problem of the National Debt, it appears to me that all these schemes of reconstruction will be in danger of ending in smoke and disillusion.
I would like to take this early opportunity of congratulating my right hon. Friend upon carrying through the very difficult ordeal of addressing the Committee for over two hours. Such a physical effort tests the powers of most Members of this House, and I think that he managed to carry through with it without even the modest glass of wafer. There was no embroidery or attempt at oratory. He took the Committee into his confidence and made us a plain, common sense, business statement. It is not an easy or an attractive task for a Chancellor of the Exchequer in war-time. He can offer no hope of lightening the burden of the taxpayer£the hope which is always in the breasts of the public in normal times. He can only give a gloomy foreboding of having to add new and fresh taxes. I think that my right hon. Friend showed courage in following a simple and straightforward method in raising the necessary money.
An Income Tax of 10s. in the £is a symbol of our determination to see this war through. It will also give great confidence to our friends in the United States of America—the confidence that we ourselves are ready and willing to bear this very heavy burden. It is the best reply possible that we can make to the sneer of the dictators that we are a mere plutocracy. One of the interesting statements that my right hon. Friend had to make was that where he is going to bring into the privilege of paying Income Tax 2,000,000 extra of our citizens. I do not think there will be much protest, because the nation is determined to see this war through to the bitter end. We as a free Parliament are going freely to vote this tremendous burden, and whether it be the Super-tax payer or the new taxpayer, I am satisfied that there will be no serious opposition to the Budget of 1941. Last year's expenditure was a record one, nearly £4,000,000,000. It was enough to make the orthodox economist rise in his grave, and I wonder what Mr. Gladstone would have said. If such a figure had been estimated a few years ago it would perhaps have been thought impossible. Now we are asked to find, as I understand it, £4,200,000,000 in the coming year. I have seen during the last few days many estimates of what is called our national income. They varied somewhere between £6,000,000,000 and £9,000,000,000. I will take it at only £7,000,000,000. This means that over four-sevenths of our national income is to go directly to the State to be spent by Government Departments for national needs. That is a very large burden. If it had not been for the Lease and Lend Bill, money would have had to have been found on a very much larger scale. Having disposed of our gold and dollar securities, we were nearly down to the knuckle bone, but, as I have said, the fact that we are prepared to put on the shoulders of the public this very heavy burden of taxation will show the United States of America that we are not prepared to take advantage of their generosity.
These are colossal figures, and in these days we have to think not only of £s. d. but more in terms of labour and material and productive effort. Much depends during the next 12 months, if we are to weather the storm and carry this burden, on the efforts of the Minister of Labour and his kindred Departments. It is vital that the productive effort of the nation should be increased, and that there should be an addition to its producing power. High taxation is a very effective weapon in decreasing consumption, and in so far as that taxation will achieve that end it will be directly helping our war effort. We must divert the consumption of goods for our own use to purposes connected with the war, but—and I am sure the right hon. Gentleman would be the first to admit it—taxation is not always a fair weapon. It is very difficult, even with all our complicated machinery of family allowances, to distribute that burden fairly. I have become a convert—I might almost say a reluctant convert—of family allowances in wages, but I realise that during the war, when there is so much variety of scales and conditions of work, it would be almost impossible to introduce this system. But by endeavouring to regulate prices the right hon. Gentle- man has made an effort to help those with large families.
I assume—and I gathered from my right hon. Friend's remarks—that along with fixation of prices of commodities there will be a genuine attempt to stabilise wages. If wages are to go up in some privileged industry, all this effort of fixing prices will fail unless you have with it an elaborate system of rationing. If you fix the price of such things as clothes and boots and do not have rationing, and you have increased wages, it will mean that the fixed prices will go to those with the highest wages. I do not know how far the Government contemplate any extension of the principle of rationing, but I think that if you are to fix prices, something in the form of rationing staple commodities, other than food, might have to be considered.
Before I sit down, I would like to add my tribute to the great work of Lord Kindersley and his colleagues, particularly Lord Mottistone, who has been a most active partner, in their efforts to raise money by War Loan and War Savings. I was one of those who was attracted to the theories of Professor Keynes, who built up an elaborate argument for compulsory savings. Well, what the organisation has done under Lord Kindersley has shown that a free country, even in the midst of difficult circumstances, is willing to lend to the Government. As a result it has not been necessary to apply compulsion. Incidentally, when we come to consider the new proposal for dealing with Excess Profits Tax and the bringing in of this new army of taxpayers, something very much in the form of compulsory savings is being applied.
I want to make some reference to the Excess Profits Tax. Obviously, the nation and. the Committee find it repugnant that people should make profits out of war. Therefore, I am glad that the principle of a 100 per cent. Excess Profits Tax has been retained. I do not like to believe that there is truth in the suggestion that the tax of 100 per cent. leads to wastage and extravagance, but I am afraid that all the evidence suggests that there is some justification for it. Unfortunately, humanity being what it is, when Government money is at stake the same care is not taken as when a man's own private pocket is concerned.
Nevertheless, whether this be so or not, it is right to retain the principle of a 100 per cent. tax. I believe that the Chancellor's new proposal to give some incentive to save by providing that there will be credits available to the companies after the war is an ingenious idea, and one that will serve the double purpose of encouraging savings and of providing the capital that will be required for reconstruction after the war. We must await the particulars of the scheme which will appear in the Finance Bill, and we shall consider that proposal with sympathy and approval.
The nation has shown great courage in facing the perils of the war, and I am satisfied that our people are prepared equally to face these colossal burdens, provided always that everybody shares and shares alike. I understand that that is the object of the Budget. I was glad to hear the right hon. Gentleman the Chancellor pay a tribute to the Select Committee on National Expenditure I hope that that tribute is something more than lip-service. Somehow or other, Government Departments, with these large sums of money at their disposal, are not taking the care which they should to see that the money is always wisely spent. If the taxpayers have to find these immense sums of money, they ought to be assured that the money is carefully spent and not wasted. Whether it is in the Civil Service or in the Fighting Services, Government Departments must be made to remember that they are the trustees of public funds. I am glad that the Chancellor, as on more than one occasion in the past, has shown that he realises the vital importance of economy and safeguards against waste. My hon. Friend the Member for East Birkenhead (Mr. Graham White) will be speaking on the Budget proposals on a later occasion, and he will have had more time to consider the Budget as a whole; but I can undertake, as far as my hon. Friends are concerned, that the Budget will have a smooth passage, and I believe it will have the support of the Committee as a whole and the general approval of the nation.
I should like to add my congratulations to the Chancellor of the Exchequer on the splendid way in which he stood the strain
of speaking for over two hours. Speaking in cricket terms, I feel that his Parliamentary Private Secretary must have been giving him some good practice in the nets. I may have some, criticisms to put forward later on, but that will not detract from my admiration for the way in which he has attempted to deal with this very difficult task. The people of these Islands are being asked in this Budget to provide about £13,500,000 a day. I work that out to be £4,775,000,000. That money has to be provided by taxation, loans and gifts, and, I say this advisedly, it is provided in the cause of God and freedom. We are striving for victory, not merely for Great Britain and the British Commonwealth of Nations, but for liberty-loving peoples everywhere, and for what they stand, because we would rather die as free men than live as slaves. But the money will and must be raised, and every sacrifice will be cheerfully made. One of our fellow Members who is a brilliant writer, the hon. Member for Wood Green (Mr. Beverley Baxter), wrote, yesterday, in the "Sunday Graphic'':
Victory and afterwards. It is worth any price the Government ask.
The figures produced by the Chancellor of the Exchequer to-day are so colossal and so astronomical that their magnitude cannot easily be grasped. The sacrifices will be made more readily and more easily if those who give and lend the money to the Government are convinced that the expenditure of that money is properly controlled. In times like these there is apt to be a Kind of contagious disease which gets around. I am afraid the Government have a small attack. The symptoms are, "Oh, here is a war on," and "It does not matter." It does matter, because we are all in danger of losing our sense of proportion and forgetting that there is such a word as "Economy" in the English language. It is vital in these days to do nothing which impairs the financial stability of the country, and the confidence of our people in the financial stability of the country is a vital factor in winning the war.
The right hon. Gentleman the Member for South-West Bethnal Green (Sir P. Harris) referred to the splendid work of Lord Kindersley and Lord Mottistone, to whom I should like to pay my tribute. The Chancellor of the Exchequer and Lord Kindersley are continually and persistently asking men and women everywhere to give and lend money to the Government. Only last night a long list of the splendid results which have been achieved in towns and cities, small and great, was read out over the wireless. But the Government must remember that they are the trustees of that money which is loaned or given, and that those who give or lend it must be confident that the money is being economically and wisely spent. The strenuous advocacy by Lord Kindersley and the Chancellor of the Exchequer has met with an amazing response, not only from people in this country, but from people all over the world. I want to ask whether the Government are being equally strenuous in ensuring that the money so raised is being wisely and economically spent. The answer of many of us to that question must be, to some extent, in the negative.
For a very long time I have been trying to direct the attention of the Government, the House of Commons and the public to instances of waste, extravagance, dishonesty and nepotism, in the carrying-out of Government contracts and the spending of public money. The main duty of the House of Commons is to be the guardian of the national purse; all our procedure is framed for that purpose. However difficult it may be in these times, we must continue with importunity to do our duty in this respect. Quite naturally the action that one has taken has brought a mass of correspondence from responsible people all over the country, and the great difficulty that I and, I am sure, others have had is to get people to come forward and give the facts, names, times, places and details, and, what is more difficult still, to get them, themselves, to come forward and give evidence. Vague allegations carry little weight and achieve small results, but there is great and growing evidence that the public is seriously disturbed at the lack of courageous action by the Government.
Three men did come forward; they were Major Evans, late of the Royal Engineers, Major Reid Kellett, D.S.O., M.C., and Mr. Carr, a member of the Civil Institute of Engineers. They all wrote me, and the allegations that they made were similar in character. I asked them to meet me in London. As far as I know, they were unknown to each other until I brought them together. In my opinion, those three sources of independent evidence greatly strengthened the case. Two representatives of the War Office have said that the charges that they preferred were "unfounded" and "frivolous." This, of course, they strenuously deny. The charges may or may not be frivolous and unfounded, but these three men are willing to stand or fall by the charges that they have made and, as they put it, if necessary, go to the Tower. [Interruption] They have not been investigated by a Judge. These three affirm that they make their charges in good faith in the national interest, and they cannot get a judicial hearing. They are suffering and brought to ruin because they have been honest. The fact remains that in England in 1941 three men are suffering under an injustice and are so far refused open trial by an English judge.
The right hon. Gentleman who spoke last referred to the work done by the Select Committee on National Expenditure which the Government set up some time ago to examine cases of waste and extravagance. Up to date it has, I believe, issued 11 reports, and they reveal a pitiful story of waste and incompetence. The Committee is an independent body, and even the Government cannot give it orders or instructions. It is a Committee of this House. It is only fair to say that no fault for these charges can be laid at the door of the present Secretary of State for War, but I should like to see one of his predecessors at least examined on this subject. It is interesting to note that under the terms of reference the Select Committee is barred from making that full inquiry which is necessary for justice. In Section 9 of the Fifth Report the Army Sub-Committee report as follows:
They have also received information from certain individuals who make allegations of a very serious character against contractors, surveyors and others in official positions in connection with the Militia Camps. They have gone carefully into some of these allegations in so far as they involve charges of waste, but are of the opinion that an exhaustive inquiry into all the charges formulated is not a proper subject for them to pursue, nor do they consider themselves in these cases a suitable tribunal for investigating allegations that those who have brought such charges have been pre-
judiced thereby. They consider, however, that the charges should be further investigated.
The next paragraph is headed "Penalty of speed." None of us complain about extra expenditure in war-time, because of the speed and urgency of the case, but in our opinion that is no excuse for the last paragraph of the report. At the end of the Appendix, giving figures of five camps, the Committee say:
The final cost at the five camps, which may be taken as typical examples, varied from about two and a half times to nearly five times the estimate.
In reply to many questions, I have always received from the Government the same kind of answer: "We must await the report of the Select Committee." All through the piece it was known that that report, owing to the terms of reference, could not adequately deal with the matter. The Committee recommended further investigation. What we have pressed for, and still press for, is a judicial inquiry where witnesses can be examined and cross-examined on oath, where the parties can be represented by counsel, and where the courts can have some power of punishment, because one or two test cases of this kind would have a salutary effect all over the country. After great pressure the only concession that we have been able to get from the Government is the appointment of a Chancery Judge to see whether there is a prima facie case on, I presume, the evidence submitted to the Select Committee. I should have thought that the report of the Select Committee provided a prima facie case. I am told on high legal authority that the Government, if it is not heresy to say so, have taken a most improper course in appointing a Chancery Judge to inquire into this matter. It should have been left to the Law Officers of the Crown.
I am trying to bring before the Committee arguments why the examination of waste should be more vigorously tackled by the Government. I want to ask whether the evidence which has not been before the Select Committee will be put before the Judge. There are big firms of contractors who have been put off the list, who would welcome a judicial inquiry, because, they say, they do not mind so much about the money, but they care about their fair name. Very awkward questions are being asked, and I should have thought that the Treasury would have welcomed with open arms an inquiry of this kind to stop waste. Why is there this delay and unwillingness to grasp the nettle? I beg the Government to do something, in order to maintain national confidence, to settle this matter quickly and drastically.
Now I turn to another subject. It is neither the large expenditure of money, nor tanks, nor guns, nor planes, that alone will win this war. President Roosevelt said the other day, when he was speaking on his Lease and Loan credit, "Dollars alone will not win this war," and in the "Observer" of 6th April the reviewer of a book entitled "Lord Halifax, the Man and the Diplomat," said of Lord Halifax:
But now, in his great position in America, his conviction that our cause is the cause of Christianity will surely serve us in good stead.
I do not know whether I am the right person to say these things, but I feel they have got to be said. This war is a total war. It is Armageddon. It is a war between good and evil, between the Cross and the Swastika. Hitler controls not only the bodies of his subjects; he controls their minds and spirits as well. He controls them by a kind of hypnotism. There is pouring out from Germany, as over the wireless, a stream of hate and evil influence. The collapse of France, following that of eight or nine other countries, cannot be accounted for solely in terms of military defeat. The debacle was uncanny in its rapidity and its magnitude. It was diabolical. Hitler's secret weapon is fear through propaganda, and we in these islands, and men and women of good will everywhere, must forge an even stronger weapon in the realm of the mind and the spirit. On 26th May, 1940, which was the Day of National Prayer, a few laymen, of whom I was not one, got together to see what they could do to marshal, vitalise and co-ordinate the spiritual forces of good everywhere, and after months of work and prayer the B.B.C. were persuaded to signal at 9 o'clock each evening—
I bow to your ruling, of course, though I am sorry that I cannot speak on that point. I have a difficult case to put forward, but I will not put it forward if it is out of Order, and I have nothing more to say. I will finish with this sentence, that I hope hon. Members, having seen the "Times" of last Sunday, will do all they can to support the Big Ben observation.
The Chancellor of the Exchequer had a very difficult task to-day, made more difficult because in the past we have not faced up to the seriousness of the financial situation. I join with those who have congratulated him on the clear statement which he made during the two hours that he was speaking, but 1 wish to devote my time to one aspect of the financial situation of the Chancellor of the Exchequer this afternoon. It is divided into three points which provide a valuable basis on which I want to state my case. The Chancellor of the Exchequer said, "We must have regard to the post-war reconstruction and social advance which we all desire to achieve." He went on to say, "The housing difficulty of the last post-war period was largely due to interest payments." That was significant, coming from the right hon. Gentleman. I could not help smiling when I sat here and listened to that phrase because my mind went back to 1931, and to all that was then said. In these days, the test of all contributions to Debate is: Will they assist the national effort and will they assist in the post-war reconstruction? With those principles in mind I put a Question to the Chancellor of the Exchequer on 20th February. The Question reads as follows:
whether he will appoint a committee to inquire into banking, finance and credit, with a view to reporting as soon as possible on how credit can be best utilised for the benefit of
the nation, the establishment of a national central financial authority, the stabilising of prices and a long-term policy for planned economy?
I am pleased to notice that the Government have embarked upon a policy of stabilising prices. The reply given to my Question by the Financial Secretary to the Treasury was as follows:
No, Sir. My right hon. Friend does not think such an inquiry is either necessary or desirable at the present time.
The I put the following Supplementary Question:
In view of the fact that industry is now being mobilised in the war effort, does not my right hon. and gallant Friend consider that finance and credit should also be harnessed to the nation's needs, and, if so, are not the suggestions made in the Question essential steps to take with that object in view?"—[OFFICIAL REPORT, 20th February, 1941; col. 291, Vol. 369.]
It is on this subject that I want to furnish the Committee with evidence which I hope hon. Members in all parts of the Committee will read, because I am convinced that we shall have to face in the very near future the situation which I outlined. Within the limited time at my disposal I shall produce evidence to show that if an investigation could be made of the character mentioned in the. Question, it would be in the national interest. During the last war, a committee was set up, and it investigated many aspects of finance. The Government have now, rightly, appointed a noble lord and my right hon. Friend the Member for Wake-field (Mr. Greenwood) to survey and consider the problems of post-war reconstruction. If it is right to take that step, is it not logical to take a similar step with regard to finance? It is on that point that I make a special appeal.
Are we again to be faced, after this war, with millions of unemployed and planned scarcity—with millions of people going short while Nature supplies us with everything in abundance? This afternoon the right hon. Gentleman emphasised in the early part of his statement, that, after every war, financial systems were disturbed and strained. I agree with him in paying tribute to the Select Committee that considered national expenditure. They have made a valuable contribution to our war effort, but a similar examination should be made of finance—the effects of speculation, credit, insurance, and banking. With a number of other
hon. Members, I pointed out, three or four years ago, that, if the international situation drifted in the direction in which it was then drifting, it would be necessary for this country to re-arm on a big scale. I say the same thing to-day with regard to finance. It is now necessary that we should re-arm financially. Let me quote the Manchester Guardian of 23rd May, 1918—the date is significant. It says:
''He who controls capital controls the economic life of a country. The influence of the master of capital extends beyond individuals and classes; it reaches to the state, to society as an organised whole. The master of capital possesses the immense power to impose his will upon the state, implied in his power to withhold help when it is urgently needed, or to derange the economic machinery of the country. In a very important sense the mastery of a country's capital is the mastery of that country.
Is that democracy? The last 20 years have proved the accuracy of that statement. It was for that reason that I put the Question which I have just quoted to my right hon. Friend and I am now backing it up with evidence. The last post-war policy of the City of London had a disastrous effect upon export trade, which is a serious matter for a highly industrialised country like ours. They lent long and they borrowed short, with the result that capital was paid back in manufactured goods. We in industry lost the orders; many of us went to the Employment Exchange; we could not afford to buy the food that we required, and the result was that the largest potential market for food in the world began to contract. Europe became a suicide centre. We are now fighting to avoid a servile State. This Budget is framed to enable us successfully to prosecute that struggle. Are we taking steps to avoid servility to finance?
The orthodox financiers and economists have been proved wrong by Germany since 1933; they have been proved wrong by this country since 1938. What an indictment this Budget is of the Geddes Axe ideals, the May Committee and the 1931 conceptions of finance. What an indictment this Budget is of the Snowdenian orthodox conceptions of finance and all those who supported them during that period. The financial position depends upon the economic resources of a country, on its productive capacity, the people's energy, and the state of organisation of that country. Our splendid young men in the Armed Forces in all parts of the world, are bearing the brunt of the war. Our workers are working harder than ever and our women are now being registered for war work. When are we going to register finance in order that we can harness it to our war effort?
The Budget is going a long way towards dealing with the immediate needs, but it is not comprehensive enough to deal with the financial situation in which we are involved. We have had crisis after crisis. We have had our Morgans, Rockefellers, Belmonts, Rothschilds, Kreugers, Hatrys, Kylsants, Hooleys and others who have held—and some of whom are still holding—the people in their grip. Is that democracy? In order to increase our war production we are, rightly, obtaining more and more supplies from other English-speaking countries. Canada, Australia, New Zealand, South Africa and India are making a great effort and ought to be mentioned in this Committee for the effort that they are making in supporting us. At the same time, they are becoming more and more industrialised. What problems will be created by this development?
In a few weeks time Canada will have reached a state of productive capacity in which her output per person will be as great as that of any other country. We should consider now the effect of the industrialisation of the countries I have mentioned. The alternative is a repetition, in a more intensified form, of the 1920 to 1936 period. What a problem will face us on the cessation of hostilities. The growing overhead charges which are being more and more imposed on production are very serious. We cannot stand them. The people will be bled white, or there will have to be a radical change. The Chancellor said this afternoon that war taxation is bound to be grievous. In 1800 the National Debt was £504,000,000; in 1914 it was £716,000,000; in 1938 it was £7,111,000,000, in which we paid in interest alone £224,000,000. The Chancellor has said this afternoon that in 1941 we shall be paying on the war debt £255,000,000, which is £25,000,000 more than in the previous year. The interest charges alone will soon reach a staggering figure, and it is because of this that I am pleading with the Chancellor and with the Financial Secretary to reconsider the question.
If we make an analysis of this White Paper, we find that we are also suffering because of the growing imposition of local burdens. For example, in 1936 the total rates paid were approximately £154,000,000, while at the same time we paid £100,000,000 in loan charges. The loan debt of the local authorities of England and Wales in 1922 was £803,000,000; in 1936 it had gone up to £1,481,000,000, and although I have not had an opportunity of making a further analysis, I venture to prophesy that it will have gone up by millions since 1936. No one will doubt that there is a need for a drastic revision of our national and local finances, and it is for this that I am asking. We cannot afford these crushing and intolerable Debt charges. Since 1918, we have paid in interest on the National Debt alone nearly £6,000,000,000, and that debt remains. My right hon. Friend the Secretary of State for Scotland wrote a book a few years ago, entitled "The Financiers and the Nation." It is a devastating indictment of our financial system, and ought to be read by every hon. Member of this House. Mention of that book reminds me of a statement made during the last war by the late Bonar Law, who said, "Never let it be said that you willingly gave your sons and withheld your money." Sir Henry Strakosch estimated that the fall in prices in the period 1925 to 1928 added £1,300,000,000 to the capital value of the National Debt. This is further evidence of the seriousness, which is not realised by many people, of the financial situation and of the Debt charges with which we are faced.
The banking arrangements need rationalising; they need democratising. For example, to be a director of the Bank of England you must have at least £2,000 stock in the Bank. Is that democracy? The Midland Bank has 34 directors, with £26 a week each; Barclay's has 34 directors, with £36 a week each; Lloyd's has 34 directors, with £30 a week each; the National Provincial has 23 directors, with £36 a week each; the Westminster has 26 directors, with £33 a week each. That means that 151 men control £66,000,000 of paid-up capital and at least £2,000,000,000 of deposits; and many of them are directors of a number of from six to 20 other concerns. Can we afford, at a time when this nation is making a great effort to carry through such a war as this, to maintain the old stage-coach idea in finance? Can we afford to let our financial system be handled by men with the old tall-hat, frock-coat attitude and the old stage-coach speed of considering questions? After considering these facts, and after reading a number of books in the library, I am convinced that if one were to present the available evidence before an impartial committee, that committee would be bound to agree that the financial system should be investigated in the way I am advocating.
It has long been admitted by all public-spirited people that deposits and assets should be at the service of the State. It is true that, as the Chancellor said, we have gone a long way towards achieving that. When the Chancellor made that comment at the beginning of his speech, I thought of one or two orthodox bankers sitting in the Gallery. He said that our system of exchange control, the mobilisation of our resources, and the method of dealing with our capital issues were so designed that they should be directed to the war needs. That is a great step in the right direction, but it does not go far enough. If it is right to go so far, then, logically, it is right to go as far as I am proposing. The 1931 Macmillan Report provides valuable evidence in support of this view. On page 16, paragraph 31, it said:
The object of a commercial bank is to make a profit.
I say then, that the realisation of profit becomes the dominant factor. Mr. Gladstone, when making a Budget statement, said:
From the time I took office as Chancellor I began to learn that in the face of the Bank and the City, the State had an essentially false position as to finance. …The hinge of the whole situation was this. The Government itself was not to be a substantive power in matters of finance, but was to leave the money powers supreme and unquestioned. In the conditions of that situation, I was reluctant to acquiesce, and I began to fight against it, by financial self-assertion, from the first. I was tenaciously opposed by the Governor and the Deputy of the Bank, and I had the City for an antagonist on almost every occasion.
That is many years ago, but it is still the position to a certain extent. Because of that, I am placing these facts on record. Just as this House has been forced to face up to other questions in the last year or two, it is only a matter of time before we shall have to face up to this question.
But I do not want it to be too late. My right hon. Friend the Member for Bishop Auckland (Mr. Dalton) wrote:
Mr. Norman pursued a policy of his own,"
and his statement was based on well-documented evidence. That statement was confirmed by the Financial Secretary to the Treasury on 7th February, 14)33, when he said:
The Bank of England made the loan on its own initiative.
Later Mr. Norman persuaded the Government to transfer the liability from his Bank to the British taxpayer. I think of that and other loans and all that it means, and of the way we suffered in industry from 1920 to 1932, of the thousands of highly skilled men in this country who were forced to sign on at the Employment Exchanges, and also of certain financial people who were responsible for preventing certain governments from doing what they themselves did. I think of the whole of that background. At present the war is being financed by borrowing from the banks. This would be a Gilbertian situation if it were not so tragic. Why should not we have a register of capital? We are having a register of men who are being forced out of certain industries, and we are having a register of women, and surely the time has arrived when we ought to have a similar register of capital and wealth. On that basis the State ought to take control of credit and cut out altogether the unnecessary burden of interest.
I am asking for the democratisation of credit. The Chancellor of the Exchequer said this afternoon that he wanted to emphasise the need for more genuine new savings. It is upon that that I want to ask the Financial Secretary a few questions. The "Economist" stated on 22nd March, 1941, in page 369:
War Weapons Weeks are already leading to the subscription of newly-created credit by local branches of the banks. A clear contravention of the principle "—
that is, of the War Weapons Week. Is that true? May we have an unequivocal answer to that question? If it is true, how is it being worked? Is it by anticipation by local banks of the week's result, or in what way? Does the new created credit represent the banks contribution to the local week's effort? There
is no justification for the payment of interest on war-created credit of that description. It is unfair to 90 per cent. of our people. The public are entitled to an answer to the questions which I have raised. The Committee should demand nationally-created credit and the control of credit at once. I intend to raise this matter again on the Finance Bill, but I hope the Chancellor of the Exchequer will take action before then. May we be told the total amount of credit created by the banks since August 1039? The Chancellor of the Exchequer introduced some improvements in the postal service when he was Postmaster-General and he knows that the postal service is carried on as efficiently as a service can be. The Export Credits Department is a State managed service on strictly commercial lines. It has earned substantial profits and secured orders which would not otherwise have been obtained, and at the same time, provided employment for thousands of people. This is an example of what can be done by credit under State machinery, managed as efficiently as possible.
I suggest that this ought to be done at once. Steps should be taken in the Finance Bill to set up a State investment trust and at the same time, to provide interest-free national credit. I venture to prophesy that if this were done, it would be a huge success and form the basis for a scheme of State-managed credit and cut out the million snow paid in interest. The trade unions and other public-spirited men and women have lent thousands and thousands of pounds free of interest. This is an example of what can and should be done. It is imperative that an investigation should be made into this matter at once. A great deal of credit for the Empire planning scheme from which we are now getting results, is due to the Chancellor of the Exchequer. It was a long-term move, and now we are getting the benefit, and I want to suggest that it is equally essential that a long-term move should, be made with regard to finance. An intermediate report should be presented to the House in order that it could deal immediately with some of the issues which would be raised. Production is being speeded up, the centralisation of capital is being accelerated and the concentration of industry will lead to monopoly development. The problems of the past will be infinitesimal compared with those of the future, unless this investigation is made and steps are taken to deal with finance in the same way that we are dealing with other problems. It is only by an examination of the past and an appreciation of the present, combined with a facing-up to the resultant situation, that we shall be able to deal with it. In my view the financial situation requires an immediate investigation, which should be carried out expeditiously, and for that reason I repeat the question which I put to the Chancellor of the Exchequer in February this year.
I shall not attempt to follow the hon. Member who has just sat down in the treatise which he has delivered to the Committee this afternoon, but I would like to point out that, despite all he has said in connection with the finances of this country, it has been demonstrated from year to year and from century to century that we still stand highest in the opinion of the financiers of the world. The Chancellor of the Exchequer has had a very difficult task, but he performed it with his usual businesslike ability. We were particularly struck with his ability when he was Postmaster-General, and for what he did then, and we in Northern Ireland are particularly indebted to him for putting us on the same footing as this country with regard to Post Offices.
The figures he dealt with this afternoon are astounding. I have heard 23 Budget speeches, but the figures which the right hon. Gentleman gave us to-day are fearsome as compared with the Budgets of the past. I must agree, however, with something that has fallen from one hon. Member of this House and has been repeated from time to time in the country —that a great deal of this money is wasted. I am quite satisfied that that is true, although in the execution of any long war I fear that this is quite inevitable. We are faced with the fact that we have an enormous sum of money to collect. At a time like this, the Chancellor must consider two things. In the first place, it is inevitable that he must find the money to pay for the war, so that the war can be carried to a successful conclusion. That is essential if this country, and everything that is right and proper, are to survive. The Chancellor has also the secondary consideration to bear in mind that, in find- ing the money, he must be careful not to kill the goose that lays the golden egg. For the first time in my experience of Budget statements, we have not heard anything about tobacco, spirits, or beer. I dare say there are some who think that additional taxation might perhaps have been put on such luxuries, but at all events they are to escape this time.
The Chancellor dwelt at length on the subject of the 100 per cent. Excess Profits Tax. No doubt there will be an opportunity of debating that matter by itself. There are those who are of the opinion that an Excess Profits Tax of 100 per cent. leads to extravagance, robs many concerns of the incentive to work, and reduces the turnout for war purposes. They have less incentive to trouble themselves about the increase in wages, and money is, to some extent, extravagantly spent. Last week the hon. Member for Mossley (Mr. Austin Hopkinson) gave us an idea of how money might be wasted in certain circumstances. First, he said that a number of relations could be put into the business and draw salaries, and, secondly, he said that he thought it would be a good idea—and from what he said, I think he is carrying it out—when there was a possibility of making excess profits, simply to make a present to the Government Department of the thing he was manufacturing for them. That is one way of cheating the Treasury, but I do not think it commends itself to right-thinking people, and if I were inclined to do that, I do not think I should like to wear the King's uniform. I mention these points only to show that there will be concerns that will do all they can to reduce the amount of money they will have to pay as Excess Profits Tax.
We have a lot of people whom we term as being in the "front line"—those in the Air Force, the Army and the Navy, and those in submarines, in the trenches and all the war workers. After all, I think we must all agree that our business people are also in the front-line trenches of the life of the nation, and that as such they are entitled to every consideration from the Chancellor of the Exchequer. There is the human element which never seems to receive the consideration it deserves in all these things. The same was the case in the last war. The generals did their utmost to make advances into enemy territory, but they seemed to forget all about the human element. I am afraid the Chancellor of the Exchequer has also omitted in his Budget to take into consideration the human element and the weaknesses which will from time to time reduce the payments to the Treasury which ought to be made.
I should like to compare what the present Chancellor of the Exchequer has said with regard to the Excess Profits Tax with the remarks made by his predecessor. His predecessor said that the Excess Profits Tax ought to be 60 per cent., which left a certain proportion of the increased profits in the hands of the businesses which made them. He said that the proportionate increased profit which remained available to business concerns would be very valuable and useful for the very difficult period which would follow at the end of the war. That is a very different view from that of the present Chancellor of the Exchequer. We must all agree that at the end of the war this country will be faced with some very phenomenal and abnormal problems. Factories now engaged in war-time production will be endeavouring to return to their own pre-war legitimate business. Millions of men and women now engaged in war work will be thrown out. What is to happen, we do not know, but any Chancellor of the Exchequer in dealing with war expenditure should also think of the future. If there are to be no financial reserves left in these businesses, what will happen? The former Chancellor of the Exchequer gave it as his decided opinion that it is a very useful thing that we should have these reserves for the post-war period. It is almost frightening to consider what may happen at the end of the war, because if we are not giving our business men the incentive to create reserves for that period, I think we are heading for a very dangerous situation.
I cannot help congratulating and commiserating with the Chancellor of the Exchequer in the job he has had to perform, and which he has performed so admirably. We all have a great belief in the eventual triumph of this country. I have no doubt about it. In Northern Ireland I believe we are putting every ounce that we can into the winning of the war. It is extraordinary what has been done by our people, though they are a small community. I am quite certain, as has been said by our late Prime Minister, Lord Craigavon, that to a man, in our determination to win this war, we are indeed King's men.
No one envies a Chancellor in these days in facing his Budget task, and I suppose each fresh burden of taxation evokes some sympathy from us, although we do not necessarily like the medicine. This is the first Budget which I think begins to reflect some understanding of the financial consequence of a totalitarian war. There are one or two very interesting aspects of it. In the first place, I believe it is the first introduced during war-time in which there has been no increase in indirect taxation. I was interested to observe, in the right hon. Gentleman's figures and statements, an indication that he is beginning to appreciate that the general policy of the Government affecting commodities is likely to restrict him increasingly in the future from adding to his revenue from the Customs and Excise Department. That is another very interesting and significant feature of the Budget. The Government's policy with regard to control of materials, limitation of supplies, and restrictions in a variety of ways is all tending to destroy that foundation of free commodity sales upon which indirect taxation will be erected in the future. The third point to which I should like to draw attention is that the Chancellor, in seeking new revenue of approximately £250,000,000. has had to resort to direct taxation, and, although there are some aspects of this proposal with which one might disagree in details, I thoroughly approve of the general principle that underlies the Budget, namely, looking to direct taxation to raise revenue. In my view that is the direct complementary policy to that which the Government are exercising in other directions over commodity control.
Now may I turn to another aspect of the right hon. Gentleman's statement, which appears to me to raise very far-reaching issues and which I do not think has received adequate consideration so far? That is the definite indication that he gives that the Government now intend to settle down to a policy of endeavouring to control prices, and not only the prices of basic foodstuffs. I hope later we shall get a further elucidation of what is, in my view, a very important aspect of Government policy. As I understand the Chancellor's statement, it was an indication that the Government intend to cover the whole field of commodity prices, and his reference to the Board of Trade, with their powers under the limitation of goods and price control legislation, rather suggested that the Government's policy now is to cover a very wide field. Is not that rather adopting a policy when it is almost too late to be effective? The question upon which I should like to be satisfied is whether the Government are really in earnest in this direction.
On the outbreak of the war we had declarations of Government policy from the Treasury Bench, and the Ministers, in introducing emergency legislation, laid it down that the Government's settled policy during the war was to keep prices down so as to avoid any movement in the direction of wages chasing prices. For a period the Government followed that policy. Over the area of basic food supplies they have succeeded, but it was apparent before many months had passed that the Government had withdrawn their policy over the vast range of domestic commodities that eventually influence the demand of wage-earners for increased wages. In that field of prices there has been a tremendous increase during the war. Let me give an example that directly flows from the Government's own taxation policy and for which the Chancellor himself is responsible. When he was introducing the Purchase Tax in his last Finance Bill he was warned by individuals like myself that it would have the effect of steepening-up prices more than any other individual action. Surety the Committee recognises the contradictions of Government policy when a Minister six months ago initiates a policy that deliberately steepens-up prices and now comes forward in this Budget with an admission that Government policy must tackle this problem.
This is very important, because the original policy of the Government to control prices during the war was sound; experience has proved it to be practicable, and it is regrettable, to say the least, that one area of price control has been allowed to escape almost completely before the policy could come into operation. Taking the period from 1st September, 1939, to 1st October, 1940, the average price for food supplies increased by 22 per cent. In the period from 1st September, 1939, to 1st February, 1941, that is, since the Purchase Tax, there has been an increase of only a further 2 per cent. On the other hand, since the operation of the Purchase Tax, the following increases have taken place: Men's suits and overcoats, 20 per cent.; woollen materials, 24 per cent.; cotton materials, 23 per cent.; boots and shoes, 11 per cent. Here is a clear indication—because food prices are just as sensitive, in fact, in many respects more sensitive, than dry goods materials—that the Government could control prices of they so desired, but through the Purchase Tax they have been the greatest sinners in this respect, and having acted in that way it is rather ridiculous for them to come forward in this Budget and pretend to adopt the virtuous policy of controlling prices. The price of soap, which is not even subsidised like flour, has remained at the steady level of 15 per cent. increase over that period. Therefore, the Government, working with the trades and following a settled course; could adopt this policy, and I sincerely trust that on this occasion they are serious.
Another interesting aspect of the Chancellor's statement is that it reflects a different policy in the relations of the Government to individual citizens. The Chancellor has announced a concession with regard to Excess Profits Tax, but it is to be a postponed payment to industry, with the object of replenishing the reserves of industry after the war. When the Chancellor introduces a modification of the Keynes plan, a rather subtle form of dealing with the lower ranges of Income Taxpayers, again he endeavours to soften the blow by crediting the individual with certain savings which will be repaid to him after the war. Where are we getting to? There is the huge war debt, which will be with us after the war— now calculated at something like £20,000,000,000, and it might easily be more. It depends entirely on the length of the war. Then, leaving out the commodity insurance schemes, compensation under the War Damage Act—and that may amount to a very considerable figure—is postponed and will be met after the war. We are developing a system within our taxation methods whereby we are beginning to collect taxes now to discharge the current requirements of the war and beginning to credit individual citizens with payments to be made to them after the war.
The after-war liabilities which the Treasury are beginning to pile up are becoming very considerable. I know there is a case for and against, and that it can be argued that for the great mass of the citizens to have some interest in the financial stability of the State will be a stabilising factor after the war. On the other hand, we ought to take into consideration that any shocks to confidence after the war would have much wider repercussions because of the dependence of the citizens upon repayments by the State. We appear to be sliding into this policy of after-war commitment so easily and with such little thought, consideration and debate that it is about time that some serious consideration were given to the problem of after-war repayment. War damage insurance represents a type of liability that has never yet been incurred by the British form of government to the individual citizen. I am not opposing in this matter. One realises, in dealing with the question of war damage, that the individual wants to feel that he will get something after the war. It is very attractive to the person who has to pay additional taxation to feel that it is a form of compulsory saving, but I hope that the Treasury has given very serious consideration to this matter and has not lightly embarked upon this policy.
I should have been more responsive in regard to steeper direct taxation, even though it went lower down in the scale, for the purposes of meeting the expenses of the war, and I should have felt the equity of the position more, if the Chancellor of the Exchequer had accompanied the proposal with a remission of the Purchase Tax. I have indicated that I approve in, principle of the steeper direct taxation, but when the Purchase Tax was introduced I made it plain that I would continue my opposition to it. After six months experience of this tax, I suggest that many of the things I stated have proved to be correct. I ventured to assert that the policy contradicted the larger policy of the Government with regard to the limitation of supplies and the limitation in the consuming power of the community. The Committee should remember that statement, in view of the Chancellor's own figures. He informed us that we should receive an annual income of £110,000,000 from the Purchase Tax, but he has now come forward and admitted that the Purchase Tax will yield only £70,000,000. One can read from his Budget Statement that there will be a need for still further restriction of commodity consumption, which again indicates that that figure of £70,000,000 may not be realised next year.
Are we to go on indefinitely with a cumbersome form of taxation that now contradicts the two larger and major legs of Government policy? In the prosecution of the war the Government need the utmost surrender of labour power in the community, for the Armed Services, Civil Defence and munition factories. When the Government are making those demands, they impose at the same time cumbersome methods of taxation for the purpose of raising £70,000,000 a year. There is the greatest dispute in regard to household necessities, which probably represent from £50,000,000 to £60,000,000 of this tax and which enter into the spiral of wages following prices. There is no dispute with regard to the taxation of luxuries, or of commodities the use of which ought to be discouraged at the present time, but when the Government are spending more and more of the national wage bill and meeting more and more of it, it is ridiculous for them to impose an additional burden, the benefit of which they will ultimately lose in increased costs of materials and of wages to themselves. This tax destroys, or helps to destroy, the policy which the Chancellor of the Exchequer has initiated here.
I trust therefore that the Chancellor of the Exchequer, now that he has embarked upon this policy, is realising that he must turn more and more to direct taxation, for the purpose of getting his revenue and for reducing commodity consumption. I hope that before this Budget is through he will take his courage in his hand and wipe away this cumbersome, expensive, inequitable and useless Purchase Tax, and will come down to a sound financial basis. If such were adopted, everybody could see exactly what he was paying in proportion to his income, and problems of inflation would be avoided. At the same time, it would be equitable for the whole of the community.
I desire to follow the last speaker in his remarks about the alarming effect of the post-war commitments into which we are entering. I want to consider the matter not in terms of finance, which to me is always rather an unreal subject, but in terms of goods—concrete goods. Month by month we are giving to more and more people the right to expect that as soon as this war is over they will have the power to command goods of one kind or another, because, after all, purchasing power is nothing more or less than the right to command goods. Are we quite sure that at the end of this war we shall have available enough goods—I do not say finance, but goods—to satisfy simultaneously all these claims? Are we quite sure that we shall not have to say to all kinds of people, such as the men who have lost eyes and legs, and women who have lost husbands and sons, "No, there are not sufficient resources in the country to enable us to deal generously with you because of all these other commitments which we have already undertaken"? I do not suppose that anybody will pay any attention to any puny words of mine, but it might be as well to put it on record that it is conceivable that after this war there will be a Government which will impose a very stiff means test upon the larger claims which individuals may make for immediate payments of these commitments into which we are now entering.
Again, I would follow the last speaker in expressing my alarm about this 20 per cent. rebate on Excess Profits Tax in reference to money which is spent, as I understand it, on capital improvements which promote and increase production of war goods. I think that that is the correct interpretation of what the Chancellor said. Things are bad enough as it is, in a situation in which a great many companies are—let us be blunt about it— evading Income Tax by having what are called repairs—repairs which, quite frankly, cost nothing. We are now to have a situation in which a company, finding itself liable to make a payment of Excess Profits Tax of, say, £5,000, will be able to wangle that into the form of a capital improvement of its plant which will, incidentally, have the effect of increasing the output of goods needed for war—and, pray, what goods are not now needed for war, for consumption either by the civil population or the Armed Forces, or for export? And if one can do that, one can get 20 per cent. of one's money back at the end of the war.
The reason why I am so long about this is that it leads me to ask the question, Who is now controlling property? Is it the Government, as we were told by the Deputy-Leader of the House nearly 12 months ago, or the private employers? Because, if the Government are controlling property for the purposes of war production, one would expect the Government to say, "This is our plan for plant expansion; get on with it."Can anybody say that that would be an unreasonable suggestion for the Government to make in the 21st month of the war? But no, that is not to be done. The individual employers are to be offered this bribe; if they can persuade some authority—presumably they will have to persuade some-body—that the expansion they propose will increase war output, they will get 20 per cent. back. I think this proposal is most vicious, because it will set up another department of our national life which will compete with every other department in deciding priorities for our limited resources. Instead of the Government making a coherent plan as to how, say, steel shall be used, setting aside so much for the factories which need expansion and so much for the making of tanks, they establish throughout the length and breadth of the land a deliberate competition against whatever plan the Government have got, which will be carried on by every single firm finding itself liable to Excess Profits Tax. They will compete and struggle to get somebody to certify that the expansion they propose will increase the output of one form or another of war material. I regard the proposal as vicious.
The proposal arises from the Chancellor's statement that the present Excess Profits Tax is not quite fair. I am afraid that all over this House it is regarded as a terrible thing to be unfair to property. I say that at this moment, from the point of view of the national effort through the coming months or, maybe, years of struggle—a struggle which is being carried on as much on the moral plane as on the military plane—it is essential to be as unfair to property as you are to life. It may be said that it is unfair that the legislation which we pass should affect one particular firm adversely. But it is only one sort and size of property for which we are concerned. I have not noticed much sympathy on the other side for the little shopkeeper who is snuffed out on account of the exodus of population from a dangerous area. It is just those large properties to which you have to be fair. Consider how unfair war is to life. What could be more unfair than that one woman should be bombed and killed, while the woman next door is not? Or what can be more unfair than that one man, who in his life up to now has developed a kind of skill for which he was being paid 70s., should now, that particular kind of skill not being needed, be drafted into the Army and receive 14s., while another man who had developed another kind of skill for which in pre-war years he also received 70s., should now find that skill needed and receive 90s.? You have to treat property with an unfairness of that quality. I feel alarmed and perturbed about this Budget, because it shows no appreciation of what the great mass of our people understand by equality of sacrifice in war-time.
I am in danger, perhaps, of seeming to endorse a criticism which is often voiced from the other side about the wages of members of the Armed Forces, compared with those of the trade unionist workers. There seems to be almost a kind of propaganda to set the men of the Armed Forces against their brothers in the factories. Let us remember that the arms workers in Birmingham are receiving, on an average, less than £3 a week. I am glad to say that, in my experience, this propaganda is not succeeding. There may be one or two soldiers—or one or two hundreds or thousands of soldiers—who may resent it, but I have not heard a word from any of the men in the ranks to the effect that some of the arms workers are getting more than soldiers. This morning someone said to me, "Isn't the food awful in the Army?" I said, "It is not too bad; you may have to live on a great deal worse before the war is over." He said, "That is impossible." I pointed out that the people of Spain had fought for over a year on breakfasts of hot water and biscuits. He said, "But they knew that they were all in the same boat."
That was a significant remark. He was not referring to the fact that some arms workers were getting twice or three times as much as he was; he was thinking about that curious fraternity of directors, brokers and stock and share manipulators. I ask the Chancellor of the Exchequer, not because of any great economic effect it would have, but for the tremendous moral effect, to consider illegalising the tax-free directors' fees. I hope it is not too late for him to consider that. It is worth while looking at a book recently published called "Rats." I do not much like the title, but the material is worth studying. It is surety monstrous that, when directors virtually control shareholders meetings, they should have the power to put the whole of the increase in Income Tax on to the shoulders of the shareholders; and then they come along and say that, somehow or other, they cannot make a profit, and the Government must make it up to them.
I would like one of these tax-free fee receivers to consider this Budget. This is a quite typical soldier's expenditure in a day. First, let us take supper. We are not underfed; on the whole, we are quite well fed; but supper is the only meal, except a cup of tea and a bun, that we get during the day between 12.15 and 7.30. On supper, the private soldier spends 4d.; on tea and a bun in the middle of the morning, he spends 3d.; on stamps, an average of 1d. a day; on those recurrent necessities which are needed every two or three weeks, like tooth paste, polish and so on, 2d. a day; on chocolate, 1d.; on beer—representing one pint a week—1d. a day; and on cigarettes, 1s. And do not let anybody who does not know the appalling boredom of the private soldier's life complain about that is. a day on cigarettes. That comes to 13s. 5d. a week—which is more than the soldier is receiving. I can assure hon. Members that there are a great many soldiers drawing upon their reserves, or rather receiving week by week payments from their wives, who, goodness knows, are hard enough put to it to make do on pay and allowances. Sometimes the wife has a job, but in some cases wives who have nothing except their pay and allowances are regularly sending their husbands 2s. 6d. a week because they know how hard hit they are. There is no room for cinemas on an allowance like that.
I would like one of those gentlemen whose gross income is £10,000 and whose net income has therefore gone down. to £4,000 a year, which is £80 a week, or to £3,200 a year, which is £64 a week, to consider—one who is not in this House but who perhaps may read what I say —what his life would be like, not in terms of finance, but in real physical suffering, if he had to come to this place at 6.30 every morning and receive a very nourishing portion of porridge, two rashers of bacon and some potatoes, and at midday, more potatoes, vegetables and bully beef, and nothing else at all until he went to bed except two pieces of bread and butter and a bun, and all that he had to spend on food during these hours was 4d. I really do not believe that hon. Members are considering the human sacrifices in terms of this kind at all. Of course, I do not want all directors to come down to the wages of the serving soldier. I agree that it is a very responsible position to direct a company. They require much more training and ability than the average soldier. I am in favour of rewarding ability, but is it really inconceivable that the general run of directors of our companies should receive the same wages as a colonel in the Army, and get on with their job, expand their factories if they need expanding, contract them if they need contracting, and keep them running if they need to be kept running, and do it all with efficiency and enthusiasm and without grumbling? Is that really impossible? If these men can do that, why should they not do it for the moral effect it would create? If these men are not prepared to serve their country in its hour of need, as all the colonels in the Army are doing for a colonel's wage, they are not men who are fit to exercise any authority over any part of our destiny.
One last and quite separate point. I suppose the Chancellor of the Exchequer thought about the increase in the railway dividends before he made his observations about the Budget and the cost of transport. He says, rightly, that it would be a bad thing to make the railway travellers pay the extra in increased fares, but it is very nearly as broad as it is long. I agree that it is better to put the burden upon the general taxpayer so that the rich pay rather more. But is he sure that the better solution would not be to revise the Railway Agreement? There is at least anything up to £5,000,000 to be saved there. If it is said that revision would be a breach of the Agreement, I would point out again that there is another type of property to which we are being ruthlessly unfair in these days. It almost seems as if there is only one kind of property to which you must be scrupulously fair and that is the property of the company director, the company promoter and the manipulators of company finance and company script. We have been ruthless with those who owned Government of India bonds and, in the same way, I suggest to the Chancellor that he can produce a substantial moral effect in this country if he revises the Railway Agreement and creates a situation in which railway shareholders will get no more than they had before the war.
I am glad to have the privilege of congratulating the Chancellor upon his brilliant display to-day. He gave the Committee and the country a bird's-eye view of our expenditure and income in such intimate detail that the whole nation will now be fully apprised of the situation which exists in this most parlous hour in its history. I wonder whether in estimating for an expenditure of £4,200,000,000 during the ensuing twelve months he has not been somewhat optimistic. Expenditure for this year is £4,000,000,000, so that the increase he anticipates is only £200,000,000. I should have thought that with the new factories coming into operation and the larger war effort we now see opening this sum would be too modest, but no doubt the right hon. Gentleman has weighed up the matter in a way which we, without the advantage of all the data and figures, cannot do.
But the limits of our effort are not only financial. There are the physical limits of our man-power, our material and the organisation of our war effort. I hope that as a result of the revelations of the Select Committee upon National Expenditure we shall not again have any situation such as is there revealed. I am gratified to know that there are no new indirect taxes. Is it the case that the Chancellor saw little or no hope on that horizon? It may be that the maximum burden is already being laid upon those who are bearing indirect taxation. There is, we note, no capital levy. I think we must all agree that there is a most substantial income levy prevalent at the present time but the Chancellor, following the illustration he gave us of certain individuals paying 19s. 6d. in the £, might have taken the other sixpence without hurting anyone too seriously.
I have heard it argued that certain individuals are being called upon to pay, in modern taxation, the sum of 22s. in the £and this is done, I am assured, by calling upon financial reserves. I am certain, however, that the Chancellor is not guilty of imposing that burden of taxation. There is no taxation on land values, presumably because it would take too long to secure such taxes, but, at all events, I think the Chancellor might have gone on the safe side and placed a tax on land based upon, say, half the actual value. As to the Purchase Tax, I was very hopeful, knowing the heavy burden on certain sections in my constituency, that this tax would be extinguished. It involves only a relatively small sum. The Chancellor says that he will obtain £26,000,000 this year, and in a full year, not what he predicted formerly, when he said that it would produce £110,000,000,.but only £70,000,000. Perhaps some modification of this tax may be introduced in the Finance Bill. I can assure the Chancellor that I have heard of cases of unemployed people and other relatively poor folk who are quite unable to renew household goods. I moved an Amendment to that Measure asking that bedding should be exempted, but the heavy hand of the Chancellor prevented that from being achieved.
It is a pleasure to learn—and no one will share that pleasure more than the agricultural interests—that farmers are now to pay their Income Tax upon their profits. It must have been a source of deep shame to that industry to know that it was paying altogether less than it should have paid, and that it had done so for many years past. It is interesting to know that, with the reduction in allowances and exemption limits, some 2,000,000 more citizens will be brought within the sphere of paying Income Tax. I have discovered everywhere that the patriotism of our people is such that I am sure no objection will be taken in this regard. I am glad that the Chancellor has offered this consolation to these people, that to the extent of some 20 per cent. there will be a nest-egg put aside for use after the war. As the tax begins at the level of —110 per annum, there are few of our citizens who will escape that taxation in one form or another. Probably, the Chancellor has adopted the most equitable manner of raising the —250,000,000 which he requires.
With regard to the Excess Profits Tax of 100 per cent., I felt that, considering the general opinion that no undue profits should be made out of the war, there would not be any reduction in the amount. There was, however, no question that the 100 per cent. was inequitable as between firm and firm. The Chancellor has now eliminated that inequality. The provision for reconstruction after the war, by crediting the firms with 20 per cent., will afford a very valuable stimulus to them and to the national economy after the war. After all, if the war lasts some length of time, there will be a substantial amount available for expenditure for various classes of goods arising directly from this grant. The Chancellor of the Exchequer advised the Committee that Income Tax would be payable upon the sum set aside. One would like to know on what year's Income Tax the charge will be made. It may be found at the end of the war that the 20 per cent. has disappeared altogether—we have already seen half of it go from what was said by the Chancellor in indicating that taxation must be raised to 10s. in the £.
It is gratifying—and I hope this may be the general progress of Chancellors of the Exchequer in the future—that certain increases due to the war shall be paid by the Government to avoid the possibility of inflation and to give a greater measure of stabilisation. Unquestionably that is a very Socialistic step to take, and it should generally achieve the end the Chancellor is seeking—the avoidance of inflation and subsequent prospective increases in prices to the public. It is a pity it could not be made retrospective. We know how transport charges have risen, and we have seen a rise of £2 per ton in the cost of steel and many other materials required for war purposes. Perhaps the Government may see fit-to pay all increases due to the war. With regard to the future position, which the Chancellor has outlined, I think we may feel satisfied. We can look our nation in the face, and also the European peoples for whom we are lighting, and particularly the American nation. However severe the burden may be, or however arduous the role, the British people are prepared to make the heaviest sacrifices they can make in order to secure an early and successful termination of hostilities.
I am always sorry that we do not have a better attendance on Financial Statement days, because it is a grand opportunity for Members to take the time at their disposal in putting forward any proposals they have in mind. Often Members have preconceived ideas of what should be done. I was particularly struck by what was said by the hon. Member for Barnstaple (Sir R. Acland), that if only we could get the idea of equality in the minds of our people, there is no question that this war would be prosecuted to a successful issue. We want our people to realise that they are being dealt with equally. I know the people at the other end of the scale— the poor people who have insufficient means. I was hoping that the Chancellor might have mentioned something about these people—I am referring now to National Health Insurance people and those on disablement benefit who are receiving the meagre allowance of 7s. 6d. per week. I should have thought there might have been some provision to give, them better allowances. I have letters from people who have to go to the Poor Law authorities to get a little more than 7s. 6d. We have tried to remove what is called the family means test, but when these poor people go there they are subject to it. These are points that I want the right hon. Gentleman to have in mind. The more he can devote his attention to giving all classes a fair share of what is going, the more will he be satisfied with himself and get the country behind him. You will never succeed if you have at one end of the scale a lot of people who are suffering, while others are doing fairly well.
The Chancellor, talking of the stupendous amount of the Budget, wanted the money to be wisely spent and deplored what he called extravagance and waste. We hear from workers in the munition factories of the colossal amount of waste, and I am invited to go and see waste material lying about and nothing being done about it. You can understand the feelings of people who are called upon to pay Income Tax when they see all this waste. I hope attention will be given to that matter. There is criticism about people being taken to munition factories and not being made proper use of. People are taken, for instance, from the mills, but if the factories are not quite ready for them, I do not regard money spent in training them as being unjustly spent. If they were not trained there, they would have to be sent somewhere else. It is only right that they should be paid a wage while they are getting their hands into proper use. It takes weeks, perhaps months, for mill hands to become efficient.
I do not call it extravagance to pay full wages while they are being trained. At the same time I hope the Chancellor will see what can be done about extravagance in other ways. I am pleased with the Chancellor's statement about subsidising essential foods for the people. I am in entire, agreement with what he has done in that direction, and I hope that he will not stop there. We are subsidising bread and other things now, and I want the Treasury to do whatever can be done to stabilise prices, because the payments by the Treasury come from all the people rather than a section.
The Chancellor mentioned the conversion of 4£per cent. loans and the money that will be brought into the Treasury as a result. It struck me that the right hon. Gentleman might use his abilities in another direction. I understand that local authorities are to convert some of their holdings and pay 3£ per cent. Whatever percentage is paid, it comes out of the common fund, and seeing that Par- liament has laid down the rate of 3 per cent. for Government loans and the Chancellor is to find the money for the conversion of the local loans, will he not say to them, "If you convert, there must be no higher rate paid than the Government are paying for their loans"? The local authorities are controlled by us and have to be helped out by the Treasury, and why should they pay any more than 3 per cent.? I hope that the Chancellor will gradually but inevitably cut down the rates of interest everywhere. The percentage should be kept as low as possible, and we shall then get something like a fair return for the money. It is hard that we should have to pay any interest on invested money when this is a common fight, and there is no reason why we should not take the money and use it.
With regard to the Excess Profits Tax, I am one who stands whole-heartedly for the full 100 per cent. The Chancellor is not doing the right thing in giving way on that matter. I know that a lot of pressure has been brought to bear on him and that there has been a lot of wrong-doing in bringing that pressure to bear. I have heard a lot about companies misusing their profits in various ways that could not be got at, for the purpose of bringing pressure on the Chancellor. It is unpatriotic of these business people to attempt to force the Chancellor's hand in this direction. There will be an outcry in the country about this, and the lower sections of wage earners who are called upon to pay Income Tax will want to know why the Excess Profits Tax is reduced to 80 per cent.
I do not like to interrupt my hon. Friend, because he always speaks with so much common sense, but does he not think that some opportunity should be provided in the public finance of the year to enable people, after this awful conflict is over, to return to their employment? How can that be done unless there is some margin to enable businesses to carry on after the war?
Parliament decided in the light of all that that the duty should be 100 per cent., and the present Chancellor was the man who led the House in that direction. What has happened since? I can give instances if required to show that financial interests, by subterfuge and wrong-doing, have tried to dodge the tax. When news of this Budget goes out to the public it will have a very serious effect upon their minds. The man in the street will say, "Yes, we are called upon to pay Income Tax. What for? For these high financial interests which are getting a reduction of the 100 per cent. Excess Profits Tax." I know that is so, because I was at a miners conference during the week-end, and that was the line of argument followed, and we were urged to do all we could to avoid any reduction of the 100 per cent. Excess Profits Tax. We on these Benches will fight as hard as we can on this particular question and try to defeat the Government.
There is another means of getting money which I would urge upon the Chancellor. He knows that we on this side have always stood for the State holding the land of the country. There is a strong feeling among the people that landowners are enjoying the fruits of enhanced values for their land which have been brought about through no ingenuity on their part but are the result of public activities. I urge the Chancellor to consider taking the whole of the land in the country, and I will tell him how to do it. I want him to purchase it at what is called the agricultural value. There is no need to pay for it in hard cash. I am not asking for confiscation—I do not want to urge that—but I do say that the whole of the land ought to be in the possession of the State. If it is bought at its agricultural value, then any increment in its value will flow in to the State, and that will be a great way of finding money for the future. We are getting near the point of exhaustion so far as ordinary taxation is concerned, but the Chancellor of the Exchequer can, if he will, find a new source of wealth. I put this suggestion before him in the hope that he will examine it, because I foresee that there will be an interim Budget before the year is out.
Our expenditure is bound to go up, and we do not object to that. Whatever is required to beat Germany—ask us for it, and you will get it. As the Chancellor wants to balance his Budget to stop inflation, he will have to look for fresh revenue. I am giving him a hint, a straight tip if you like, how to get it, and I hope he will take notice of it—this proposal for the State to acquire the land and get the benefit of the increment value which has come about without help from the landowners. On the whole I am satisfied with the Budget. All that I am anxious for is to try to get the ordinary people outside this House to have a feeling that there is a sense of fairness in the House of Commons, that when we are putting on taxation to meet the needs of the country we ought to put the burden equally on everyone's shoulders. If we can do that, there will be no need to fear the result. If we get the whole country feeling that we are doing the right thing here, we shall get a successful conclusion of the war.
I consider that one of the remarks made by the Chancellor when introducing his Budget was very significant, although it might seem quite innocuous. He said that along with the work of prosecuting the war we had to prepare for measures of reconstruction and social advance after the war. That means that after the war there will be the same old Tory conception of the same old system of society. The idea prevalent is that the property-owners will still remain on top and the masses of the people will be down at the bottom. That conception determines the character of the Budget.
I do not propose to deal in detail now with the modification of the 100 per cent. Excess Profits Tax, but I will deal with it in the country. I would like to have an opportunity of doing so in the presence of the hon. Member for Moseley (Sir P. Hannon), who interjected during the speech of the hon. Member for Leigh (Mr. Tinker). What is the guiding principle of the Government's attitude towards the 100 per cent. Excess Profits Tax? You can see it as plain as anything. It is that the rights of property must be protected and maintained; its profits must be secured during the war and the property protected after the war. While there is such concern for property, what concern it, shown for the poor? None. All the indirect taxation that bears so heavily on the poorest of the poor remains. I wonder whether any hon. Member on the other side of the House, or even the Chancellor of the Exchequer, would be prepared to spend a week-end at the home of one of the poorer workers, sit down with them and share their scanty rations and contemplate at the same time the amount of taxes that those people have to pay. On tea they pay £12,000,000 a year, on sugar, £30,000,000; cocoa, £1,000,000; beef and veal, £3,000,000; dried fruits, £1,000,000; matches, £9,000,000; silk and art silk, £4,000,000; beer, £106,000,000; tobacco, £151,000,000, and entertainments, £7,000,000, making a total of £324,000,000. These burdens, or most of them, are imposed upon the poorest of the poor. The burden falls upon old age pensions, and there have been continuous resolutions to the Chancellor of the Exchequer, demanding the end of the means test. No provision is made in the Budget on behalf of those people.
Added to the indirect taxation that bears so heavily on the people is the Purchase Tax. This tax was adequately described by the right hon. Member for East Edinburgh (Mr. Pethick-Lawrence), who said, on 24th July last year:
The Purchase Tax … is generally known in other countries as a sales tax…It has been the name for a tax devised by people who wanted to push on to the poorer classes a large part of the burden of taxation." —[OFFICIAL REPORT, 24th July, 1040; col. 906, Vol. 363.]
The right hon. Gentleman understood it, and knew what it meant. He explained what it meant, although he supported it. Principle is not very strong with some of the Members on this Front Bench.
Worse than any of the taxes is the tax on wages. It is a scandalous tax. The other day I had a letter from the Thorn ton branch of the National Union of Railwaymen, protesting against the tax and asking me to do everything possible to prevent an increase in the tax. The Chancellor says that there has been an unofficial inquiry in a certain area. Whether it is an unofficial or an official inquiry, it is a fraud. Everybody knows that it is a fraud. Supposing the unofficial or official inquirer went to a worker and said to him, "Do you agree with the tax on wages?" and the worker said "It is a damned scandal, that is what it is"—
I am sorry if I have transgressed, but I was trying to describe how a worker would express himself about the tax on wages. If he expressed himself in such a form and said, "It is a scandal; it ought never to have been imposed, and the trade unions ought to take action and put a stop to it," the inquirer would mark down such a man or woman as a "Red'' and report that man or woman to the police. The Financial Secretary to the Treasury shakes his head as if he does not accept that, but there has been so much of it, that when these inquirers go round the people are very careful in what they say because they have heard of such cases, and the police have been known even to raid houses and search for seditious literature and that sort of thing. The inquiry is a fraud. The workers are bitterly opposed to this tax, because they know that the property owners and their profits are being protected. The workers know that they are shouldering a heavy burden thrown on them by the property owners, and that they are guaranteeing the property owners profits. Then the workers are told that on top of that, while the profits of the property owners are to be protected, a certain percentage of the money filched from the workers wages will be credited to them to meet the difficulties which will arise. What difficulties? Unemployment, that is what is meant. At the end of the war, in the sacred name of property and profits, there will be mass unemployment.
When talking about taxation and wages there is an idea on the Tory benches that the workers are making enormous fortunes. There are some workers who, by working overtime every night of the week and by working on Sunday, make £7 or £8 a week. But in my constituency there are mostly miners, railwaymen and agricultural workers. What sort of wages are they getting? They are only getting the normal wages which they had before the war, with one or two small cost-of-living additions. It is very difficult for them to make ends meet as things are. The miners are simply desperate to get wages which will give them security, but with this lowering of the limit of taxation many of these men will have to pay taxes, and they will be unable to carry on. It is the same with railwaymen and agricultural workers. It is claimed that because of overtime and Sunday work, workers can make fair wages. Alright. Then the Ministry of Labour goes to the dockers with a scheme which promises them a guaranteed wage of £4 12s. 6d. a week, while they may make much more. I am told that coal-trimmers in Cardiff and Bristol can make from £8 to £10 a week, working coal on the surface, but the men who are working the coal way down at the bottom of the pit—what sort of wages are they getting? And now they have to pay the tax. A wage of £4 12s. 6d. a week is not too much for the dockers; it is not enough, but if you can guarantee a wage of £4 12s. 6d. for the dockers, why cannot a similar wage be guaranteed for the miners? But no, to force them down to the deepest depths of poverty is the idea. That is what is happening, and the workers know it.
Nothing has been said about the banks and the bankers. Why are they being allowed to run about all over the country? When you hear about the lend-for-nothing campaign, or lending at a low percentage, you do not find the bankers among the lenders. The Chancellor has praised Lord Kindersley and his appeals. I have heard him appeal myself, but he appealed in vain to the bankers to lend cheap money. Why should not the banks be reorganised and taken out of the hands of the gang who control them? There are so many banks, most of them redundant, but the State could take over the banks and completely reorganise the banking system. Then, as the hon. Member for Leigh (Mr. Tinker) asked, why, in a crisis like this, should the land of the country be in the hands of private owners? Private owners have no right to the land. Reference has been made to a book published about 20 years ago, by the present Secretary of State for Scotland. In that book it describes how the possessors of the land got it. This is what is said:
There can be no progress until the superstition that the old nobility is noble is completely eradicated. Their title deeds for the land they possess are theft, rapine, murder and court harlotry.
The last-named is significant. I do not want to use common language to describe what it means or I would be using unparliamentary language again. Why should we leave it in their hands? Why do we not take over the land, and in taking it over take over all the land
values? What an amount you would get out of that. The big thing that is wanted in a crisis of this kind is a tax on property. There is no other way to meet the crisis.
Mention has been made of the Lease-and-Lend Act. But nobody discusses what the Lease-and-Lend Act will mean to the people of this country when the war is over. Our people are already committed, whether we win or lose the War, to reparations payments to America. I heard the subject mentioned the other day among a group of Members. One or two said, in an easy, happy-go-lucky way, When the war is over we shall do what we did after the last war, we shall not pay. "But it will not work that way this time, because we are being tied up.
Then there is the National Debt, of about £11,000,000,000 or £12,000,000,000 at the present time. I have had an estimate made of the effects of a tax on property. The total property in private hands is estimated at £25,000,000,000. Of this, about £14,000,000,000 is owned by 300,000 people each having property of over £10,000. It is these people, numbering less than 1 per cent. of the population, who would have to pay. The number of persons with property of over £100,000 is 14,000. The total value of their property is £4,500,000,000. A tax at the rate of 33⅓ per cent, on that property would yield £1,500,000,000. There are 90,000 other people with property worth over £25,000, to a total value of £5,500,000,000. At 25 per cent., a tax would yield £1,400,000,000. Then, there are 196,000 people owning property of a value from £10,000 to £25,000. The total value of their property is £4,000,000,000, and, at 15 per cent., a tax would yield £600,000,000; making a total yield of £3,500,000,000.
It is alleged that there will be a great deal of difficulty in dealing with the property, getting the examinations made, and the estimates worked out, and so on. But the Estate Duty returns show that persons with property of over £10,000 have, on an average, nearly a quarter of their wealth in the form of British Government and municipal securities. This makes it clear that such a tax could be arranged, if the Government had any intention of interfering with property. I listened to
the hon. Member for Stoke (Mr. E. Smith) discussing the conscription of men and women and the tenderness that is shown towards property. I was at Queen Street Station, Glasgow, the other day, catching the 9.40 train for Newcastle. There were a lot of lads joining the train after their embarkation leave, and I saw some touching scenes. Most touching of all was a mother with her arms around her son's neck; and their relatives had a most terrible job getting her hands loosened from her boy, as the train whistle was blowing. Tears streamed down her face. Her heart was obviously breaking. Yet such tenderness is shown for profits and property. Speaking on 23rd April last year, the leader of the Labour party, now the Lord Privy Seal, said, from this side of the House:
We have always advocated a capital levy." — [OFFICIAL REPORT, 23rd April, 1940; col. 90, Vol. 360.]
The First Lord of the Admiralty, when he sat on this side, asked the Chancellor of the Exchequer to consider the general proposition to mobilise in war time the capital wealth of the country. A decision was taken at the Labour party conference at Bournemouth as follows:
This conference, recognising the paramount importance of democratic success in the present struggle, declares that any. sacrifices entailed must be apportioned with justice and equity. It urges the vital importance of protecting the workers against schemes of compulsory saving and calls for immediate restriction of profit and the imposition of a levy upon capital.
The question now is, as all these burdens gather, with property and profit protected, are we to assume that we are going to carry all these great burdens over into the post-war period? There are the reparations to America, the £11,000,000 or £12,000,000 of war debt which is being added to all the time? Where is there any possibility of social progress or of a new social order such as labour leaders are talking about and about which the Tories laugh and jeer? With such burdens there can never be a new world of any kind. There can only be the old world with greater poverty and distress than has ever occurred in the world before. If there is to be any change in the future we must begin by making changes now, and these changes should be registered in the Budget. We should have a Budget freeing the workers from
the tax on wages and removing the Purchase Tax and the taxes on the ordinary necessities of life, and taking from the robbers a share at least of their ill-gotten gains. Until we can get such a Budget there will be no guarantee for the future of the people of this country.