Before the arrival of Black Rod I was on my last point. It was the failure of the graduated Income Tax to achieve one of the functions for which it is designed, namely the introduction of a greater degree of equality. As a matter of fact, the very high rate of taxation has to some extent defeated itself in that now we find that the incomes of those who can command high salaries have increased enormously to meet, or rather to circumvent, the higher rate of our Income Tax. There is undoubtedly a very strict limit to which any form of taxation can go to bring about this greater equality which I think the nation is demanding. A Third Reading Debate on the Finance Bill is not appropriate to the discussion of such alternative methods to a graduated tax, but I feel that this problem of incentive—which is being bedevilled by our higher rate of taxation—and the equally difficult problem of meeting the equalitarianism which the age will demand cannot be solved by taxation. I think that ultimately they will have to be solved in the only possible way—that is by a general recognition of the fact that the mere possession of some talent which gives a man almost a monopoly of certain skills, should not and must not enable a man to demand an income or a standard of living completely out of consonance with those of the majority of the people.
I do not propose to follow the hon. Gentleman the Member for Chesterfield (Mr. Benson) very far in his incursion into the field of equalitarianism, except to say that there is another check on the effect as it appears in this Bill of too high a rate of taxation in its killing of incentive. I believe that it does tend to kill incentive, but the cure may be found in a form which would be extremely bad for the interests of this country—that is, in the export of brains and ability. That is the thing which we have to fear most of all—if in this country the Government evaluate at too low a figure what is contributed by the man of enterprise, brain knowledge and energy. If he is too oppressed by the incidence of taxation, then there is every sign that he will take what he has to contribute—which is his knowledge and his enterprise—to another market. In the long run, that may not be a bad thing if the result is the building up of industries in other parts of the world which nevertheless are still attached to this country, but from the point of view of revenue and increasing the production of the best type of goods, to drive out of this country that type of brain and energy by too high a rate of taxation is a disastrous thing. I appeal to the Chancellor, when he is reconsidering these matters, to see whether he is not approaching, or has not even overstepped, the limit which will have the effect I have tried to outline.
The Chancellor began, as we are accustomed to expect from him now, with a spate of self-laudation, pointing out what a magnificent Budget this was and how, even after the very long Debates we have had, it was still his Budget, and that it was to be counted as a credit to him. It is just possible that in the Debate which has taken place since, the persistent efforts that have been made from all sides of the House, and chiefly from this side, although they have not caused him to see the light, may have removed the scales from his eyes, because there have been enormous improvements. The right hon. Gentleman spoke about the buoyancy of the revenue rather, I think, in the terms of the farmer who goes into the stall of cattle to look at his stock which is being fattened with thoughts of killing it later on. It is worth pointing out that what he refers to with pleasure today as the buoyancy of the revenue, he calls on other occasions something quite different. When it is producing the inflationary tendency which he fears, it is called "too much money chasing too few goods." Those are two expressions for exactly the same thing. The buoyancy of the revenue produces exactly the same too much money which he objects to when it chases the too few goods.
I would like to join in the congratulations which the Chancellor and others have offered to his two assistants. As a newish Member, I find it very difficult to follow and understand all the Clauses in a very complicated thing like this Bill, but when the Solicitor-General, in particular, has explained a Clause to us two or three times, I cannot help feeling that his spiritual and mental home is the maze at Hampton Court. I cannot find my way out of the Clauses, any more than can any other hon. Members.
I want particularly to refer to the taxation of motorcars. In the sort of semi-valedictory blessing which the Chancellor gave today, there lay a certain danger. During the Debates on this subject, he said that taxation is a limiting factor on design. I believe that the very welcome concessions he has given us have all been made with that end in view. Though I agree with my right hon. Friend the Member for West Bristol (Mr. Stanley) that it is probably the weight of the taxation rather than anything else which is the limiting factor, it is only right, in order to avoid great disappointments in the future, to point out that there are other limiting factors, not directly financial, which must have a very great effect. What really limits and guides design at the present moment in this connection are causes going back a very long way. There was the robbing of the Road Fund. I will not at the present moment say who was the original robber, but only that the subsequent robbers have joined in the robbery with the greatest enthusiasm, thinking that they could get the benefits and lay all the blame on the original robber. Nevertheless, the robbing of the Road Fund has led to fewer roads being constructed and that has been limiting factor on the design of motorcars.
The fact that in this country, even under the present Government, buildings are being put up of which hardly any have garages which can take the cars that are supposed to be the ideal ones for export is a limiting factor. We have just seen installed a new system for parking in towns—yellow signs on lamp posts, whether for the guidance of man or dog I am not quite certain—but that is certainly supposed to have the effect of driving motorcars away from our main streets. All that is a very direct limiting factor on design. If one has not the opportunity to produce certain types of cars for the home market, one cannot really get down to the matter of exports. Quite inadvertently the Chancellor may be helping the motor trade in their export drive with what he has done in the Finance Bill. We tend to talk very much too loosely of the export market for mortorcars as if it were a homogeneous thing and as if all cars were of one type, and that type the right type for export. That is no longer true. We have to see how our overseas motorcar market has developed and how it will be effected, not only by this Bill, but later on.
I have spent a good deal of time travelling over most parts of the world and I have seen the new development there. In a great many towns, and round a great many new towns, more roads have been built. In those urban and semi-urban districts a motor car of the 12 to 18 horse-power type made in this country is the ideal one as it is mostly for general use and round-the-town use, but in the bigger open spaces the motorcar which is ideal is a much larger vehicle, for which those of American and Canadian manufactures are much more suitable. I believe we shall get the best out of these concessions which the Chancellor has given if we realise that our target must be the medium-sized car for that limited market, which is still a very big one, and not for the market where we have bad rough roads and need a very heavy, well-sprung, large and roomy car.
I would like to give one final note of warning on the subject of motorcar taxation. It is that this is not a magic wand waved by the Chancellor that must immediately result in the motorcar industry producing at short order, the ideal car and building up an enormous export trade. It has taken years, if not decades, to get into the present position, and it will be most unfair if Members of the Government and hon. Members opposite come along in a very short while and say, "There you are—we have given you all you ask, and you are not producing the goods; it is another instance of the failure of private enterprise; here is another industry which we ought to take over, regulate, push about and in the end throw into our nationalisation bag." These concessions are a good beginning. It is certain that the industry will seize the opportunity and use it to the best advantage. But let us see it in its true perspective.
I have another point to make on the subject of distributed profits and the incidence of taxation thereon arising from this Bill. I do not believe the Chancellor has taken into account nearly sufficiently, those very large groups of firms and businesses which were badly hit by the war by being overrun by the enemy in the Far East and in many other parts of the world. It will take them many years to get into their stride again; they are still suffering from the effects of being overrun, and from the slowness of the Government in settling claims for war damage and other risks; and at the end of five or six years of no dividend for the equity shareholders, who took the risks in building up these vitally important industries which are one of the biggest dollar producers within the British Empire, heavy extra taxation falls on them and no sort of weight is given to the arguments put forward for some sort of relief.
Looking at this Bill in its true perspective, I cannot do better than emphasise the warning given by my right hon. Friend the Member for West Bristol that we must not be too complacent about this wholly unhealthy buoyancy, due to there being insufficient goods and services for the national revenue to be expended upon and we must not listen to the siren voice of the Chancellor—although he puts in at about every third phrase, "I wish to give you a serious warning that all is not well"—which tends to make his speech read rather more rosily and complacently than the note of warning would indicate. If we do not listen too carefully and do not see that the true picture is one in which our real situation is worse this year than it was last year and not better, as he was trying to make out in his speech, we shall not be doing the House, the rest of the country, or the rest of the world, a service.
It is with a good deal of trepidation that I poke my nose into this Debate on the Third Reading of the Finance Bill. There are just two points I would like to mention. First, I would like to say how much I enjoyed the very entertaining speech delivered by the right hon. Gentleman the Member for West Bristol (Mr. Stanley). I think he must understand how much I deplore the fact that he left the glorious hills of Westmorland to become the representative of the bombed city of Bristol. As one of his old constituents—I well remember the time when he first became the Member of Parliament for the County of Westmorland—I want to pay that tribute for the very entertaining speech he gave us this morning. I noticed that the right hon. Gentleman remarked that this Bill on its Third Reading had little resemblance to the one which appeared in the first instance because there were so many alterations, and he had a severe criticism to make of Clause 9. I was hoping that, while criticising Clause 9, he might go one step further and say a few words about Clause 10, because it is that Clause in which I am most interested. That has not been altered.
I am referring to the relief for earned income which has been increased from 1/8th to 1/6th and that is a valuable concession. We have heard a great deal about incentives and I think that that relief is a great incentive to every type of worker in this country. Although it is small, perhaps too small for the right hon. Gentleman and his hon. Friends to recognise as being of any importance, yet if he will come within the circle of the working-class communities, if he will go into the trade union branches and among men who have to depend upon their weekly wage, he would hear a certain amount of praise for this improvement in the Finance Bill. Another point in Clause 10 is that the allowance has been applied to the aged people. There, of course, it is limited to £500to a year, but it brings within its purview a wide circle of deserving people who have done great service to the country, who have lived their lives humbly with no excess of salary, and it is worth noting that they will enjoy this allowance of 1/6th of their total income.
I do not want to make any comment about any other part of the Finance Bill, although I was interested when the hon. Member for Bury (Mr. W. Fletcher) started to speak about the robbery of the Road Fund. I do not know whether he remembers who was the robber, but many of us on this side of the House are very conscious indeed of the identity of the person who performed that little act of robbery which has had such dire consequences to our roads. I want to thank the Chancellor for this Bill. I agree there is nothing really remarkable about it, but we are living in days when changes of a remarkable nature could not possibly take place, and I am only too pleased to think that we have a Budget of this description two years after the end of six years of bitter and fearful warfare. I hope that, in the ensuing year, when we hear his next Budget statement, there will be some attractive features connected with it which will fill us with delight and give us a great deal of satisfaction.
It is not unpleasant to me, Sir, and I hope it is not unpleasant to you and to other hon. Members that, after the storms and the growls and the heat and the heavy rains of yesterday, we return this morning to calmer Parliamentary waters. It is true that the majority of the officers and crew appear to have gone to their quarters. I do not know whether the Government have been able on this occasion to put out of action their shift system and allow a great many of their supporters to return to a four-day instead of a five-day Parliamentary week.
I am not referring to the empty Benches on that side of the House any more than I am to the somewhat unoccupied benches here. It only shows that there are occasions, such as we are experiencing this morning, when the majority of Members are satisfied with the 95 per cent. of the work already done and find it unnecessary to turn up to see the conclusion of the matter.
First, I shall refer to the heavy criticisms with which I bombarded on the Second Reading, Clauses 14 to 18 inclusive of the Finance Bill as originally drawn. They were very complicated arguments which I had to press and, as I told the House then, I was not quite sure that, if I had been asked to amplify my arguments, I should have been able to do so with the clarity which we expect to receive from the Financial Secretary to the Treasury. However, I am grateful to the Chancellor and so, I think, are those responsible for industry, for having taken the unprecedented course of wiping those five Clauses completely out of the Bill and having had second thoughts and consultations with experts outside and then introducing new Clauses from which the great majority of the formidable objections to the original Clauses have been removed, and which, therefore, proved acceptable to all quarters of the House.
If I may say so to the Chancellor, although the situation has been largely cleared up by the introduction of his new Clauses, I do not think anybody considers that the position is yet as appropriate as it ought to be on these matters, and it is well worth while that the Chancellor should consider beween now and his next Budget setting up some form of committee or commission, or some method of inquiring into this problem of pensions and retirement allowances and so on, so that we may all be agreed, as far as we can get it, upon an ideal method of dealing with these matters rather than the piecemeal and inconsistent methods which are applied at present. That is the first point I want to make while thanking the Chancellor, as I do most sincerely, for having met the arguments which were presented to him from this side of the House, I would press him to go further into the matter and add to the improvements he has affected already.
My second point, a smaller one, is the fact that the Government have not met me on this question of the immersion water heaters. The Chancellor is sometimes right and I am sometimes wrong. On this occasion, I am quite convinced that I am right and he is wrong, and I would ask him if he would invite the experts who deal with fuel efficiency matters in the Ministry of Fuel and Power—if he has not already done so—to look into this. While I cannot disagree with what he said yesterday, that there is some risk of these articles being used wastefully by ignorant people or if they are improperly installed, at the same time, if those risks can be eliminated, there is absolutely no doubt in my mind that it would be a mistake to prevent their use by keeping on this heavy tax because, looking on their use from the point of fuel economy, there is no other apparatus I know of which will provide hot water supplies in the domestic household more economically than this type of heater.
I was very disappointed that the Chancellor was unable to consider the Amend- ment which was moved by my right hon. Friend the Member for North Leeds (Mr. Peake) dealing with changes in the classes of goods subject to, or the rates of Purchase Tax. Over and over again, not only the present Chancellor, but some of his predecessors, when brought up against similar problems have said "We would very much like to do this or that, but administratively it seems quite impossible." Hon Members will remember the earlier arguments we had when it was suggested that P.A.Y.E., or some similar system, should be introduced. We were told how formidable were the difficulties which faced any such system.
They were, but difficulties are meant to be surmounted, and the Chancellor and his advisers were able to get over those difficulties. I ask him to apply the same determination to this problem because the time will come—at least we all hope it will, and I am sure the Chancellor shares in that hope—when this formidable Purchase Tax may be removed. Then we may be dealing with many millions of money which have to be readjusted between buyers and sellers. This is a real problem which has to be tackled sooner or later, and I am not at all despairing that if the intelligent minds which have grappled with these other problems are applied to this one, the Chancellor with his advisers will be able to find a suitable Clause which will meet the difficulty.
The hon. Member for Chesterfield (Mr. Benson) chided us, or rather challenged us on this side of the House to say how, if we wanted taxation reduced, we could reduce Government expenditure. That is an old method of passing the ball from one side of the House to the other. But, if there is to be real economy in the staffing of Government Departments, the only way I see that that can be done is by altering the present system of administration. The system in Government Departments is, I know, having served in them many years, archaic. No large business undertaking could carry on successfully on the lines of Government Departments. I see Mr. Deputy-Speaker looking at me with a warning eye. You were not present, Mr. Deputy-Speaker, when the hon. Member for Chesterfield introduced this subject, and I was only attempting to make a reply to it But I take your warning at once to leave that subject alone.
Lastly, we are still faced with a period of desperately high taxation in this country which falls very heavily indeed upon those responsible for carrying on industry. I hope the Chancellor will constantly keep in mind—I know he does so pretty thoroughly—the imperative need in framing our fianancial policy of nursing industry. One thing I greatly fear in the months or perhaps years ahead is that unless we are all very careful a great many of our smaller industries will go bankrupt. This risk is not always appreciated and has not been frequently pointed out. What do we find today?
The cost of wages and raw materials have risen enormously and the result is that all the stocks we have to keep and the work in progress going through our workshops require twice the capital compared with prewar years to finance it. Not only that, but if one is giving ordinary credit to customers one has twice the amount of cash standing idle. There are a great many firms today who are already beginning to feel the pinch. As the sellers' market gradually disappears, unless there is a very rapid fall in wages which no-one wants to see, and in the cost of raw materials, the time will come when those who want extra capital will find it extremely difficult to get it. That is one thing I view with apprehension for the future. We do not want to go through a period in our industries such as we experienced after the last war. I think the financial policy of the Government must not lose sight of the risk which a great many of the smaller industries are going to be faced with because when all is said and done, while we have great industries in this country, the bulk of our industrial expansion has been built up by scores of thousands of smaller firms by which the great volume of our industry is sustained.
The right hon. Gentleman the Member for West Bristol (Mr. Stanley), in the course of a series of rather skilful interrogatories to the Chair, claimed that the finances of the country were not quite so sound as they appear on the surface. That is a rather serious statement to make The right hon. Gentleman discussed it with his usual geniality, but there are rather too many statements of this kind going about these days. I should think, especially in view of our credit position abroad, that the fewer statements of that kind that were made the better it would be. It is not only statements made in this House, in the most charming manner, which have an effect on our credit abroad, but statements made in the country at this time, in an endeavour, apparently, to run down the present state of our country for purely party aims.
The right hon. Gentleman said the Finance Bill and the financial policy should be used as instruments of planning, and in a further series of skilful interrogatories endeavoured to infer that financial policy has not been used in this way, and that the result, on the contrary, has been little short of disastrous. I wish to say straight away that I think the way in which our financial policy has been conducted has been extremely admirable and on the contrary we ought to be very proud indeed of some of the economic results which have ensued from the financial policy of the Chancellor, expressed not only in this Finance Bill, and in the previous Finance Act, but also in the current administration of finance. From time to time we witness the progress this country has made But sometimes we forget that this is a period of record employment, and that more and more people are being employed in industry, and furthermore that we are in a period when our exports in volume are achieving new heights and that the fuel and power generated in this country, despite setbacks in the coal industry, have reached new heights, and when the nation as a whole is making every show of a first-class recovery.
Furthermore, in the case of the Finance Bill, further endeavours have been made to effect a very desirable redistribution of income, and if one turns to Table 36 of Cmd. 7099, one gets some indication of the vast shift in the incomes of various categories of people that has taken place as a result of the financial policy pursued by the Chancellor, a policy which has not been challenged from any quarter. Moreover, despite the tremendous difficulties through which the country has gone, the Chancellor has, by means of the taxation which he has been able to raise through the various kinds of machinery in the Bill, been able to maintain subsidies at a point at which food prices of basic commodities are much lower than they were in the similar period after the 1914–18 war. These are things which are remembered by our people, and which go to illustrate what I consider to be the fundamental soundness of the policy pursued by the Chancellor.
I thought that we were to have in this Debate a further dissertation about low interest rates. I observe that that has now been dropped from the financial armoury of the party opposite. They would like to argue that owing to the low interest rates prevailing the would-be ' entrepreneur or the investor had little incentive to invest his money for a lower rate return. But they do not use the argument now, for they know perfectly well that in the event of there being a demand for capital, in an enterprise considered essential by the Government, which was unsatisfied on the capital market, the Government itself would step in and provide the money. Some of the deliberate policies pursued by the Chancellor have had extremely good results in this respect. At 30th April, 1947, there were 138 factories completed in the special areas, and a further 468 were under construction. All these things, which are of great value to our people, have been possible because of the soundness of the over-all financial policy pursued internally by the Chancellor.
The right hon. Member for West Bristol said that things might be all right in internal finance, though he endeavoured to cast some doubt on that, but he added that, of course, there is always the question of the balance of payments abroad. The discussion of that subject is obviously not permissible in a Debate of this kind, in which we are concerned with the domestic finances of the country, but I think it should be said again that the bulk of our difficulties arising out of the balance of payments arise absolutely and entirely from policies which it was found necessary to pursue—and the necessity for which I do not dispute—in the war itself. There was the process of disinvestment abroad which took place during the war. There was no protest from the Conservative Party about that at that time. There was the accumulation of sterling balances for war stores which we had to get. There was no Conservative protest about that, although they knew that those sums would have to be paid after the war. There was the provision of United States equipment which would subsequently be used for peace-time purposes, while this country was left with the bulk of the onus for providing equipment of a war-like type, or which was more explicitly used for war-time purposes, with no residual peace-time use. There was no protest about that from the Conservative Party at that time.
Our balance of payments problem arise from those policies, the necessity for which, as I say, I do not dispute, which were pursued during the war. It would come rather handsomely from Members of the Opposition if sometimes they endeavoured, in the non-partisan spirit of which they are sometimes so proud, although one does not notice it so much outside this House, to outline some of the difficulties with which the Chancellor has to contend in meeting this adverse balance of payments, because no one questions for one moment that had there not been the process of disinvestment abroad and the accumulation of sterling balances for the supply of warlike and other stores for this country, our existing exports, maintained at their present level, would easily balance our existing adverse balance of payments, and the country would be in an extremely prosperous position at the present time.
I pass from the financial observations of the right hon. Gentleman to the Bill itself. I wish to say how grateful I am, as are Members in all quarters of the House, for the handsome concession which the Chancellor was able to mike to old age pensioners. This is not a matter of world-shattering importance, but to a very important section of our community the concession was very welcome. Another act of small dimensions which now finds its way into the Bill is the concession which the Chancellor was good enough to make in respect of children's playground equipment. Those two concessions, which were given in the course of the Committee stage, have undoubtedly improved it, and they are widely appreciated.
I turn to the Income Tax section of the Bill, about which I am a little less happy. I am in complete agreement with the provisions of the Clauses that are now in the Bill, but as I look through this Measure as it will inevitably go upon the Statute Book, and as I look through past Finance Acts and the Income Tax Act, 1945, the thought strikes me that it is getting on to the time when there should be a consolidation Bill for Income Tax purposes. The existing code of Income Tax law, going back to 1918, is rapidly getting into a most unwieldy position. Now, after 30 years, we might ask the Government whether it would be possible to consider a further consolidating Bill in order to put the matter into a much more simplified position than it is in at the present time.
In 1944 the hon. and gallant Member for Pollok (Commander Galbraith) raised in the House the question of extra-statutory concessions granted by the Commissioners of Inland Revenue. Following representations by him, the then Chancellor, the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) was good enough to publish a list of the extra-statutory concessions which had been given during war-time. It would be of great convenience, not only to industry but to the accountancy profession as well, if it were possible to have a further White Paper containing the extra-statutory concessions that have been made since the time of the last White Paper.
The type of extra-statutory concession which I have in mind is that which is not covered within the terms of law as passed by this House, such as the extra-statutory concession given during the war in relaxing the time limit in which serving people might make their Income Tax claims. Even though that is incorporated in no Act of Parliament, the Commissioners of Inland Revenue did concede that where, owing to war-time conditions it had been found impossible to lodge a claim, they would relax the rule as laid down in the appropriate Act. Since that time, a whole series of other concessions have been made and it puts the accountancy profession, which works considerably with the Commissioners of Inland Revenue to the mutual advantage of both, in a rather difficult position if these concessions are not made public.
I had hoped that when my right hon. Friend was dealing with the Profits Tax he could have given some consideration to the position of capital profits. I hope most sincerely that before next year's Budget he may give some consideration to the arguments advanced during Committee stage for the amending of existing Income Tax legislation to this end. The United States have a tax of this kind which they find of tremendous value. Finally, I would like to -ask my right hon. Friend whether he could not give some consideration to relaxing, slightly at any rate, the rules applicable to the admission of expenses under Schedule E. I am sorry that he did not give more consideration to this during the Committee stage.
I was expressing regret that the Bill had not been finally amended in the direction I desire. I am convinced that, as a whole, the Bill, as an instrument of financial policy, represents an excellent tendency in our domestic affairs. Very wise concessions have been made by way of increase in earned income reliefs, and and so on. I think this is a Bill in which the House collectively can take some reasonable pride, and I have great pleasure in supporting its Third Reading.
It would be very foolish to deny that there are one or two good things in this Bill and that the Chancellor of the Exchequer has made one or two very acceptable concessions, but I suggest that there are two general lines of criticism, to which reference has been made already. I was rather horrified to hear the Chancellor's expression that he had been able to maintain expenditure at such a satisfactory level. I believe that it is only by the reduction of national expenditure that we shall succeed in cheapening our costs of production and enabling our export trades to function.
I am much obliged. There is no point in misrepresenting what the Chancellor said. He said he was happy to sustain that degree of expenditure on the social services.
The Chancellor was speaking of the whole of his Budget proposals and, having referred to the buoyancy of the revenue, he spoke about having been able to maintain a satisfactory level of expenditure. That is the wrong attitude. I think it was implicit in the thoughtful speech of the hon. Member for Chesterfield (Mr. Benson) that he, too, realised that it was essential drastically to cut down the level of national expenditure. Unless we cut down the level of national expenditure I do not think that our productive industries will be able to export at competitive prices. That is a general observation and I admit that it is a sweeping one; but I hope that the Chancellor will not be complacent about the present level of expenditure.
The second general criticism is that so much of the original proposals in the Bill have been changed. Of course, one does not complain that changes have been made; one complains of the fact that changes were necessary. It makes it very much more difficult to be properly advised on these matters if there are such substantial changes as were effected in the original provisions in this Bill. Although I shall be accused of making a party point, I say that the original proposals had all the marks of the hasty work, poor craftmanship and bad finish which the country is beginning to regard as the hallmarks of Socialist legislation. Having been somewhat controversial—[HON. MEMBERS: "No."] I am delighted to hear that—I will support something of what the rather controversial Gentleman, the hon. and gallant Member for North Portsmouth (Major Bruce) said in regard to the clarification of the tax law.
I am told that this is the fourth Bill within two and a half years which has contained somewhere about 60 Clauses and a considerable number of Schedules, and that there are 40 or so existing tax Acts in force. There are many thousands of decided cases, and tax law is becoming a jungle which is impenetrable to all except the most ingenious. In support of these propositions I would refer hon. Members to the authority to whom appeal has already been made today. I will refer to some-
thing which the Chancellor of the Exchequer said in 1937. He talked of a particular tax, the N.D.C., as being:
A device for the endowment of accountants and of lawyers who batten on the uncertainties of the law and the ambiguities of our Statutes and who render no service that can strictly be called productive.
I doubt whether the Chancellor would dare to say that in this House, in which he is staunchly buttressed by the hon. and learned Member for Gloucester (Mr. Turner-Samuels) and the hon. and learned Member for Kettering (Mr. Mitchison). Really, it is a classic example of Satan rebuking sin, because he has produced three of the most complicated additions to that already complicated collection. I think that no one would say that tax law is a paradise even for lawyers and accountants. It is much more like a purgatory. Further examples are in the Seventh, Eighth and Ninth Schedules of this Bill where entirely new principles of taxation are introduced. I am advised that those Schedules will impose very great extra burdens upon a tax-collecting machinery which is already creaking and groaning. This is a serious matter. The machine is so grossly overburdened that there will be an administrative breakdown if further complications are introduced.
I also ask the Financial Secretary to remember that it is not only the tax-collecting machine that must be considered, but the tax-paying machine which also has to try to compete with these very complicated matters. I plead for the codification or simplification of the tax law. It is long overdue and would be very much welcomed by many professional people concerned as well as by the taxpaying and tax-collecting parties. An example of this further complication arises in the Clauses dealing with retirement benefits. We on this side of the House have always admitted that if evasion is proved to take place it is desirable to stop it. The cumbrous machinery of the original Clauses was obviously defective and we were very glad when they were taken back and reconsidered. But the new Clauses are also extremely complicated. I ask the Financial Secretary to say what revenue he expects to derive from the new Clauses dealing with retirement benefits. How much does he think he will get and, as a counter-balancing factor, how does that compare with the cost of administration? Is it worth the amount which the Government will get in view of the complications and difficulties involved? After all, that is the primary purpose of levying a tax—to get revenue from it.
Next, let me say a word about the Profits Tax and the duty on bonus issues. There is a widespread belief that the purpose of those Clauses is to combine the raising of revenue with the good old Socialist practice of harming private enterprise. It is a fact that there is that belief that that is the primary purpose behind those new Clauses. We cannot call it a declaration of war, because that has already been declared; but we can call this the thin edge of a new wedge in the battle against private enterprise. The feeling is that these taxes can very easily be increased in later Budgets.
The hon. Member says "Hear, hear," so I am quite right in describing this as the thin edge of a new wedge. It is felt that it is this sort of tax which hits most just that type of private enterprise which the Government ought to assist. I think it will be agreed that our prosperity depends on the production of coal and upon the heavy industries. Wrapped up in that is the importation of raw materials, and the provision of food and consumer goods for the workers in those industries; and wrapped up in that is the making of goods for export to pay for, those raw materials and food, etc. I, personally, do not believe that our export trade can be built up on mass production. I think that is a delusion. I think that we shall have to depend very largely upon five counts, upon fine quality specialities, goods remarkable for quality, design, novelty and craftsmanship. They are the types of goods produced by the small enterprises, the small businesses. We shall also have to depend on the merchanting and marketing of that class of goods. That is the way to rebuild the export trade and the commerce of this country.
The motive in that class of business is the profit motive. Just as the manual worker, the labourer, has the incentive of higher wages and better working conditions, so in this class of private enterprise the incentive is profit. It is against that incentive that these particular Clauses at this particular time strike with great effect. They have, in fact, operated as a cold douche for the people who are contemplating expansion in enterprises of that sort. I think such people are entitled to know whether that is the Government's policy? Do they intend to administer a cold douche to that type of enterprise? Is it the Chancellor's policy to penalise that type of small industry? Does he intend gradually to eliminate private enterprise?
At the present time there are very many people who would consider undertaking some form of expansion, some new enterprise, some new risk if they felt that it was going to be worth while. Psychologically, at the present time, the Government are doing a very great deal to discourage that type of person. It is true that the Socialist Party have declared that they propose to leave four-fifths of the field of industry to private enterprise. I do not hear the hon. Member for South Cardiff (Mr. Callaghan) saying "Hear. hear" to that.
That is exactly what I am seeking to explore. There was a certain gentleman in Europe, as hon. Members will remember, who said he had no further territorial demands to make. What people engaged in private industry are interested in is whether, in fact, the intention of the Socialist Party and of this Government is to eliminate private enterprise. This question is directly concerned with these Clauses, and this Profits Tax, and the tax upon bonus issues. I realise that it is a question upon which the Government, probably, are very anxious to avoid having to give an answer, but I do think we are entitled to know whether these Clauses do constitute the thin edge of a new wedge.
I shall, of course, follow your Ruling, Mr. Deputy-Speaker, and discuss the very thin edge of the wedge; but I should have thought, with very great respect, that it would be very difficult to discuss the thin edge of the wedge without revealing the fact that it was the thin edge of the wedge; and I am dealing precisely with that point, whether it is the thin end or not. Your Ruling is that it is the thin end. What I want to be informed by the Government is whether it is the thin end. The answer to which I think we are entitled is one of these—"Yes," "No," "We do not know," or "We do not care"—whichever the real answer is. I think it is a very reasonable assumption that the Government, in fact, will say nothing at all about that question.
A further example of what I am suggesting is behind some of these Clauses lies in the duty on bonus issues. I cannot help feeling that the real purpose in the Chancellor's mind in imposing that tax was to tax capital appreciation, and that that is what he really desires. The essence of the limited liability company organisation of industry is the flexibility of its structure. This tax tends to diminish that flexibility. It is, in my view, exceedingly dangerous, and induces people to believe that these Clauses are fashioned as instruments for the future complete destruction of private enterprise. Hon. Members may think that I am putting forward these points from a party point of view, but I really do believe that there could be nothing psychologically better to secure increased production, and a new drive and co-operation from all sections, than a clear and unequivocal statement by the Government of their position in these matters. Do these constitute the thin edge of the wedge or not?
If the hon. and learned Gentleman will let me finish my sentence, he will hear that I sat here quietly until I was so provoked by the nonsense he spoke that I sought to catch your eye, Sir. The question as to what the Government's intentions are as regards the nationalisation of industry I do not find in this Bill, but as I understand it is in Order to refer to it, and as I am quite incapable of giving any authoritative answer on their behalf, perhaps I may be allowed to say, at least, this: the Government's programme was surely set out quite clearly in the King's Speech. There it is stated, and there industry knows where it stands. To suggest that we can hang on the Clauses in the Finance Bill which deal with the Profits Tax any indication as to what future Government policy is to be is, of course, merely the stale device of a party orator, stuck for any other arguments, to catch the headlines in this evening's papers. When he says that the new Profits Tax threw a cold douche on the City, he is as ignorant of what happened in the City as he is inaccurate in his observations.
They thought so badly of what the Government did in connection with the Profits Tax, that the price of shares on the Stock Exchange went up the morning after the Budget. If the hon. and learned Member is honest, he knows perfectly well that a sigh of relief went through the City and commercial circles when they knew what a small impost this tax represented, and that the forecasts as to its size were ail shown to be over-pessimistic. One of the earliest lessons I learned at the Chancellor's knee was that there is no such thing as gratitude in politics. If there were, the Opposition would have come down to the Third Reading Debate and, instead of complaining about the size of the tax, would have thanked him for imposing such a small amount that the share prices went up on the Stock Exchange the morning after the Budget.
I wish to make one or two observations arising out of some of the things which have been said, and notably to refer to the observations of the right hon. Member
for West Bristol (Mr. Stanley) in connection with our external balance of payments position. It is exaggerated to speak of the external balance of payments position as though this Government were responsible for the situation in which we find ourselves. I should like to quote to the House an extract from the recent report of P.E.P. on the financial state of this country at the end of the war. This is how it reads:
It is scarcely an exaggeration to say, with respect to our external financial position, that we have emerged from the war a defeated nation, saddled with a considerable load of reparations, the real weight of which bears a striking resemblance to Lord Keynes' estimate, in 1919, of the maximum figure of Germany's capacity to pay.
Has the full significance of that comment gone home? Here is a report which says that, as regards our external position, we emerged from the war a defeated nation. In circumstances like that, I do not think I am putting it too high to say that it is only making a cheap party point to come down to the House of Commons and blame the Government for the situation it which we now find ourselves. This report goes on to compare our position with that of other countries, and let me name them. Our external financial position is compared with that of Germany, Italy, Japan, Greece, Yugoslavia and Poland. But we won this war. I do not complain of our wartime financial policy, because little else could have been done in the circumstances. We have to recognise that we have emerged from the war in no better shape than that of the defeated nations, and it makes the task of this nation no lighter to be told in that situation, some of the sort of things which have been said today.
Another misrepresentation I complain of very much, is this reiterated statement that Income Tax is 9s. in the £, and that it is a dreadful drag on initiative for people who are working. It is purely a convention to say that the rate of tax is 9s. in the £. I should like to give the actual rate for certain levels of income. I will take the case of a married man with a wife and two children, which is the sort of case fairly representative of English family life. The man who receives £7 a week pays no taxation at all. The man with £400 a year, or about £8 a week, does not pay 9s. in the £, but 3d. in the £. The man with £500 a year pays 1s. 1d. in the £. Even in the case of the middle-class man with £1,000 a year, he is not paying 9s. in the £, but 4s. 3½d. It is not until we get to the level of £4,000 a year that the married man with a wife and two children pays tax at the rate of 9s. 1d. in the £. The number of people in this country enjoying £4,000 a year or more does not amount to one quarter of one per cent. of the population. If hon. Members opposite want to help us in our production drive, and in our campaign to get more goods in the shops, they will say in their public speeches, as frequently as I do, that it is important to recognise that the average worker getting £4 to £8 a week is paying tax, not at the rate of 9s. in the £, but at the rate of 1d. to 5d. in the £. I would not have made that point had we not had it said from the Opposition Front Bench that this is one of the causes preventing output.
I hardly think we can describe this as a big Parliamentary occasion. The right hon. Member for West Bristol said that what had happened demonstrated clearly the need for maintaining all the stages of the Financial Bill. When I look round, I begin to wonder if he has not chosen an unfortunate occasion to make that statement. I dissent completely from the view that there are no stages in our Finance Bill procedure which could not be tidied up without any loss of sensible and detailed consideration.
Subject to reflection, the Debates on the Budget Resolutions. I do not accept the view that there is not some considerable tidying up which could be effected in our procedure.
Anyone who moves about the country today—and all Members keep closely in touch with their constituencies—knows, to put it in the vernacular, that there is less money about. There are vacant signs to be seen in some of the holiday resorts at this time, and some of the fruit is being left unsold in the greengrocery shops in some of the poorer parts of our big cities. The shopkeepers are saying that people are not buying so freely, and that all the gratuities have now been spent. This is a very difficult situation, and this is perhaps the most dangerous moment when the possibility of inflation may overtake us. If less money is in the pockets of the people and not so much is being spent on luxuries and semi-luxuries as last year, and if that leads to further wage claims, we shall not get out of our present situation where there is still not enough goods to cover the national income.
I feel that this is an important moment for wage claims not to be prosecuted. That being so, it is equally important for the Chancellor to do nothing which would increase the cost of living. No attempt should be made to disturb food subsidies in any way. I can conceive of nothing which would be more disastrous, at the present time, than a substantial attempt to cut them down. Although I know that the Chancellor has an ear for music, I hope he will not listen to the beguiling voices of the sirens of the "Economist", or the more discordant noises uttered from the benches opposite. We are passing through a ticklish time, and I trust that the cost of living will be maintained at a stable level, because I believe that that is one of the best ways in which we can get over the present inflationary hump.
Rightly or wrongly, the workers have the feeling that there is a lot too much money being thrown about to shareholders. They see distributed profits going up; they see additional profits being made, and there is a feeling that if dividends are going up why not wages? I said this time last year that it was a bad thing to distribute profits at the rate at which they were being distributed then. The situation has become worse. There is more money being distributed in profits. I do not see that the Chancellor's new tax, of which the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) complained, will stop that. I wish it would. I wish that the new tax on distributed profits was of such a height that it would limit distribution to last year's level. But the truth is that there is so much money being made that companies can set aside money to pay for this tax while increasing their dividends. That is much more against the national interest than it was even at this time last year.
I say to the Chancellor that if he cannot rely on profits being kept within reasonable bounds—and they are not being so kept today—he is entitled to take action to stop it. We know that if all the profits that are now distributed to shareholders went to the workers in industry they would not put up wages by more than a flick of the finger. We know what the relative proportions are which go in wages, taxation, and profits. But there is a psychological point about this matter. If shareholders who are not lifting a finger to assist the export drive are to continue to get substantially increased dividends for doing nothing, then it is impossible for trade unions to hold in check their members who say, "Let us have a share in what is going."
I would like to make a brief reference to the alarming suggestion by the hon. Member for Harwich (Sir S. Holmes), that we should abolish Surtax. When the hon. Member was making this suggestion I noticed that the right hon. Member for West Bristol (Mr. Stanley) left the House. I do not blame him; he must have been thinking, "Save us from our friends," bearing in mind the new alliance which has been made between the Liberal Nationals and the Conservatives. Why was his proposal not put in the Industrial Charter? What a good advertisement—"Vote for us, and we will abolish Surtax." Is it really thought fit that we should debate in this Chamber a proposal that the wealthiest members of the community should be exempted from the impost they have had to bear for many years, at a time when the cost of living has risen, and ordinary men and women are finding more difficult to live? I thought that what the hon. Member said was the last word in irresponsibility.
I want to say this about the Surtax and Surtax payers: that the tax machine has become blunted in its efforts to catch Surtax payers. It is a tax on income. No one has ever defined income, not even learned judges, who can define anything if we are to believe the lawyers in the House. There are many payments going into the hands of wealthy people which are not caught by the Income Tax Acts. That is the reason why, when they are supposed to have been soaked out of existence, they are able to maintain a standard of life which is obvious to all of us who walk about with our eyes open. This Income Tax machine is not catching a large number of payments that are going into people's hands, and which, under the ordinary definition, can be described as income. That is a serious matter, and one to which the Government must pay careful attention. There is a large sum of money trickling through the Chancellor's fingers. The Surtax payers, who were described by the hon. Member for Harwich as having been soaked, have found a way of getting out of the rain. We must bring that to an end.
This Budget, as has been said, is one of a series, and is to be regarded in that light. I am sure that my right hon. Friend the Chancellor is doing his job in the right way. He is relieving the poorest first, and maintaining a high rate of tax on the rich. I rejoice in that, because I am certain that it is in accordance with the conscience of our people, the principles of social justice, and one of the best ways of maintaining the morale of the people who work. I therefore congratulate my right hon. Friend on his Budget, and I am only sorry that I shall not have the opportunity of going into a Division Lobby to support him.
We always listen with pleasure and attention to the hon. Member for South Cardiff (Mr. Callaghan), and I recall that when I had the honour to deliver "The Week in Westminster" broadcast, on the Saturday after the Budget, I said of the hon. Gentleman that no one who saw his agreeable appearance would realise that he came to us originally from the Department of Inland Revenue. The remarks he has just delivered to the House are those of a tax gatherer, rather than a tax payer, and there is a great gulf between the two. I was not surprised to hear the hon. Member suggest that the Government should follow up their attempt to muzzle the Press by gagging the House of Commons on financial matters, by abolishing any kind of discussion on the Budget Resolutions. It is the kind of recommendation which one would expect from the quarter from which it comes.
During the long course of this Finance Bill, a number of welcome concessions have come our way. The Chancellor generally has a few million pounds, in the way of petty cash, available for disbursement as we go along, and nothing could exceed the geniality of his manner of avuncular bonhomie as he hands back to the taxpayers meagre allotments of their own money. Important changes have been made in this Bill. The deletion of the original Clauses 14 to 18 in toto, and the substitution for them of other and more equitable Clauses, did show what can be done by the House of Commons in discussions which seem so irksome to the hon. Member for South Cardiff.
We have had our moments of anxiety. One has never quite known in what mood the Chancellor of the Exchequer would be on any particular day. There has, for instance, been the way in which he has blown hot and cold—and I say this literally—upon electrical apparatus and the Purchase Tax connected therewith. There have been days of uncertainty, and I am reminded of a village which I knew many years ago where there lived an old gentleman of considerable means, but with a temperament which alternated sharply between generosity and parsimony On one Easter Sunday, he was so moved by the eloquence of the vicar that he hurried round to the vestry and wrote out a handsome cheque for the Easter offering, thereby causing that good man two days of acute mental anxiety because, knowing the banks to be closed on Monday, he was not sure when he presented the cheque on Tuesday whether the effects of his sermon would have worn off and his cheque have been stopped. I am glad to inform the House that in that particular case all was well.
It was through this kind of apprehension that we passed during the Committee stage when discussing these matters The Chancellor, of course, was under some handicap. He had to reflect the financial mental somersaults of the Minister of Fuel and Power in these matters. One wonders what conversations have taken place between the two right hon. Gentlemen outside the precincts of this Chamber and whether they could be quoted in Parliamentary language, and one wonders what the Chancellor has to say to the Minister of Fuel and Power, because, I take it, that it is to him he has to refer, having no direct access to Mr. Arthur Homer. The Minister of Fuel and Power has placed upon the Chancellor the necessity for these rapid changes in the matter of heating apparatus. The Chancellor has had to bear many burdens in the last 12 months. He has had, of course, to budget for heavy taxation to deal with some of the mal-administrations of the Minister of Food—buying dried eggs from America by bulk purchase because 200,000 tons of non-maltable wheat last autumn were not switched over to poultry feeding—a complaint which has descended on the right hon. Gentleman with drastic consequences.
I think that the Finance Bill of 1947 and the Budget that preceded it, will chiefly be remembered for two items—first, the Tobacco Duty, and secondly, the right hon. Gentleman's ham-fisted treatment of the old age pensioners. The hon. and gallant Member for North Portsmouth (Major Bruce) expressed his gratitude to the Chancellor for this concession. May I remind him that the old age pensioners are still waiting, that one-third of the financial year has passed, and the full weight of that increased tax is still being borne by them. I think that some consultation ought to have taken place between the hon. Member for South Cardiff and the hon. and gallant Member for North Portsmouth before they delivered their speeches.
It will be welcome when reflected in the price of tobacco, and not before. This is not governed by good intentions. I am pointing out that one-third of the year has passed and that for four months these old people have borne the increased weight of this Tobacco Duty. It is incredible that before it was ever put on, that factor was not borne in mind. The hon. Member for South Cardiff tells us that we are a defeated nation—the awful weight has fallen on us. The hon. and gallant Gentleman the Member for North Portsmouth said that all was well; he was looking forward to the great benefits to come to the people; the Chancellor's administration had been beneficent and so on.
The chief feature of this Finance Bill is the Profits Tax. We have had a good many speeches about that. The hon. Member for South Cardiff has told us what an admirable thing it is going to be in raising the morale of the people. One never knows quite of whom hon. Members opposite are speaking when they say that they are speaking for the people. I imagine that he feels that all is well because the Co-operative hierarchy has been excluded from the full weight of this increased Profits Tax. The Government are looking after their political friends.
One cannot pass from the Finance Bill without a word on the subject of expenditure. It is the technique of hon. Gentlemen opposite, as, indeed, it is of the Chancellor, to over-spend the national income and then to say to the Opposition, "What would you cut?" Here are all these benefits flowing from the Exchequer, and national income is deteriorating almost every day that passes. They say, "What would you cut?" That has never been the business of the Opposition. The duty of the Opposition is to point out where we think administrative mistakes have been made. May I illustrate that by a story which is entitled to respect on account of its age?
If the hon. Member will study that or any other balance sheet, he will find that it has two sides. If he will examine the national accounts or any other accounts he will find—and this is the chief difficulty, after all, of Socialism—that there is expenditure in addition to revenue. If one could only continue to spend without revenue, all would be well. I am very glad that is not so. The object of this Finance Bill is to endeavour to provide the necessary apparatus for that procedure. I was going to say, when the interruption occurred, that the policy of the Government on this matter of expenditure is best illustrated by the story of the family which had got into grave financial difficulties owing to extravagance. They formed themselves into a committee of ways and means to discuss the situation. After a long family conclave they reached a decision, with one dissentient, on how to put their affairs in order. It was that the kitchen matches in future should also be used in the drawing room, that father should give up smoking, and that he should work harder. That is as far as the Government have got in this matter.
Family finances fall into unbalance owing to expenditure on things that cannot be afforded. Perhaps, in a family, the income of the father is not equal to sending his children to expensive public schools where he may desire them to be educated, if only for the purpose of rubbing shoulders with the sons and daughters of Socialist Ministers. Perhaps it may be due' to expenditure on restaurants or theatres. The fact remains that in the family, if there is over-expenditure, cuts have to be made. The gravamen of this is upon the Government. I am wondering whether they are going to repeat the events of 1931 when the Socialist Government of that day appointed the May Committee to try to deal with the question of over-expenditure, and then ran away from their recommendations. The Government have appointed a Plowden Committee, and unless I am greatly mistaken that Committee will tell them at no distant date that if the national economy is to continue and if good planning is to be possible, there will have to be heavy cuts in national expenditure.
These are gloomy reflections perhaps for a Friday afternoon. We have had a long pilgrimage since 15th April and many interesting Debates, which will become more interesting probably in retrospect than they are now. As he is on the Front Bench at the moment, I should like to say how much we always appreciate the diligence with which the Financial Secretary to the Treasury has carried out his duty when he was sent in to stonewall on a bad wicket. When there is a concession to be made, the Chancellor comes along and makes it, but the Financial Secretary is put up to explain preferential treatment for the Co-operative societies, or why this or that concession cannot be made, which he always does with unfailing good temper. We noticed him ageing as the Finance Bill proceeded, and his brow got more and more furrowed as he had to listen to more speeches from the hon. and gallant Member for North Portsmouth. We wish the right hon. Gentleman well.
If the Chancellor, who is no doubt profitably engaged somewhere else, but who will be with us before we close, were here I would make a recommendation to him. I understand that before he introduced the Budget he spent a few days in the country listening to the songs of the birds. It was at a time when the cuckoo is first heard in this country. He went with the Minister of Agriculture, who returned to us with a careworn expression and seemed to show some signs of deafness after those days in conversation with the Chancellor. Let us hope that the Chancellor will take advantage of the Summer Recess to return to those haunts and there to gain inspiration for new songs, and that his rural ruminations will lead to greater arithmetical accuracy.
I am only going to raise a couple of questions. There have been remissions made in this Bill with regard to Stamp Duty, but I should like special consideration to be given—I do not know whether it has been given—to the double Stamp Duty on conveyances of land purchased by local authorities on behalf of the community. In Loughborough, we recently purchased 25 acres in the middle of the borough for £27,500, on which the Stamp Duty would have been £275, but is now to be £550. The local authority, in raising the money, will also have to raise the money for the Stamp Duty which will not only mean extra capital but extra interest accruing on the debt. I would, therefore, be very glad to hear from the Financial Secretary whether consideration has been given to this matter, because this is a question for the community upon whom this extra payment will fall very heavily. That is a pity when the local authority is buying land for the welfare of the public.
My second question is one on which I feel very greatly: I deplore the fact that the Chancellor did not see his way to withdraw the Purchase Tax from toothbrushes. I had every sympathy with the Opposition on that, and I had a lot to do to withhold myself from walking into the Lobby with them. However, I abstained from voting on that occasion. This is a matter on which I feel very deeply, for two reasons. The first of these is that I am 60 years of age and I have been able to keep all my own teeth because I have used consistently good quality toothbrushes. Everybody should have the same opportunity. Only recently in our own paper, the "Daily Herald," there was an announcement about special preference to be given to children for dental treatment. Why give them special preference for dental treatment unless they are also given the wherewithal to complete that dental treatment? Throughout my life I have been very careful on this question of toothbrushes.
Seeing that I agree with the Opposition on this question, why make a point of Order out of it? Every day I have always used three toothbrushes. One is actually my own design and has been registered by a firm in this country. It is the only rotatory toothbrush in existence.
There is a second reason why I deplore the fact that the Purchase Tax on these brushes has not been removed. I have been a language-teacher and the teeth are almost as important for speaking a language properly as is the tongue, and that is more so with the English language than with any other language in existence, except Japanese. [Laughter.] This is no laughing matter because English is a strongly developed odontological language. The front teeth are used to a tremendous extent.
With all due deference to your Ruling, Mr. Deputy-Speaker, I am deploring the fact that Purchase Tax still exists on toothbrushes under this Finance Bill. I am giving the reasons why I deplore it. I think that the nation would gain in health, and what we would gain by being able to take full advantage of this instrument of speech which Providence has given us would be, in itself, sufficient reason not only for abolishing the Purchase Tax but even subsidising toothbrushes, so that everybody would enjoy the benefit of having good teeth, and be able to speak their language and enjoy good health.
I do not think that this Bill should receive its Third Reading without at least a small mark of congratulation and praise from his own back benches for the Chancellor's courageous action in agreeing to the alteration of the taxation system on private motorcars. The hon. Member for Chippenham (Mr. Eccles)—the cause of whose absence today I am sure the whole House deplores—said during the Committee stage, in reference to that proposal, that he thought that it was the most important reform and indeed the most important Clause in the whole Bill. I would not go as far as he did in stating that so categorically. It remains to be seen whether the condition created for the motor industry will he used by that industry for the purpose for which it was designed. It is entirely a matter which remains to be proved in the future, and perhaps not even in the immediate future, but I think that the Chancellor is to be congratulated from all sides. After all, this was not in any sense a controversial or party matter, and it is right that it should be recorded that in spite of the difficulties of his predecessors, and particularly his own difficulties a year ago in his discussions with the industry, and in spite of the uncertainties which that previous experience had produced, he nevertheless took the opportunity on this occasion to undertake this long-overdue reform.
We have had an interesting Debate today in which there have been some most valuable contributions from hon. and right hon. Members on this side of the House and some interesting, though not always so valuable, contributions from hon. Members opposite. I am inclined to think that the speech of the hon. Member for Loughborough (Mr. Follick) was the high spot I entirely agree with the views he holds about toothbrushes, but I had hoped that from one who, I find, was once secretary to the late Emperor of Morocco, we should have a rather wider survey of our financial position as a whole than that to which the hon. Gentleman treated us this afternoon.
The Bill which is now passing through its final stage today is not one which we on this side of the House can commend very highly. I do not propose to weary the House by going through it in great detail. Hon. Members already know my views on many of the different Clauses since I have intervened from time to time during earlier stages, but I want particularly to say a word about the general financial position. To my mind the Chancellor of the Exchequer has been continually making claims which are a very long way from the truth. He has been claiming that the financial situation in our domestic affairs is a satisfactory one, and that he has a balanced Budget. We have argued before from these benches that the Budget surplus is in fact bogus, but whether it is bogus or not, it is quite certain that the Budget has been balanced, if it has been balanced, only by maintaining taxation at inordinately high levels. The outstanding feature of the whole Finance Bill is the alarming level of taxation and the alarming total which is to be raised by it.
If hon. Members will look at the Financial Statement, they will observe that the total estimated to be raised from taxation during the current year is just under £3,000 million, which is considerably higher than the total amount proposed to be raised from taxation during the previous year. After a year has passed—a year further away from the war—the total amount of taxation to be imposed on the people is considerably higher than it was last year. My right hon. Friend the Member for West Bristol (Mr. Stanley) pointed out in his opening remarks today that it was held by many economists that there was a certain ratio of taxation to the income of the people which could not be exceeded without the most dangerous consequences to the whole economy of the State. He put a question to the Chancellor of the Exchequer and I repeat it to the Financial Secretary. Does he think that the present ratio of taxation to the income of the people is one which can be sustained without the most serious consequences to the whole of our economy? I suggest that such an enormous proportion of the income of individuals cannot be taken away without causing inflation.
A third, at any rate, of all incomes in the country is taken away, as this White Paper shows, and as my right hon. Friend pointed out, the key Clause to the whole Bill is Clause 9 which fixes the rates of Income Tax. The hon. Member for South Cardiff (Mr. Callaghan) made some interesting observations about Income Tax, and I should like to say something about them. The evils of a very high rate of Income Tax are numerous and well known, but there are one or two that are not perhaps always fully considered. To begin with, I would remind hon Members that a considerable part of this taxation is being paid by individuals out of capital or savings, quite apart from the £155 million to be raised by Death Duties which, of course, all comes from the capital payments on estates of individual taxpayers who are deceased. In addition to this and to the fact that numerous individuals are obliged to pay their taxes out of capital resources, the point on which the hon. Member for South Cardiff spoke was the question of incentive, which was also mentioned in the speech of the hon. Gentleman the Member for Chesterfield (Mr. Benson).
The hon. Member for South Cardiff sought to make out that because the total incidence of the rate of taxation at the lower levels of income was not necessarily 9s. in the £ the effect of this heavy taxation on incentive was not really as great as one would imagine. I challenge him on that very much. The incentive which is diminished by high taxation is an incentive which applies to all classes of taxpayers in the community. It is not at all restricted to one class or another—to capitalists, wage earners or professional men. In my opinion all of those are restricted in their incentive by a high level of taxation. Let me take the wage earners first as they are by far the most numerous of the tax paying sections of the community. Wage earners are not attracted by requests to work overtime when in fact that may mean that income tax at 9s. in the £—or at any rate 6s. in the £—becomes payable. If, for instance, one earns £1 a week in overtime but receives only 11s. of it, one may find that the overtime rate is in fact lower than one's normal rate of pay, whereas the average worker expects to receive more for working overtime than when he is working during his normal hours. That is one point I would try to impress on the hon. Member for South Cardiff. I quite appreciate the point he made, but he must also appreciate that there comes a time, particularly in regard to overtime earnings, when the high level of taxation—the rate of Income Tax men- tioned in this Clause—has a very considerable effect. The experience of all hon. Members bears out that contention. It is constantly put to us by various sections of the community and by trade union leaders.
The next category of taxpayer I will mention is that of the professional men. There is no doubt whatever that a number of professional men, particularly those who already have considerable practices, are unwilling to take on additional work when it may mean that their additional earnings are taxed at anything between 9s. and 19s. 6d. in the £. One can illustrate that from the medical profession, the legal profession or the accountancy profession, and one knows it is true from one's own experience. It cannot be denied by any hon. Member that a number of individuals are definitely restrained from adding to their commitments at the present time. The third section are the capitalists. There are capitalists of all sorts. Take the capitalist who is engaged in some business which carries with it a very considerable amount of risk.
Only this week I was talking to a member of a firm which has traded for many years—almost for many generations—with the Far East, and he told me to my great regret that his firm was abandoning its trade with the Far East, a trade which had brought great profit to this country as well as to that firm and which had brought great benefits to the balance of payments of this country in earnings in foreign exchange and so on. Why is that firm abandoning that trade? It is because the rate of Income Tax and Surtax which the proprietors of that business are paying is so high that it is entirely out of relation to the very heavy risks they have to run in engaging in trade in the Far East. I give the House that as an illustration of what actually happens. That is a true case, and there are many others of the same kind. All the loss falls on the individual trader or capitalist, but, when it comes to making a profit, as much as 19s. 6d. in the £ is taken in the higher levels of income. Therefore, it is not surprising that men who have substantial capital resources are not anxious to embark them in such conditions when the whole of the risk falls upon them and hardly any of the profit, if profit is made, accrues to them. I do not know whether that will be challenged in any quarter of the House. I genuinely believe that example to be representative of large numbers of people throughout the community.
There is very little temptation to people to work harder and be more enterprising and very little incentive to work additional hours. What happens? Numbers of people in the country are seeking ways of getting money not subject to tax, a point which was dwelt upon by the hon. Member for South Cardiff and others. It is obviously owing to this high taxation that it is more profitable than it was ever before to seek means of getting money without paying tax. If you know the word, Mr. Deputy-Speaker, it is the "spiv" who is making the money. He is the man who knows how to get round controls, how to avoid taxation and how to make a quick profit on the rising market which the inflation has caused. That is all due to high taxation, and it is the Chancellor of the Echequer who is responsible for the "spiv economy" into which the country is gradually sinking. He is responsible by reason of the high rates of taxation which he insists upon imposing.
I am sure that all hon. Members, and certainly you, Mr. Deputy-Speaker, are conscious of the dangers of inflation. It is my belief that the low level of productivity in our economic system at present, which all hon. Members observe and regret in many spheres, is the most powerful inflationary influence of the lot. All sorts of causes of inflation are talked about. There is the cheap money policy of the Government and the capital expenditure which is excessive in relation to the savings that are made; but to my mind by far the most important cause of inflation is the low productivity into which we have sunk. Why have we sunk to such a low level of productivity? I am absolutely certain that output is low in many cases because incentive is reduced by excessive taxation, and that is how the argument I am using is directly tied up with Clause 9. The excessive taxation has the inevitable consequence of reducing productivity in almost every sphere of activity in business, trade and commerce.
When output declines and productivity is low, incomes do not fall proportionally to the loss of output, and consequently the inflationary gap is increased. We are quite clearly getting entangled in a very difficult vicious circle and it is quite essential, although it is difficult, to break through that vicious circle somehow. One of the ways in which the Chancellor must try to break through is by substantially reducing the rate of Income Tax. It may have been suggested in some parts of the House that it would be inflationary to reduce Income Tax because the public would have more to spend, but I beg him to realise that that idea is much exaggerated. The increased productivity which would be generated over the whole field of industry and commerce would far offset any danger there might be of increasing inflation from that cause.
The Chancellor is continually telling us—and rightly so—of the serious foreign exchange situation and the difficulties of our balance of payments and so on, and I am not one of those—neither is any hon. or right hon. Gentleman on this side of the House—who tries to maintain that the difficulties of our foreign exchange position are entirely caused by this Government. No such suggestion has ever been made by me. I would never make it. I had the privilege and also the difficulties of being at the Treasury during the war and I know something about these things, but although I think it is useful to distinguish between external and internal financial and economic problems, I entirely agree with my right hon. Friend the Member for West Bristol that the Chancellor is carrying too far the habit of trying to think of them in separate compartments. They are not in separate compartments. We have to see how the whole thing fits in together.
The Chancellor of the Exchequer is constantly telling us how grieved he is about the foreign exchange situation and what the difficulties are. At the same time, he is very jaunty and very boastful about his own Budget surplus, about the internal financial position of the country—very jaunty—"Not so bad for a Labour Government, what?"—and all that kind of thing. I suggest to him that it is not only a dangerous attitude, but an entirely false attitude to adopt. I want him to realise that it is internal extravagance and internal overspending—
—by public authorities and by private individuals, which is one of the chief causes of our adverse balance of payments. The pressure to spend forces itself not only upon goods that are produced in this country but also upon goods that are produced overseas, and every increased pressure to spend increases either pressure for overseas goods or puts pressure on some goods that have been produced in this country which, if they were not being produced, would leave more room for production for the export trade. There is not the slightest doubt that the excess expenditure in this country, by individuals, by local authorities and the Government, is one of the primary causes of our difficult dollar situation, and the sooner hon. Members and the Government recognise that, and act accordingly, the better it will be for all of us.
I beg your pardon, we are on the Third Reading of the Bill which originated in the Committee of Ways and Means. If the hon. and gallant Member cares to read this copy of Dod's Parliamentary Companion, he will appreciate that the Committee of Ways and Means provides an opportunity to discuss the raising of taxation, but one is not entitled in the present circumstances to discuss matters which should be discussed in Committee of Supply.
I was afraid this would not provide an opportunity for expressing where these cuts should lie, but in any case, I am making a case this afternoon that the Government are spending much more money than the people of this country can reasonably provide by taxation.
I am making an allegation and I hope a case too. I suggest that it is the responsibility of the Government to decide where these cuts have to be made. They have all the information at their disposal, they know the facts, they can cover the whole field. We see merely a part of it. In any event, I know that the hon. and gallant Member for North Portsmouth (Major Bruce) is always trying to draw a red herring across these discussions by raising this point, and I shall not fall into his trap this afternoon.
I was making the point, which I am satisfied is a good one, that internal expenditure in this country is one of the chief causes of our dollar exchange difficulties and our foreign exchange difficulties generally. I suggest that the internal situation needs clearing up. That is the first thing we have to do, and then we shall be able to see our way a great deal more easily about our overseas position. In the end, we must go back to the old-fashioned remedy which is economy in public spending and a sound budgetary and monetary policy. Sound money and reduced taxation are amongst our greatest needs, and this Finance Bill contains proposals for excessive taxation, and it is not based on sound money. As will be observed in Clause 57, there are provisions for the permanent charge for the National Debt. The Clause provides that the permanent charge for the National Debt shall be raised from £355 million to £525 million. That is to be the permanent charge for the National Debt.
The constant rise in the charge for the National Debt in time of peace is a clear proof that overspending is going on and I suggest that we are all living in a fool's paradise. There is no remedy except harder work and severe economy and sound money. Those are the remedies and it is not the slightest good the Chancellor of the Exchequer and others screaming at us to save when he himself taxes us so high that we have no chance of saving. The Chancellor himself is the man who should save. He is the greatest spendthrift this country has ever known and, unless this policy of extravagance is checked, nothing can stop the most severe financial and economic crisis. I say that with all seriousness. I say it not only as the Member for the City of London, but also as one who has had some experience at the Treasury, and I hope that the House will not entirely disregard the warning.
We have had about a dozen speeches from various sides of the House and it would be impossible for me in the time which I should allot myself to cover everything that has been said. [HON. MEMBERS: "You have an hour."] For one thing, I am of the opinion that if I attempted to answer all the points that have been put, I should be out of Order. We are dealing with the Third Reading of the Finance Bill, and the utmost limits to which one should go is the whole Bill and nothing but the Bill. Quite a number of the speeches, which have been interesting, have gone rather outside the limits of a Third Reading Debate. Some hon. Members have discussed expenditure, and there is nothing about expenditure in this Bill. It deals, as the right hon. Member for the City of London (Mr. Assheton) said, with Ways and Means rather than with Supply.
On the whole it has been a friendly Debate. At times, in the earlier stages, I began to imagine that I was inside a church, it was so subdued and so orderly; at other times I thought the entertainment supplied was excellent, and I was glad to be here to enjoy it. Particularly I was delighted with the speech made by the right hon. Gentleman the Member for West Bristol (Mr. Stanley) as, I am positive, were all who heard it. As usual he treated us to a speech which was polished and witty and, if I may say so, although most of the shafts were aimed at the Chancellor, these were all so good-natured that no one enjoyed them better than my right hon. Friend. There was, however, very little in his speech which requires an answer. Most of it was assertion and not query.
However, the right hon. Gentleman raised two points which I will endeavour to answer. He put one question, which was repeated by the right hon. Member for the City of London, whether in the view of the Government the rate of taxation now was such that we could view it with equanimity and whether, taken in relation to the national income, we thought it could go any higher. It is not the intention of my right hon. Friend to put up taxation; it is his intention, given what we hope will be the march of events in the next two or three years, at the earliest moment to bring taxation down. He has already brought it down to a considerable extent since he has been in office, particularly for those who, during and since the war, were least able to bear it.
May I remind the right hon. Gentleman that, as I have said, the amount of taxation to be raised this year is higher than the amount which had to be raised last year. The total is greater; it has not been reduced.
The total is greater, but in actual fact the incidence of taxation on the individual, particularly the direct taxation on the individual, is considerably lower in the case of large numbers of the population. The right hon. Member for the City of London, in following up the point made by the right hon. Member for West Bristol, indicated that one-third of all incomes was taken away. That, of course, is not true. It does not work out that way at all. It may well be, as the right hon. Gentleman said, that something like 7s. in the £ of the national income is now taken by way of taxation, but that is over-all taxation. Nothing like one-third of all incomes is taken from individuals, as individuals. Anyone who looks at the White Paper which is supplied to us all when the Budget is opened every April, will see, as my hon. Friend the Member for South Cardiff (Mr. Callaghan) showed in a very excellent speech, that incidence of taxation does not amount in any case now to 19s. 6d. in the £. Even on an income of £100,000 it means no more than the over-all effective rate of 18s. 9d. in the One hundred thousand one-shilling-and-three-pences are worth picking up.
It is not the difference between 18s. 9d. and 19s. 6d., but the difference between 18s. 9d. and £1. I was in process of showing that 100,000 times 1s. 3d. is worth picking up, and is more worth picking up than 100,000 sixpences, which, according to the argument of the right hon. Gentleman, quite a lot of well-to-do people are left from their incomes. As a matter of fact, the right hon. Member for the Scottish Universities (Sir J. Anderson) only left them 1s. 2d. My right hon Friend has gone a penny better for these extremely hard-pressed people who come within the £100,000 a year income rate. But, as my hon. Friend the Member for South Cardiff pointed out, now the ordinary workingclass home has benefited considerably by the change in the incidence of taxation which this and previous Finance Bills has put into operation. Now a married couple with two children have to earn over £7 a week in order to come within the income tax paying class at all. The man who earns nearly £10 a week has only to pay about 1s. 1d., whereas when the right hon. Member for the Scottish Universities occupied the position now occupied by my right hon. Friend in a previous Government, a person with £10 a week was not left anything like the amount which my right hon. Friend has left him.
We are talking about Income Tax and Surtax, and I was trying to answer the point made by the right hon. Gentleman on the Front Opposition Bench. One other point made by the right hon. Member for West Bristol was that he did not think the changes made in this Bill in regard to the licence duty on motor cars would have the effect which many people claimed.
My right hon. Friend has never claimed that this change will make all the difference which some people think will result from it, but it is his hope, as I am sure it is the hope of every one, that this change to a flat rate of £10 on all new cars will assist the motor industry in this country to achieve a great home market and certainly a greater export market. My right hon. Friend has, in fact, done no more than follow the advice which has been offered to him. Last year that advice was of a different kind from that given this year. I think my right hon. Friend is to be congratulated on having. at the request of the trade, put one form into one Bill one year, and then, when the trade had had second thoughts, having been willing to change it the following year. We all hope, and we can only hope, that what is now being done will assist in the direction we all desire.
I have, for many years, known the hon. Member for Harwich (Sir S. Holmes), who intervened this afternoon. He first swam into my ken when he was one of the rising hopes of the Radical Party in London. I am sure that in those days he would never have forecast the future sufficiently to have prophesied that he would stand up in this House and urge that the first thing to be done by this Government, with all the problems they have on their plate, and with all the injustices that have to be undone, was to drop the Surtax, which at the present moment is bringing in £80 million. It will be quite impossible either for my right hon. Friend next year, as I think the hon. Member suggested, or for any other Government, whatever its complexion, to drop the Surtax. It would be completely unfair. The hon. Member also made the point about taxation at 19s. 6d. in the£ and the deterrent it was. We all admit that taxation is a deterrent to effort, but I do not think it is the deterrent he imagined, and in any event the tax does not rise to that level in its early stages as he seemed to think.
I would remind him, and the other hon. Members opposite, that the Government have done a great deal to help industry. I hope that I am not misinterpreting him, but his argument rather tended to the belief that the Surtax payer was predominantly a private individual with means, who was taking risks. Surely, that is not true. Industry may take risks, but Surtax only comes into operation when profits have been made and paid to the individual. What this Government have done, and I think they have done the right thing, is to give what help they could, not to the person with a very high income who comes within the Surtax range, but to the small man; in addition, help has been given in various ways to industry directly. The effort and provision to assist industry began in the first Budget which my right hon. Friend opened in this House in 1945, and has been continued through the other Finance Acts which have been passed through this House up to and including the present Measure, with which we are now dealing. Therefore, it is unfair and untrue for either the hon. Member or anyone else to say that Surtax prevents industry from functioning or from taking such legitimate risks as industry must take.
The hon. Member for Stockport, (Sit A Gridley) wanted to know whether a Commission could be set up to consider the whole question of pensions and retirement allowances. Commissions are expensive things. Frequently they sit for a. very long while, they eat into Civil Service staff, they come to conclusions which often are not unanimous and, when their con. clusions are come to, all that happens is that their report is filed away, put into a pigeon hole and forgotten.
I would be out of Order in referring to that, but I think may promise the right hon. Gentleman—. not that I have any influence in this direction—that the procedure which I have just described in reference to many Commissions in the past under less advanced and less progressive Governments than the present one, will not happen to the Commission on the Press which is now sitting. Though Commissions may sometimes be desirable, we must only have them when the matter in hand is of sufficient importance to warrant the use of staff and all the rest which is involved. This question of pensions is not one for a Commission, but it certainly is a matter that might be looked at. I think I can promise that it will be looked at by the Inland Revenue.
I apologise. I was no, present. The note given to me when I got back was to the effect that the hon. Gentleman wanted a Commission. I think I can promise him that inquiry will be made. As he and the rest of the House know, the Clauses upon which he raised this matter, namely, Clauses 14 to 18, were withdrawn and other Clauses took their place. It will be necessary during the coming year, as those who took part in the discussion following the withdrawal of these Clauses will remember, for the Inland Revenue to keep this thing well under review and to see what, if anything, is to be done to tighten up the Clauses as they are now printed. In those Clauses we have not gone as far as our advisers suggested that we should go in closing up the gaps and loopholes which are there. We have made a beginning and it is quite likely that we shall have to come back to the House next time and ask for further power. That, in itself, will mean that the suggestion made by the hon. Gentleman will be carried out.
The hon. and learned Member for Wirral (Mr. Selwyn Lloyd) and my hon. and gallant Friend the Member for North Portsmouth (Major Bruce) wanted some sort of consolidating Measure to bring Income Tax law up to date. Of course, that has been talked of for a long while. The last consolidating Measure that we had was in 1918, nearly 30 years ago, and it is more than time that a consolidating Measure was brought in and the thing tightened up and clarified by that process. As hon. Members know, we have been extremely busy with other Measures. Consolidating Acts of this kind, although they are overdue, must wait until time can be found for them. For one thing, the staffs of the Inland Revenue and the Customs and Excise Departments are being grossly overworked. That remark goes for the whole Civil Service, but particularly for the Inland Revenue staff. Every time this House makes changes in the incidence of taxation, whether it is in child allowances, marriage or personal allowances, or a change in the standard rate of taxation, it involves many, many months of much hard work for the staffs of the Inland Revenue Department now that P.A.Y.E. has been introduced. I think I carry everyone with me when I congratulate the staff at Somerset House and in the Provinces, and the staff of the Customs and Excise Department, for the excellent work they have done under difficult conditions, often in very badly equipped buildings and with many of their people away.
My hon. and gallant Friend the Member for North Portsmouth asked whether another White Paper might be produced showing any new wartime concessions that have been brought into being since the last White Paper was published. All I can tell him is that no new concessions, either wartime or other, have come into being since that White Paper was published. That White Paper can still be got. What my right hon. Friend did promise some time ago was that, if and when any of them were withdrawn, he would publish the fact—give notice—so that people would be well aware of what the situation was.
The hon. and learned Gentleman the Member for Wirral asked me how much the Government expected to get out of the tightening-up Clauses dealing with directors' and employees' remuneration. It is quite impossible for me to answer. What we have done has been to shut a door, and it is, therefore, difficult to know how many people would have escaped through that door it the door had not been shut But it is quite obvious that we shall make something out of this, particularly as during the last year certain insurance brokers have been doing a good deal of advertising, suggesting to a lot of people that they should take advantage of this loophole which, in our wisdom, in this Bill we are now closing. Therefore, we shall save money and bring money in, but how much I am sorry I am unable to indicate at the moment.
The hon. and gallant Gentleman the Member for Holderness (Lieut.-Commander Braithwaite) wanted to know why the concession for old age pensioners of tobacco at reduced rates had not yet begun to function. The answer, of course, is that there is a good deal of spade work to be done. It means the printing of a good many millions of forms, and then it means circulating them; and, in addition, not only forms but coupons or tokens which go with them. All I can say to him and to other hon. Members who are interested in this is that, as quickly as we can, we shall bring this concession into operation for those who are entitled to it, and who, I know, are looking forward to it. The hon. and gallant Member said that the most important item in this Bill was the Profits Tax. Well, it all depends on how you look at it. To him the Profits Tax was the thing in this Bill that loomed large. Obviously, other people would look at the earned income allowance, or the children's allowance, or one or other of the various provisions which my right hon. Friend has put in.
Or the Tobacco Duty—yes, it you look at that. When the hon. and gallant Gentleman began to speculate on the findings of the Plowden Committee, I wondered if someone would not rise in his place and ask if there had been another leakage—not a Budget leakage this time, but a leakage of another kind, for he seemed to have some inside knowledge of what that Committee was doing. Let me, in company with the right hon. Gentleman the Member for the City of London say a few words to my hon. Friend the Member for Loughborough (Mr. Follick) about toothbrushes. The reason toothbrushes are still in this Bill under Purchase Tax is because my right hon. Friend felt that first things must come first. It is quite true that all of us would like to see the Purchase Tax taken off toothbrushes, but it is our view—and I hope it is shared by other hon. Members—that we cannot take it off toothbrushes without also taking it off toothpaste; and the two together would make a substantial concession, which my right hon. Friend thought might be better made in some other direction at this juncture. I must say that I fully agree with him that we do want to keep this thing in perspective. It is quite true that the Purchase Tax at present on toothbrushes is threepence or fourpence. That may seem a considerable sum, but we do not buy toothbrushes every week. Normally a toothbrush—and, no doubt, the one invented by my hon. Friend—lasts much longer, lasts almost indefinitely.
Well, if they last three months, then, roughly, the Purchase Tax is about a penny per month. That, surely, is not a great imposition, particularly in these days when people go to cinemas and spend 2s. 4d. two or three times a week without turning a hair, or fill in football coupons and then buy a postal order for 10s. or 15s. We must get this in perspective. What my right hon. Friend is doing is to give relief where it will be the most help to the greatest number. It is not that we are against the use of toothbrushes.
The right hon. Gentleman the Member for the City of London said that the Budget surplus was bogus. He is entitled to his view, but I can tell him that only yesterday I saw the returns, and I can assure him the surplus is there in hard cash. At the moment it amounts to £234 million, and that is something which has never happened before at this time of the year for many years past. I can assure him, bogus or not, the surplus is in the "kitty."
All I can do is to confirm what my hon. Friend has said, namely, that the incidence of this duty on local authorities will be exactly double what it was before. His argument may be that the local authorities, like the Government, should not have to pay Stamp Duty on transfers, leases, or conveyances. We have to stop somewhere, and it was felt that local authorities should pay this just as ordinary individuals have to pay it. It is in the Bill, and there is nothing we can do about it now, because we are on the Third Reading Debate. If he feels strongly about it, I would remind him that life still goes on, and that there will be other Budgets and Finance Bills when he will be able to put forward his point of view.
I had intended to make reference to the statement of the right hon. Gentleman the Member for the City of London, to the effect that there has been a permanent rise to £525 million in the charge on the National Debt. That is true, but he knows that it is not the fault of the Government. What we have done has been to regularise the situation, and this was explained at some length in the earlier stages on this Bill. When he speaks about the alarming rise, I would remind him that it would have been a good deal higher with a Government formed by hon. Members opposite, because they would not have been so ruthless in bringing down the rates of interest to 2½ per cent. No one who has sat through Questions in this House will doubt that the attitude evinced by hon. Members opposite towards the cheap money policy means that if they had been in Office the rates would not have been as cheap as they are, and that this £525 million would have been a good deal higher.
The right hon. Gentleman the Member for the City of London has just attempted to show that Treasury 2½ per cent. Stock is now listed, on the Stock Exchange daily list, at 90 or 91½. That is neither here nor there. These stocks go up and down. As the Chancellor pointed out last week, when this Government was formed they stood at 84, and they have been down to something like 43 under the Conservative Governments of the past.
I am not unfamiliar with these things, and I am not suggesting that there is any particular merit in Consols standing at 90 or any other figure. It is not a case of the highest price being the best. If a person's temperature is 104 it is not necessarily the best sign of his health. My point is that the 2½ per cent. rate, although it was established for a short time, has, from the right hon. Gentleman's point of view, no longer any significance, because he could not issue a long-term loan today at 2½ per cent.
That only underlines the argument I was trying to make. I am sure that Members of the party opposite, people in industry and local authorities, would like to be able to borrow money, at this time in our history, at a reasonably cheap rate. I do not understand the attitude of right hon. and hon. Members opposite in trying to cramp my right hon. Friend's efforts to keep money rates down. The fact that at the moment some gilt-edged 2½ per cent. Stock is not so high as it was a few weeks ago does not nullify my argument. However that may be, the Debate, on the whole, has been very friendly. Once or twice there has been slight feeling, but apart from that, this has been a most amicable occasion. I admit that right hon. and hon. Members opposite have helped us to improve the Bill in its passage through the House, and they have said that they will not go into the Division Lobby against us. That being so, all that remains for me to do is to commend the Third Reading to the House, and ask approval for the Bill without a Division.