Excess Profits Tax

Part of Orders of the Day — Ways and Means – in the House of Commons at 12:00 am on 17th November 1947.

Alert me about debates like this

Photo of Mr Marcus Lipton Mr Marcus Lipton , Lambeth Brixton 12:00 am, 17th November 1947

We have listened with some interest to the speech of the hon. Member for Monmouth (Mr. P. Thorneycroft), which seemed to boil down to two points, one of which is to cut the food subsidies by £300 million, and the other to compensate for that by adding 2s. a week to the amount of old age pensions, family allowances, sickness benefits and items of that kind. If that is the suggestion he makes, I do not see what advantage we can derive from it. It would mean that new pension books would have to be issued, and more civil servants employed to take money from one pocket and put in into the other. When we add to that the only other concrete suggestion of the hon. Gentleman, to increase the price of petrol to 5s. a gallon, we realise that, stripped of all its adornments, the case he has presented to the Committee and to the country for consideration is a somewhat tawdry and threadbare case.

The fundamental which seems to have been overlooked by many hon. Members opposite is that it is not the Labour Government of Britain alone which is faced with the threat of economic disaster. This is not essentially a British crisis. It is a crisis involving half the world. The dollar anaemia from which the country is suffering is a disease for which many countries of various shades of political complexion have to find a remedy. No British Government, whether Socialist or Conservative, could have prevented the disastrous rise in world prices which has taken place since 1945. The right hon. Member for the Scottish Universities (Sir J. Anderson) said so last August. That is one part of the speech he made last August from which today he did not try to extricate himself. It is not merely the pound sterling which has depreciated in value in the last few years. The American dollar has also depreciated in value, and the American Loan has been devalued in very large measure by circumstances largely beyond the control of the Government of this country. It is of little satisfaction to note that the depreciation of the dollar is due to the wholehearted acceptance by the United States Government of the very principles of competitive selection which are so enthusiastically advocated by the right hon. Member the Leader of the Opposition. In the first Budget introduced by the present Government, the then Chancellor of the Exchequer, my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) wisely observed: We must make … the most vigorous efforts … to re-establish … the balance of our external trade. Until this is done, we shall not, in truth, be the masters of our own economic and financial destiny."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, c. 1881.] The yardstick by which the Budget now under discussion must; be measured is whether it contributes to the country's economic and financial independence. To the extent to which it does not, we on this side of the Committee are rightly critical. So long as we consume more than we produce, inflation must persist. The right hon. Member for Scottish Universities continued to advocate old-fashioned methods, disguised under the name of controlled deflation. There is no unwillingness on the part of hon. Members opposite to apply a certain measure of control in respect of deflation. What does controlled deflation mean? We know that hon. Members opposite do not like the cheap money policy pursued by the present Government. They want money, like everything else, to rise in price. But controlled deflation, which would very soon get out of hand, means that the proportion of the national income that goes in debt charges, without necessarily any advantage whatever to our export trade, would increase. In the words of a recent article which appeared in the "Economist": This kind of approach pays no attention to equity as between individuals, and hits the poor more than the rich. It is socially blind in its incidence, and cures over-consumption by under-consumption. Those methods were tried after the first world war, when they doubled the burden of our national debt, caused wages to fall by £500 million a year, and increased the value of fixed interest earning securities by more than £700 million. That is the policy upon which we are invited to embark by hon Members opposite. In 1922 the then Tory Chancellor of the Exchequer, Sir Austen Chamberlain, made a speech in Glasgow about the economic and financial difficulties of that period. These were his words: Nearly two million of our people are unemployed. The trade of the country is stagnant; the purchasing power of Europe does not exist. The whole machinery of exchange and trade has been destroyed. That, thank goodness, is not the kind of speech which a Chancellor of the Exchequer has had to make since the present Government came into power. It is not the kind of speech which my right hon. and learned Friend will have to make tonight when he replies to the Debate, after more than two years of Labour rule. The remedy for inflation does not lie in tampering—