Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 25th November 1947.

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Photo of Mr Arthur Palmer Mr Arthur Palmer , Wimbledon 12:00 am, 25th November 1947

This is certainly a kind of mathematical statement, but it is the result which is so interesting. If we add to that, say, the view of the hon. Member for Monmouth (Mr. P. Thorneycroft), squared—and I think in this matter he has possibly been squared—it comes to this: that the views of hon. Members on the other side can be put under two headings. The first is that they believe that public purchasing power is too great and should be reduced; secondly that State expenditure is too high and should be curtailed. There is one action alone which if taken, would correct both these defects if they be defects. Obviously, increased taxation will not correct them because that reduces purchasing power but still permits an extremely high level of State expenditure. Nor will cuts in the Armed Forces, for the opposite reason. Of course, many hon. Members on this side are very much in favour of cuts in the Armed Forces. No, the only thing likely to satisfy hon. Members opposite is a cut in the social services and that, of course, is their real policy—[An HON. MEMBER: "Perfectly ridiculous."] It is not perfectly ridiculous. They simply have not the honesty to admit the truth, and they are not likely to do so until the result of the Gravesend by-election is known.

The hon. and gallant Member for Ayr Burghs (Sir T. Moore) said it was nonsense to suggest that the Tory Party has in view any cut in the social services. Yet many hon. Members opposite have been arguing in favour of a cut in food subsidies and, in the present circumstances, food subsidies are an extremely important and valuable social service to the people of this country. In fact, I think hon. Members opposite are so obsessed with this idea of a cut in food subsidies that they have given up worrying about whether or not it will counter inflation effectively. For instance, the hon. Member for Monmouth, who I am sorry is not here this afternoon—[An HON. MEMBER: "He is at Gravesend "]—but who is quite typical of his hon. Friends, though he expresses himself a little more plainly than most of them, said: If we tackle these food subsidies, if we are bold about our policy in relation to indirect taxation, then we should and must reduce direct taxation. Again, I shall not be pendantic about precisely how we should reduce that taxation. We should reduce that by an amount which is equal to 6s. 8d. in the pound in Income Tax."—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 880.] I suggest that in these matters we should call things by their right names, and to cut food subsidies under present conditions is not anti-inflationary; it is a transference of income from the not-so-well-off to the better off. I think, therefore, that the wisest policy in these matters is that which is being pursued by the Government, to dam back the inflationary pressure by relying on physical controls, rationing and so on as the main auxiliary to taxation and savings.

I believe that this Bill, generally, is a good Bill and adequate for its admittedly limited purpose. I think it is justifiable to increase the Purchase Tax under present circumstances on not absolute necessities. I do not think anyone claims seriously that the advertising tax proposals will cripple industry, but I hope that in Committee my right hon. and learned Friend will look favourably on any Amendment which seeks to modify the form of tax allowance to suit conditions of particular businesses—a good example of that is the mail order business. I am in favour of the limited duty proposed on pool and greyhound gambling as an experiment. I have no particular objection to it as far as it goes, but it does not go far enough.

I thought my right hon. Friend the Financial Secretary was particularly weak when he answered the interjection made by the senior Burgess for Oxford University (Sir A. Herbert); he did not seem to believe in his own arguments as far as the new duty on gambling and betting was concerned. In the long run I feel that we must either tax gambling as a whole or not tax it at all, though this may be a preliminary canter. Under the present proposals the bookmaker will have an advantage, and in that connection I would refer the House to an article which has appeared in that very moderate and sensible publication, "The Tribune," for this week. In that article my hon. Friend the Member for Reading (Mr. Mikardo) puts up a persuasive argument for a special licence for book-makers. I suggest that my right hon. Friend the Financial Secretary pays some attention to that article, which will not take him long. It certainly impressed me with its good sense, but then perhaps I am easily impressed.

In the few minutes that are left to me, I come to a point of criticism. The main objective of this country under the present admittedly difficult conditions—though not as difficult as they would be if hon. Gentlemen opposite were in power—is to do more with far smaller resources than we possessed in pre-war years, and everything that makes for increased and better production is good, while everything that operates the other way and reduces production is bad. That applies to hours, controls, economic and financial policy. Therefore, I applaud the Finance Bill for sticking firmly to the principle of as much equal sharing of burdens as can be managed, and I recognise the Bill to be a substantial contribution towards mopping up any threatened inflationary pressure. However, an omission, which I think can be repaired in the Bill we shall have in the Spring, is that very little has been done in this Bill to strengthen production incentives. It is not beyond the wit and ingenuity of the present leaders of the Treasury—it was not beyond their wit and ingenuity under the leadership which has been enjoyed since the General Election of 1945—to devise new systems of taxation.

I throw out this suggestion to them: why cannot we have a system of taxation by which every company or manufacturing unit which exceeds its production figures shall be entitled to claim certain taxation rebates, provided, of course, that these rebates can be shared on an agreed basis between managements, employers and workpeople? The method to be devised for making the share-out could be on the agenda of the production committee. I know that hon. Members opposite do not like to be told this, but we must go on telling them. They must understand that the system in which, curiously,

they still believe, in which all win any prizes they can, may give results after a fashion, but in the view of those of us on this side of the House, only at a tremendous price in suffering and poverty. The great majority of people are no longer prepared to pay that price. So far as this party is concerned, the new organisation of the productive processes under conditions of full employment has come to stay. I therefore press this on my right hon. Friends on the Front Bench. Without output of real national wealth, stimulated by financial policy as much as by every other kind of policy, there can be no real permanent hope of a steadily increasing standard of life for the people of this country.