Orders of the Day — Finance Bill

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

Alert me about debates like this

Photo of Mr David Eccles Mr David Eccles , Chippenham 12:00 am, 25th November 1947

I hope the hon. Member for Streford (Mr. Austin) will forgive me if I do not follow his speech, except that I will try not to be furtive about what it is right that we should do. Owing to an unhappy experience with a bad duck-egg, I have not had the opportunity of catching your eye Mr. Deputy-Speaker, since the early days of July. In the interval much has happened. The American Loan has disappeared; sterling is under the disgrace of inconvertibility; and we are throwing our last reserves of gold and free exchange into the unbridgeable gap between our dollar earnings and out goings. These are the unmistakable signs of a national crisis which far transcends party politics. Yet I find that the Government have decided upon another round of Socialism as the best remedy, and that they have adopted compulsion as the ultimate sanction of their economic policy. Part of that economic policy is monetary and fiscal, and we are told that this Bill has been brought forward to decrease the inflationary tendencies which now exist, or which are likely to develop before April when the annual Budget is brought in.

The new Chancellor has said that the Bill is adequate for that limited object. I doubt that; but I think it is much more important to discuss whether the limited object itself measures up to the crisis in our national fortunes. I agree with the right hon. Gentleman that no one can measure and assess accurately the inflationary pressures, but surely we know enough about them to determine what it is right to do now. A dog cannot define a rat, but the mere sight of a rat is sufficient to stimulate a good dog to the appropriate action. As I see it, my hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) was correct when he said that this inflation is everywhere, at all levels in our economy, and the Chancellor was following too closely in his predecessor's footsteps when he claimed that the pressure is mostly in the area of Capital goods.

Suppose that all the controls were taken off at one stroke. Which prices do hon. Members think would rise fastest and furthest? The prices of foodstuffs or the prices of capital goods? The prices of potatoes, eggs and bacon, or the prices of machinery and power stations? It is very important, when considering how to check inflation, to realise that the heaviest pressures are against the necessities of life, although, of course, it is true that the pressures against capital goods have so far had more chance to show themselves. I agree that no one can measure accurately this inflation, but we cannot mistake its consequences. Today, we have two price levels, one which embraces all those goods which are rationed or controlled, or otherwise prevented from commanding their natural prices, and the other which embraces the goods and services which are not controlled or rationed; and the consequence of Daltonian inflation has been steadily to widen the gap between these two sets of prices. Labour, management and materials are pulled towards the production of the uncontrolled articles and away from the production of the necessities of life. If that were not so the Government would not have introduced direction of labour in peacetime.

We find, therefore, that this inflation expresses itself through the public spending too much of its money on the wrong things. There is only one effective cure for this unhealthy pattern of spending, and that is to expand the production of the right things. But that is not the cure which this Bill proposes. This Bill attempts to reduce the inflationary pressure by making the public spend more of its money on things which do not matter. Like the tobacco tax last April, the consumption taxes in this Bill are designed to make us spend more on non-essentials, and, if the public does not choose, in the months ahead, to lay out more money on beer, betting, and luxuries, then this Bill will fail in its anti-inflationary object.

The surplus purchasing power will not have been mopped up, but will still be running loose, and it will be all the easier for it to break-out elsewhere, because the range of the Purchase Tax has not been widened in the Bill. It is very curious to note that if this Bill is to succeed in its object, it must do so because of the constancy of human nature, which is expected to preserve the pattern of spending, in spite of the new taxes. The constancy of human nature is at the root of the Bill, and yet the case for Socialism has time and again been that it rests upon the ability of its exponents to change the economic motives which have hitherto moved mankind. I commend to the intellectual bigwigs sitting opposite this interesting contrast between the theory and practice of Socialism.

If the Bill is not adequate to its limited purposes, the purpose itself is much less adequate to the crisis in our economy. The Bill makes only a negative and half-hearted attack upon inflation. At the very best, it will Help to stabilise poverty where it is today. Surely, it is time to stop thinking that we can again raise the prosperity of England by making more expensive the cost of things which do not matter? Is there no way in which we can make a positive attack upon inflation, and make more attractive the production of the things which matter? Apparently, the last Chancellor of the Exchequer did not think so. His vindictive policy was to restrict what he did not like.

The right policy is to expand what the people want. How is that to be done? As far as the Finance Bill is concerned, one obvious way is to reduce the cost of living subsidies in the manner proposed by my hon. Friends. In the course of the recent Debates, which I have read, many right hon. and hon. Members spoke for and against these subsidies. If my hon. Friends will allow me to say so, not one of them made the case for the reduction of subsidies half as well as it was made last Wednesday at Question time by the Minister of Food. One of his hon. Friends tackled him about the rising price of mackerel, and he defended himself with much less of that unctuous confidence which I associated with him when I was last in the House. Having admitted that the price had doubled, he said that "the supplies are about double too." That is the point. Raising the price doubles the supplies. These are the words of the Minister of Food. Who can doubt that if a year ago the prices of potatoes had been sharply increased, the same results would have been achieved?