Orders of the Day — Budget Proposals and Economic Survey

Part of the debate – in the House of Commons at 12:00 am on 8th April 1948.

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Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn 12:00 am, 8th April 1948

If I have made an error I am sorry.

One criticism I do want to make of the Chancellor; I wish to join with others who spoke earlier, in saying that I think he has made an error in offsetting the workers' gains through this Budget by an increased levy on beer and tobacco. I do not say that because I am trying to curry any favour with my constituents, but on the basis of principle. I am sure that hon. Members opposite will fully agree. If the Chancellor is attempting, and I think he is attempting, to get a productive response through this Budget, then these are pinpricks which will cause great reaction and resentment and resistance among the workers, out of all proportion to the amount which may be contributed to the revenue. The second point of principle is that these levies on beer and tobacco penalise the lowest sections of income which have already in the past been relieved of Income Tax, and, therefore, do not stand to benefit from the increases in the earned income allowance.

The Chancellor may say that in this situation we have all to make our contribution. Is he not forgetting that these lower income groups, along with others, have since the last Budget already made an additional contribution through the withdrawal of £33 million worth of subsidies on leather, cotton and wool? Is he not forgetting also, that in the future they will perhaps make increased contributions through the decision to stabilise food subsidies rather than allow them to follow the potential rise in food prices? The increase in utility prices for footwear and clothing have already caused considerable consternation among this class of the community who are feeling the pinch very much at the moment. After all, subsidy is a tax in reverse and if a subsidy is withdrawn then, in effect, a tax is imposed. I maintain that this section of the community, the main proportion of whose income has to be devoted to essentials, are feeling the increased taxation through the withdrawal of the subsidy.

I would suggest that to tax tobacco still further on the grounds that we really ought not to be smoking dollars is failing to face up to the fairest way in which we can share out the dollar shortage. It comes at a time when we are making concessions on all the other items of dollar expenditure, such as films, petrol and foreign travel. I know that the foreign travel concessions are not directly a question of dollars, but the ban on foreign travel was one of the hardships imposed at the time of the foreign exchange crisis. If necessary, let us have a points system for dollar expenditure so that those who have petrol do not have tobacco or do not go to the cinema. But to just keep piling a tax on tobacco, on the ground that people ought not to smoke dollars, is a "hit or miss" and, in my view, an unfair way of meeting the situation.

We are strongly behind the Chancellor on the broad lines of his financial policy, and I ask him to have the courage to go forward with that policy, but I would suggest that the Marshall Plan has now come to relieve us of the worst of the hardships that we feared, and I ask whether we could not use the Marshall Plan to enable the workers to share some of the results of their increased productive effort during the coming months. Cannot we recognise that we should at each stage in our productive drive give what we can in the way of concrete rewards? When the situation was bad, as it was last summer, and it was a question of scraping the bottom of the barrel for every dollar, that was a different matter. But now the Marshall Plan has given us some elbow room and I would say: Let us remember that it is human beings to whom we are appealing and that we should at every stage give them some reward for their magnificent and patriotic response.