Orders of the Day — Profits Tax Bill

Part of the debate – in the House of Commons at 12:00 am on 3rd November 1949.

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Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough 12:00 am, 3rd November 1949

If the hon. Member will allow me, I shall explain it even to his simple mind. It is perfectly true that most of the people who have to get a footing in the American market will be very lucky if they recover their overheads. I will, if I may, give an example from my own company. In the first six months of this year, compared with the same period last year, our exports were up by 68 per cent. On the other hand, our profits are down by something like 30 per cent.—I shall not give the exact figure because it is a public company—and yet we continue to export because it is our duty. We are doing our best to answer the Government's call.

I have here a dozen actual orders from America for high-grade textiles which my company has recently executed. They came from New York, San Francisco, Toledo, Atlanta, Kansas City, and Pittsburgh. If any hon. Member wishes to see them afterwards, he may do so. These orders involved the making of 15 different garments necessitating 48 basic changes on large machines. Garments made for the American markets are quite different from those made for the English market. One finds that the garments which the Americans will accept are not suitable even for the Canadian markets. They have to be shaped, styled and sized quite differently. This means cutting right across the normal home production, thereby reducing the profitability of the home trade.

It follows, therefore, that there is not only no extra profit for those answering the Government's urgent call to go into the dollar market, but, in most cases, either losses or very considerably reduced profits. It is useless denying the fact that by doing this, the home consumer is being asked to subsidise our exports. That being so, no greater profits are to be obtained as a result of devaluation by exporting to the dollar market.

My second objection to this tax is because I think it is footling. We are living as a nation beyond our income to the extent of £400 million a year. If it had not been for the utmost generosity of the American worker and taxpayer we should have had to institute savage cuts such as few hon. Members on either side would care to consider. Unless we fill that gap when American aid finishes, those cuts must come, whatever Government are in power. Therefore, I submit to the House that a tax producing only £13 million with which to fill a dollar gap of £400 million is just playing with the situation. This Government have done nothing but play with the economic situation ever since they were first frightened by it. The effect of this tax is like a pinprick to the industrialists who are being asked to make special efforts to export their goods to the dollar market. It is a pinprick that does not matter very much, but it tends to put exporters off doing their job, especially when they know that the next stage in taxation is going to be a capital levy. It is also dangerous to continue the illusion in the minds of the workers that, somehow or other, our economic crisis can be overcome by "soaking the rich" still further.

My third and last objection to this tax is that I believe it to be a vicious political tax. The real reason for it is not economic, but political. Why was it imposed? Most business men feel that this tax was imposed for one reason only, namely to keep the Minister of Health in the Cabinet. It was in order that the Minister of Health should not resign and form that splinter party of which some of his colleagues are so afraid. It is, as it were, an offset to the bitter pill which the right hon. Gentleman has had to swallow in the form of a shilling on prescriptions. His scheme is no longer a free health scheme and, therefore, this tax is proposed as an offset.

I am sorry that the Chancellor is not here tonight because I wanted to say this to his face; I am sorry that I must say it when he is not here, but I think it should be said. There are many business men who have no close political affiliations but who had a very high regard for the Chancellor of the Exchequer. They thought he was a much finer man than his predecessor. They believed in him and they had a great regard for his personal integrity. But they have had a rude shock recently. No man's public character has gone down so heavily—I say this with great sorrow—as has the present Chancellor's in the last few months. Those business men who thought so highly of him previously do not believe his word today. They wistfully thought that it was he who would save England in her crisis, and they now feel that he has failed them. If he had decided to resign rather than devalue the pound I think the average business man would have regarded him as the greatest man in the country. Today they feel that he has completely lost his high standing.

For those of us who sit on these benches, to see him about a month ago publicly embrace the Minister of Health after a speech full of hatred and bitterness from that human dynamo of hatred, was a dreadful and shocking sight. The Chancellor of the Exchequer will never again have the pull with the business community that he previously had. I do not think hon. Members opposite realise the significance of that. As I see it, there is no one else on the other side of the House who can quite take the place that he previously occupied. If we are to get out of our economic difficulties we shall only get out of them if both sides of industry try to understand the other's point of view and pull together. One man who could have done the job before he sold himself was the Chancellor of the Exchequer.

Business men feel that this tax has been imposed rather against the better judgment and the better will of the Chancellor of the Exchequer in response to the demand of the Minister of Health. The only explanation I can give is that every time hon. Members opposite have to consider something that is particularly disagreeable economically, they are scared of 1931. I remember the Foreign Secretary saying, "I shall never be a MacDonald" when reference was made in this House to a Coalition. This tax has been imposed because hon. Members felt that to offset the increase in the price of bread and in the cost of the Health Service something had to be done against hon. Members of this side of the House. I think it is the ghost of Ramsay MacDonald that has frightened hon. Members opposite. He is with them all the time.