Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 16 May 1950.

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Photo of Mr Oliver Lyttelton Mr Oliver Lyttelton , Aldershot 12:00, 16 May 1950

I think that every hon. Member who has been present during this Debate would say that its feature has been the very excellent maiden speeches which we have heard this afternoon. I think that they reached a level which has perhaps never been surpassed and very seldom equalled in the late history of the House. There were speeches by my hon. Friend the Member for Ruislip—Northwood (Mr. F. P. Crowder) and my hon. Friend the Member for Oswestry (Mr. Ormsby-Gore) and in both those cases we thought of a parent here in one case and not far distant in the other. There were also maiden speeches by the hon. Member for Wokingham (Mr. Remnant)—and we remember the Parliamentary reputation which his father enjoyed—by the hon. Member for Cardiff, North (Mr. Llewellyn), and the hon. and gallant Member for Harborough (Lieut.-Com-mander Baldock). I could not help thinking that if this was the standard reached by the maidens, what was expected of those who have long ago lost their maiden allowance in this particular race and I felt rather nervous about having to wind up.

The hon. Member for Blackley (Mr. Diamond) tried to fasten on me, amongst others, the label of being an apostle of gloom. I am not that at all. I admit, however, the impeachment of being the apostle of danger, and I do not think there is any right hon. Gentleman on the Front Bench opposite in a responsible position who would deny that we are in very grave economic danger. When the elections are not imminent very stark-things are said by Ministers, and as the elections approach, their outlook becomes more optimistic.

I do not want to repeat the argument which I made during the Budget Debate upon the dangers of our economic situation, but, in my view, these dangers have not changed during the last two or three weeks. They are, first of all, that a country which has no remaining taxable sources of revenue, which has a balance of payment so very delicately adjusted as ours, and, above all, which depends on the highly-artificial measures of wage limitations, by a voluntary wage-freeze and dividend limitation, is in a very precarious position, and is a precarious foundation on which to erect an economic structure. We are quite unable to see how we should live through even a minor depression in American business, so I make no apology for referring to this background, and I think that we should discuss all the budgetary measures with a mind to it.

I very much hope that the Chancellor this evening will be able to record a further rise in our reserves of dollars and hard currency. I do not know if it is his intention to tell us tonight, but my impression was that the general pick-up in American business in recent months—I think it is about 1 or 2 per cent. under the peak reached last year—has had a distinct effect on British economy. That effect is produced by American stock piling, and from the more than ordinary demands for raw materials which is now being felt.

Even if the Chancellor is not going to tell us, very shortly we shall be able to see that our reserves in dollars and hard currencies have risen because I repeat—and when I say this the Chancellor always smiles in a rather superior way—that convertibility of the pound must be the prime, although it be a distant, object of the Treasury. The Treasury Bench always laugh at that, because it is such an obvious thing to say. Nevertheless they do not carry out the necessary measures to attain such an end.

Quite apart from the many factors which are required and which we must mobilise if we are to make sterling a convertible currency, we shall have to create a much greater international confidence in our country and even in our political structure. We must have a cessation of the attacks on capital, and we hope that certain Ministers will stop these unbridled speeches about the redistribution of wealth being retribution. Speeches like that do not create international confidence, and they make the convertibility of sterling all the more difficult.

Even if all the factors are working for us, we need much larger dollar and gold reserves in order to protect ourselves from fluctuations, and these are the conditions which are precedent to any return to convertibility. I would not like to estimate how much of our present dollar and gold currency reserves of about 1,984 million dollars are necessary for the bank with which we carry out transactions for the sterling area, but it would be a large proportion of it. If we consider that last year—I must now switch over to sterling because it is very difficult for a non-official person to know the rates of exchange and how to express these deficits—there was a deficit of £380 million and against that we had 1,984 million dollars, it surely has to be recognised that for only a few months at last year's rate could we sustain our present reserves. We are all agreed they must be increased as one of the precedents to the covertibility of sterling.

I am very glad that my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman), in his thoughtful speech, again drew attention to the figures of productivity. Although I believe the general tendency of production is good, we must be very careful not to pass any optimistic forecasts upon them. The last thing I should like to do would be to run down the efforts of the most skilful body of workmen in the world, but whatever the figures are for production, it is not high enough, it is not what it should be, and, above all, it is not what it must be.

We are entitled to expect greater results from the huge capital investment which has been put into British industry since the war, a capital investment which derives solely from five years of boom and of unprecedented demand for goods in the sellers' market. Even now for many commodities and manufactured articles that boom is not over. I do not wish to recapitulate the arguments used during the Budget Debate, but I wish to concentrate on the Budget itself and its fiscal provisions. I do not want to make my remarks too long, because I want to leave the Chancellor of the Exchequer plenty of time in which to answer the questions addressed to him, the very pertinent questions, by the hon. Member for Wednesbury (Mr. S. N. Evans). In this particular case, I have no doubt the Financial Secretary will complain that the Opposition have not answered the hon. Members questions, just as he always seems to think it is our duty to introduce the Budget and his duty to criticise it.

On this occasion, we are looking forward with some interest to what is known in trade union circles as a "jurisdictional dispute" between someone who has let out a large portion of the Labour policy in a rather inadvertent manner, and the Chancellor of the Exchequer. We shall listen with interest to see how they get on. It is always painful when a Minister has to eat his words, as happened with the Chancellor of the Exchequer on devaluation, but he will find it much more agreeable to eat one of his late colleague's words in the House.

Turning to the Budget itself, I should say that its first characteristic is its lack of imagination. It is a Budget of an exhausted Government which has lost all faith in itself and in most of its favoured policies. There is no financial, political, social or commercial creed discernible in this Budget. There is no shred of policy which runs through this patchwork. We have ceased to hear that nationalisation is the cure for all our economic ills. That is a subject which Socialists do not mention. We do not know whether Members opposite believe that nationalisation or further nationalisation is to be the cure for our economic evils.

I shall be interested to hear from the Chancellor whether he still believes in that. Does he still believe in further nationalisation? I believe, if rumour is true, that the party opposite are about to go to Dorking, turning their backs on the Isle of Wight and other seaside resorts, in order to eliminate nationalisation from the party programme. I do not know whether Members opposite really believe that the cure for our economic troubles is in nationalisation, but I am quite sure they all feel that nationalisation is not going to be a very good cure for their electoral difficulties. If rumour is true, the section headed by the Lord President, who believe that nationalisation should be mentioned under their breath until after the General Election, are going to win the day. I shall be very interested to see whether I have any success as a prophet.

However cynical it may appear to us, my guess is that the anti-nationalisers are at the moment in the ascendant. When Members are talking about the economic background to the Budget, surely the subject of nationalisation is not so irrelevant as they would like to make it. The mood of this Budget, as was touched on by my hon. Friend the Member for Oswestry, is the physic as before, the old spoonful of brimstone without the treacle, which used to be the fare of the boys at Dotheboys Hall. This prescription has to be paid for by the taxpayer.

That is why I say the Budget is so unimaginative. It simply consists of spending all the Government can lay their hands on, saying that they cannot make any economies, and then adding up all the expenses and taxing the country £200 million above the sum. Then, since there are no other sources of taxable income, some new taxes are added here and there and the same amount is taken off elsewhere. It is all delightfully simple, and any fourth form schoolboy who could learn up a little patter about "democratic planning" could produce the physic, always the same bottle and always the same label, but perhaps not quite as well as the right hon. and learned Gentleman.

What, in our opinion on this side of the House, are the fundamental weaknesses of the Budget? There are four most important. First of all, its size; secondly, it depends upon an ever buoyant revenue; thirdly, there is very little service paid to the idea of incentive; the budgetary policy of the present Government remains a deterrent to production, hard work and saving; and lastly, it appears not to realise in any way the serious problem of the increased costs of our social services which will face us over the next decade or 20 years.

I want to spend a moment or two discussing those four fundamental weaknesses. First, the size of the Budget: nearly £4,000 million five years after the war, 43 per cent. of the national income being spent by the Government, and no prospects whatever of any relief to the taxpayer under this Administration. We remain the most heavily taxed nation in the world. The situation is really much worse than this, because we have grave fears—and I do not think those fears are on this side of the House only—whether we shall be able to finance all that we have to finance, even at this level of taxation. The Treasury apparently admit that taxation cannot be increased; we have used up all the taxable sources, as I think is clear from looking at the Budget.

The next point is the supposition upon which the Budget is based—that revenue will remain buoyant. The hon. Member for Blackley with a large bundle of "The Times" or the "Manchester Guardian," I do not know which——