The Committee has just heard from the right hon. and gallant Gentleman the Member for Leicester, South-East (Capt. Waterhouse), what must be the most unconvincing defence of a broken election promise that has ever been heard. To judge by the faces of hon. Gentlemen opposite, he did not seem to be carrying a great deal of conviction even there, and he certainly did not convince anybody on this side of the Committee. I do not think that he will convince anybody in the country.
The right hon. and gallant Gentleman is suffering from a very serious delusion if he thinks that the cutting of food subsidies has been made good by relief elsewhere. He seems to be quite unaware of the fact that very large numbers of the lower paid wage earners have no sort of compensation to meet the increased cost of food which they will have to pay.
One mystery which has not been cleared up by any of the speeches of hon. Members opposite today is why the date of the Budget was advanced. We had all this elaborate, psychological build-up; all this bally-hoo in the Press about what a dramatic crisis Budget it would be; and then the maestro comes along on Tuesday, weeks earlier than usual, with the flags flying and the trumpets blowing, and merely announces that he intends to raise the Bank rate—which he could do on any Thursday of any week; and for the rest he says that there are to be no cuts in civilian consumption, for these are not necessary at all. This is the crisis Budget for which the country has been prepared by all the psychological propaganda of the last few weeks.
I agree with my right hon. Friend the Member for Huyton (Mr. H. Wilson), that the Budget is little related to the national crisis, but I think there are some extremely disturbing things in it. First of all, one thing which I do not think has been sufficiently noted was the speech—if I may say so, the very verbose, rambling and platitudinous speech—of the Minister of State for Economic Affairs last night. In that speech he tried to pour scorn on the method of estimating the inflationary gap by a series of arithmetical calculations.
Of course, it is quite true that several of the calculations made last year were wrong. It is quite true that this sort of economic forecasting is still in its infancy and it is quite true, in particular, that if we have a year like last year, in which there was a great shift between the first half of the year and the second half of the year, these calculations are likely to be wrong.
But the answer, surely, is not to pour scorn on this sort of method and to fall back, as he was doing, on a kind of divine intuition. The answer is to try to improve and perfect these methods, Indeed, the logical answer, as I suspect we shall find in this country in the long run, is to have a Budget every six months and not once a year. At any rate, I should myself prefer to trust the most imperfect forecasts of the economic planners rather than rely upon the intuitive judgment of somebody like the Minister of State for Economic Affairs. I very much hope that this speech does not mean that the party opposite propose to turn their backs entirely on the national income planning which has been developed in the last few years and, instead, to revert to the laissez faire policies of pre-war days.
A word, next, on the Excess Profits Levy. I do not think anybody on this side of the Committee would dispute the proposition that in a period of re-armament it is desirable to increase the taxation of profits, but how ironic that the Tory Party, of all parties, should choose the one method of increasing the taxation of profits which will clearly have the maximum disincentive effect and which is the clumsiest method that could conceivably have been chosen.
If we consider the effects of this new levy, we have the situation in which a company which, by its greater efficiency, has increased its profits finds that 80 per cent. of the increased profits are taxed away; whereas a company which has stagnated, and whose profits are no higher today than they were during the standard period, will actually pay less in taxation after the introduction of the new levy than it was paying before. What a marvellous incentive to extra effort and efficiency!
That is surely the most ludicrous situation we could possibly imagine. For instance, to take one example, after the new levy we shall have a situation wherein all the brewery companies in the country will be paying less taxation than they were, whereas an expanding engineering company will be asked to pay very much more. That is the most clumsy and disincentive method of achieving what the Chancellor wanted that I can imagine. Why put a high tax on marginal earnings, and decrease the tax on average earnings? Of course, the right method would have been greatly to increase the existing Profits Tax, particularly on distributed profits, and not to come along with this ridiculous new idea which shows that now the Tory Party cannot even run a capitalist economy, let alone a planned one.