Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 25th April 1955.

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Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00 am, 25th April 1955

The right hon. Gentleman says, "Hear, hear." If he believes that the workers are the basis of national prosperity, how does his argument justify taking £50 million or so from the workers in insurance contributions and giving it away, to use his own words, to the shareholders? Perhaps the Economic Secretary will explain the argument to us.

When the Chancellor says that the companies are his favourite children, does he really mean simply the directors and shareholders, or does he mean the workers as well? If he means the workers, why is the money taken from them to give to another section of the community? We have not had any answer to that. At any rate, our position is perfectly clear. We believe that the productive workers are the main source of production and prosperity and productivity; and that any incentives that are possible should be concentrated mainly on them.

I should like to know, also, whether the Chancellor studied the figures in his own Economic Survey before deciding to bolster up the large companies with further reliefs this year, or whether the idea simply popped out of his head like one of those cats out of the bag, of which he spoke last autumn, without any serious study of the facts. The Survey of this, year—my hon. Friend the Member for Cardiff, South (Mr. Callaghan) gave a number of examples of how individual companies would fare under these proposals—shows that companies as a whole after covering depreciation, taxation, dividends and fixed investment, in both fixed capital and stocks, had £400 or £500 million surplus available in 1952, 1953 and 1954. In that case, where is the need for this extra injection of money to finance investment? Is there the slightest evidence that it will stimulate increased production or will increase investment in any way?

We already have in existence both the initial allowance and the investment allowance, both of them, incidentally, dependent upon a firm actually carrying out investment and not available to be used for dividends or capital appreciation. If that was the Chancellor's purpose, I should like to know why he could not have increased the investment allowance rather than to make this, as he calls it, "simple, classical and pure" reduction in the standard rate. It seems to me that when he used those rather meaningless adjectives, he was really admitting that he did not have a serious argument to put forward.

The evidence proves overwhelmingly that, as in 1954, these new reliefs for large companies will mean another spate of higher dividends and bonus issues, with all that that means in an already inflated economy, with more wage claims, more industrial unrest, and so on. Indeed, the Minister of Labour at present is spending almost all his time coping with the industrial unrest which is the secondary effect of the Chancellor's Budget policy. The irony of this is that the £42 million—that is the figure given to us by the Financial Secretary today with great care—required for this extra relief for companies is almost precisely the same amount as the yield of the shilling increase in insurance contributions by employees as opposed to employers.

The Prime Minister has made one contribution, we understand, to this debate. We have it from the Chancellor that the Prime Minister accused my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) of uttering "class war stuff," because he pointed out—the Prime Minister probably had not noticed it before—how outrageously unfair was the incidence of the tax reliefs in the Budget. If the Chancellor introduces a Budget of that kind, with such a very unfair distribution of benefits, he cannot really accuse other people of class war propaganda because they denounce it as being what it is. It is typical of the Tory Party to start a class conflict and then to denounce other sections of the community for defending themselves.

We have been asked—this was supposed to have been a very clever question which was put to us—whether we regard this as an electioneering Budget, on the one hand, or a very unfair Budget, on the other hand. We say this: the Government think this is an electioneering Budget; but we think that it is an extremely poor Budget. That is the difference between us. Why did the Chancellor rush into all this anyway? Why, incidentally, is he going to unprecedented lengths to suppress Parliamentary discussion or amendment of his Budget proposals? Why is he going to the length of using the procedure for Purchase Tax Orders, for a purpose for which it was never intended, to rush through the main part of the Budget without detailed discussion?

I hope that some of our correspondents outside, who write to both sides of the House at this time of the year about many interesting topics—such as sport and entertainments and, as we have heard today, cutlery, linen, diesel oil, and transport—will realise that this year the Government have made it virtually impossible for almost all these topics to be examined seriously by the House in the passage of the Finance Bill?

Why are the Government acting with such reckless haste? Perhaps the Economic Secretary will tell us? I suppose the explanation is to be found in the first sentence of the leading article in the "Observer" of yesterday, which stated: It is not impossible that by the time most of us go away for our summer holidays— and I devoutly hope that we shall— the country will be in the midst of a balance-of-payments crisis more serious and more menacing than that which afflicted us in the autumn and winter of 1951. If there is substance in that, and if that is the reason—I do not know what other reason there is for all this haste—I do not think that the country will judge well of a Government which thus hurries through a totally unfair Budget, and refuses to face up to the real problems which are confronting the country at the present time.