Clause 2. — ;(Alterations in Personal Reliefs.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 27 April 1955.

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Photo of Mr Charles Hale Mr Charles Hale , Oldham West 12:00, 27 April 1955

I do not want to say more than a few words, because I am so entirely in agreement with what has been said by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice), but it is important that we should have it on record quite clearly that the only reason this Amendment is being debated is that any Amendment increasing the benefits is out of order. We are, therefore, not able to explain our full policy as we should wish to do.

My right hon. and learned Friend always speaks with exceptional courtesy, and he did so in this case. It seems to me that there is only one reason for the introduction of this provision, and that reason is abundantly clear. The Chancellor of the Exchequer, in referring indirectly to this matter during the discussion upon Clause 1, said that he had tried to carry out the recommendations of the Royal Commission which had recommended the removal from taxation of a large number of people who were paying very small sums. There is no doubt about the reason for that recommendation. It was that it is not economical to collect those small sums.

There are many people who, fortuitously—almost accidentally—find themselves, by a slight increase in their salaries, suddenly coming just within the Income Tax range; having to have P.A.Y.E. certificates arranged for them and the whole paraphernalia of collection, assessment, and possibly appeal, related to them. They are paying an average of 2s. 9d. a week, and they number about 2,400,000. It is not worth collecting the money. It costs a lot of money to collect it, and causes much exasperation. It is a good thing, even from a Tory point of view, to write those people off.

That is what the Chancellor did, and then he said, "But this is still costing us rather a lot of money, and will give these people rather more than I intended. There is a very ingenious way of getting it back, namely, by reducing the amount of allowances at the lower rate of tax." There is no argument about that. No hon. Member opposite dare controvert what I have said. The Chancellor said, "I am giving them 9d., and that is too much. I am going to take 6d. back."

The real effect of a tax concession is the percentage increase in spending power which it gives to a man. I quite agree with the Chancellor of the Exchequer that a concession of£10 to a man earning£20 a year is a good deal more than is a similar concession to a man earning£2,000 a year. It is quite clear that it raises the spending power of the first man by 50 per cent. whereas, to the other man, it is of very little importance.

If we look at the figures which are affected by this Clause—which is directed principally against the lower-paid workers—we must do so in terms of those percentages, and we then find that whereas the increase in spending power to the man earning£500 a year is about 2½per cent., the increase to the man at the top rate is 25 per cent. or 30 per cent. It is quite disgraceful and shocking that this increase of taxation—because it is an increase—is deliberately, destructively and decisively applied primarily to the lower-paid workers. It obviously makes no difference to the higher income groups. It is directed to the lower-paid groups precisely because the Chancellor is afraid that his reduction of 6d. in the£all round would give too much benefit to the lower-paid workers. I challenge anyone to deny it. There is no other possible explanation. That is why this Budget is peculiarly contemptible.

I wish the Chancellor no harm; I have considerable admiration for him. A week or two ago I thought that after a short and nominal regime he might take over the leadership of the Tory Party, and become the only able leader it has produced from its own ranks since the Younger Pitt. I do not know whether that can happen now, when people have studied the Budget.

The Chancellor has been throwing up a smoke-screen in the debates which we have had. Apart from the fact that in drafting the Budget Resolution he has chosen deliberately to prevent us from moving Amendments that we, as a Labour Party, would wish to move, he talks about a reduction in taxation when, in fact, the Budget increases taxation. The question whether or not taxation is increased is a matter of expenditure. If one is raising more money from the public as a whole, one is increasing taxation, whatever the rates may be.

If the Chancellor had an enormous surplus at his disposal, he had it for one of two reasons. It was either because he deliberately misled the House last year, in framing his Budget—which I do not believe for a moment—or because he made one of the most extraordinary miscalculations ever made by a Chancellor in estimating his Revenue. Having to deal with that surplus as best he could, and having some money to distribute upon the eve of the Election, he asserts that he has given 6d. to everybody, but he has taken back 3d. off the lower-paid worker by this ingenious and rather dishonest limitation upon the concession given to him. 7.0 p.m.

In an earlier discussion the Chancellor said that he had made an all-round reduction of 6d. in the Income Tax. It was made all round, to everybody, millionaires and all, as a matter of financial rectitude—one could not make fish of one and fowl of another; one could not differentiate between classes of people; one had to give it to everybody in the same way. That is the old argument which we have heard before about equality. Everyone can go into the Ritz Hotel. Everyone can have an Income Tax concession, an expenses allowance, buy a car, and so on. It is rather a question of what your salary is, what your allowances are, and what you have available to spend.

The Chancellor, having talked about financial rectitude and having indicated that it sprang not so much from the rectitude of his own conscience but from the sight of Gladstone's eyes, which were looking down at him from his painting, and which had petrified him into a rather temporary attitude of rectitude, now comes forward with this proposal about the liability on the lower band of Income Tax. We are to have class distinction applied to the lower-paid workers. We now see that the tax concession does not apply right through but that its most damaging, savage, and particular effects fall upon the lower-paid worker.

Since I have sat here this afternoon I have been wondering whether I made some frightful error when I was reading the account of the Budget speech. I have wondered whether we were discussing something else. I listened to the suggestions from the Government benches that taxation was being reduced when it is, in fact, being increased. I listened to the suggestion of benefits being given when, in point of fact, the Chancellor is filching by false pretences hundreds of thousands of pounds from people and is proposing to give only a little of it back. I listened to our being told that we cannot discuss, on any of these Clauses, any alternative means of allocating this money.

It has become plain to me beyond any possibility of doubt that the Government have framed a fraudulent Budget in an effort to deceive the electors, and that they framed a Budget Resolution to prevent any discussion which would enable light to be given to the electors to show what the real proposals and the real facts about the Budget are. We are presented with proposals which, from start to finish, are designed to mislead.

I have admired the Chancellor of the Exchequer in many ways. I admired his struggle to save the£, which is worth less now than it was in October and is considerably lower than it was in 1951. We have heard about his financial rectitude, his careful computations and his careful estimates, every one of which has been wrong, yet Government supporters can still get up and say that this Budget is the result of his stupendous ability, diffident character, and irresistible charm. I recognise his charm. There is no question about his charm. In my former days, when I was a practising solicitor, I encountered many confidence tricksters of one sort or another. Charm and ability were always there, coupled with a capacity to present financial matters in a most impressive, instructive, and moving way.

With every desire to use words that are in no way controversial—[Laughter.]—well, over-controversial—I suggest that this Income Tax proposal is a mean and contemptible way of filching back a few pennies from people on the lowest band of Income Tax liability, from the very people who work for those who are in control of the private sector of business, who produce things, and without whom no private business could exist. This is coupled with a contemptible way of presenting it, so as to try to conceal from the public that a confidence trick has been played upon them, and that when they get their P.A.Y.E. demands they will find that something has been taken from them which offsets any benefits which may have been given to them.