Clause 1. — ;(Charge of Income Tax for 1955–56 and Surtax Rates for 1954–55.)

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

Alert me about debates like this

Photo of Mr Harold Steward Mr Harold Steward , Stockport South 12:00 am, 27th April 1955

In the short time that I have been a Member of the House I have witnessed upon no fewer than six occasions the kindness extended to hon. Members making their maiden speeches. I am certain that in the more restricted atmosphere of a speech upon a Clause in the Committee stage of a Bill I shall be in even greater need of such kindness and tolerance from the Chair.

After the speech of the hon. and learned Member for Kettering (Mr. Mitchison) I was left in some doubt whether hon. Members opposite had made up their minds whether it was more desirable not to give any reliefs, and so guard against inflation, or to give reliefs which themselves will tend to guard against inflation. I believe that in this simple, direct Bill, judged in the context of the last three Budget statements, we have something which, while guarding against inflation, will give the greatest measure of relief in the most widespread manner.

It is simple, direct, equitable and, from my point of view, very welcome. It gives practical expression to what I believe to be the whole spirit of the Bill, as defined in two passages from the speech of my right hon. Friend when he was explaining his Budget proposals. He said: If we are to achieve the full increase in production of which the economy is capable, we must continue to provide encouragement to the whole productive effort of the country. We must seek fresh incentives to the forces of growth by the stimulation of output and productivity. Later in his speech, he said: I am satisfied that the world at large will applaud our continuing climb back to the uplands of prosperity, and I rely on our people to respond to the trust which I have placed in their sure and steady steps."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 56–61.] That epitomises the policy of my right hon. Friend. It has already been said that this Budget demonstrates the difference between the general outlook of the two political parties. The message of this Budget is "Trust the people"—not one section, but all sections. I am quite content to believe that that is, indeed, the root of our Conservative faith, and history has demonstrated time and again that when trust is placed in the people it is never abused.

It has been suggested that the giving of further assistance to industry should have been achieved by way of investment allowances. I am glad that in this matter, as in the rest of the Bill, the Chancellor has demonstrated his trust in industry, in just the same manner that he has demonstrated it in the wage-earning and salaried classes. He has left them freedom of action and freedom of manoeuvre. I am certain that his trust will not be misplaced.

4.0 p.m.

For 37 years I have worked in industry. I have worked alongside the hourly-paid employee. For many years I have worked with the clerical and development staffs. More recently, I have played a modest part in the executive management of a large company. I would surrender to no man my admiration for what is commonly termed the British working man—I have worked with him for too long. I regard him as the most likeable, most lovable, most stubborn, most independent, most remarkable— and at times the most unreasonable man alive.

At the same time, he is probably epitomised in that slightly inebriated husband who said to his wife, "I will do anything in reason, Maria, but I will not go home." He is not moved by reason and abstract scientific thought, but by an inner course that makes him tick and which, I believe, will respond to the type of trust placed in him by the Chancellor.

To the craftsman and the professional worker this relief, and much more, is long overdue. Their differentials have been reduced, their difficulties have been increased, and in no other section has the disincentive principle and the disreward of higher responsibility been more marked. To a large extent he has always been, and still is, the goose that lays the golden egg—the middle stratum of our society—which has been exploited and plundered by every Chancellor, irrespective of party. The relief offered to them in this Budget is long overdue and very well earned. At all times I believe that anything which the Chancellor can afford would be well given to that section of the public.

It has been suggested that the relief given to industry will be used only to disburse higher dividends to shareholders. The last two years have shown—and it is demonstrated clearly in the White Paper—that the incentives given to industry are resulting in a steady build-up of new fixed capital assets. In this respect it must be appreciated that there is, of necessity, a time lag between the conception of any original capital project and the expenditure of the money necessary for its implementation. I believe that the next few years will see a vastly accelerated upward trend in expenditure on building and plant as a result of schemes which have already been initiated.

This Parliament has witnessed two changes which are very often lost sight of in relation to matters of this kind. The first is that we have changed from a buyers' to a sellers' market, with all the fierce competition that that entails. That is a vast change which private industry has taken in its stride and has continued to expand. Secondly, we have witnessed a welcome change from Government to private buying. While this is very wel- come, it must not be forgotten that nonrecurrent but quite vast expenditure in the building up of private stocks has taken place and has made further demands on our working capital. Looking at the White Paper, I believe that since those stocks are so widespread, and since prices have tended to rise, there may here be a hidden asset of which full account has not been taken. If that is so that asset will show to our benefit in the future.

Surely, Sir Charles, it is right to claim that the industrialists have done, and are doing a fine job under the most difficult conditions, and that, in the common weal, the relief extended to them by this Budget has been well earned and fully deserved. It is primarily an encouragement to further effort, and an encouragement to that ploughing back of further capital which is, in itself, the destruction of any further inflation.

If we can agree on the desirability of the cut there still remains the overall question of how far we increase production to an extent which would overcome any inflationary pressure caused by greater spending power. Let me here say that I have yet to meet the industrialist who does not require—and desire—conditions of full employment to continue. Profits are not made from people who are unemployed; they are made from full employment. A high and stable level of employment and production is one of the prerequisites for the successful conclusion of any industrial activity.

Full production is with us. There is, therefore, a limit to the extent to which we can obtain further production by means of added labour. The undesirability of working further man-hours within the same labour force is quite apparent. The limitation is quite real and very clear. The only answer which meets all the circumstances of the case is one which is so often spoken about, but, by many of our people, not too clearly understood. It is the getting of higher productivity generally; in other words, the better utilisation of our resources, higher efficiency in the use of our manpower and machine power, fuel, materials, transport, etc. without reducing quality of turnout—more consumer and capital goods from the same ingredients.

It is not enough merely to raise production. The cost per unit quantity has to be reduced. We have seen production rising ever since the war, but has there been a corresponding rise in productivity? There has certainly been some rise in productivity, but it has not been a corresponding rise. I suggest that we have been far too ready to mortgage the benefits of increased production before the event. The result has been that, by the time the increased output has found its way to the consumer, prices have again risen, and the continual spiral of wages, costs and profits has taken another upward turn in the cycle. Nevertheless, with good will and the exercise of a full sense of responsibility by all concerned there is enormous scope for a real and continuing increase in productivity.

I was very pleased to hear a tribute paid to the work of the British Productivity Council. As Chairman of the Merseyside Committee I have had some experience of the work of the Council, sponsored, as it has been, by the Government of the day; successive Governments have taken the same attitude to its work. There is a growing and rapidly developing organisation in which both sides of industry are exchanging their views and common production problems. Enormous good will is being created, and by the accumulation and dissemination of information throughout industry—always one of the most difficult tasks—there is a wider appreciation of each other's difficulties and anxieties.

The free exchange of information not only between firms engaged in the same industry but between firms in differing industries and firms of relatively different size and scope has been taking place on a wide scale. As a result, there is gradually building up a more widespread use of modern techniques. In so far as they are applicable to conditions here, the things learned by the Anglo-American Council on Productivity are filtering through the whole network of our industry, both nationalised and private.

This work is still in its infancy and the potential benefits are still largely untapped. I believe that the growth of that work is, in itself, a corrective of any signs of inflation which may have been apparent. Our resources are greater than at any time in the recent past. More savings are available and they will be increased by this present Bill. Nevertheless, I believe that there is scope for greatly increased capital resources, par- ticularly in small industries, which constitute such a large proportion of the pattern of our industrial life.

Secondly, I believe that there can be more enterprising and venturesome work in pioneering new methods. When I met a colleague who went to the United States recently, as so many of us have done, I was impressed by his statement that he believed the success of American production was derived largely from an attitude of mind over there by which they believed in mechanisation for its own sake; they recognised that when mechanisation had been accomplished the ultimate benefits were greater than those which were immediately apparent when making an assessment of the position.

I believe that if we in this country could make a more energetic approach in that way, believing in mechanisation in the first place for its own sake, and so redeploying any labour saved by its use to further gainful employment, it would vastly increase our productivity. In studying the economics of new projects we are apt to lose sight of these two factors.

Thirdly, I believe that in these new and modern conditions there is room for amendment in the system of wage negotiation. I believe that the trade union system in this country, at its best, is better than that in any other part of the world. It is spotty in many places, just as management is spotty in many places, but we are approaching a new set of conditions in which we shall be distributing a higher standard derived from greater productivity. I believe that the present set-up of national arbitration on every matter is too remote and is apt to lead to troubles on the shop floor.

I believe that national negotiation should be retained, and let me add here that I am no opponent of the large unions. I believe that the large union still has its place in the inspiration which it can give, but I believe that the district committees could, and should, be used to a much greater extent and with greater advantage on some of the secondary problems which beset industry.

Finally, I would suggest that the time is rapidly approaching—and is recognised by many leading trade unionists to be so—when the strike weapon will become obsolete and it will be found that negotiation is the better way to succeed on all fronts. I believe that no Government would wish to withdraw the strike weapon from the hands of a trade union to be used in the last resort, but I believe that more and more attention can and will be given to the peaceful settlement of strikes by negotiation. Public opinion is the judge of right or wrong in this matter. Within that context I believe that there is a growing volume of public opinion which believes that the unofficial strike should be abolished.

I believe that there we are not getting a reflection of the true will, even of the small number of people who are often concerned in these unofficial strikes, and that a means will have to be found within the next few years by which the total will, not part of it, of any union concerned will have to be fully demonstrated before any strike takes place.

With these things combined I believe that it is possible vastly to increase productivity. I believe that the hope expressed by the Chancellor in his Budget statement will be demonstrated as correct, and that when he presents another Budget statement in twelve months' time—as I am sure he will—we can hope for further reduction along the same lines.