I must apologise for the state of my voice. I have a suspicion that I have caught the infection from the Lord Privy Seal. I used to think and say that the intimate character of this place was one of its great attractions, but I am not so sure that I was right after all, if I have to catch laryngitis from the right hon. Gentleman. However, at least the Committee will be spared a long speech or many interventions from me in this debate.
I agree with the Chancellor that we should now bring the discussion on Clause 1 to a close, not because it is not an important Clause but because we want to get on to some of our Amendments to Clause 2 which express more precisely what we think ought to be done. I should, however, like briefly to touch on some of the points which the Chancellor and others have mentioned. I do not propose to say anything about personal incomes because it will be possible and quite appropriate to discuss these on Clause 2. I shall confine my remarks to the question of the distribution of the Income Tax concessions to the companies.
Before coming to that, however, I should like to press the Chancellor once again on a point which my right hon. Friend the Member for Battersea, North (Mr. Jay) raised in an interjection about the numbers of persons exempted from Income Tax as a result of this Budget, because I scarcely think that, and I shall be surprised if, the reply which the Chancellor gave was correct. It would mean that the numbers would be dropping much faster than one would expect. Perhaps he will ascertain the answer. Perhaps he is already ascertaining what exactly the position is, and will give us a reply, not necessarily immediately, but at some time during our debates.
The Chancellor has rebuked me, not today but in his winding-up speech last Friday, for what I said about companies in my speech during the Budget debate. I have looked up my speech to see what it was I said that could have offended him so much. The only thing I can find I said about companies was that they were the Chancellor's favourite children. I do not know what was offensive about that. Is it that the Chancellor dislikes those children? Or is it that the companies dislike the parent? I do not know, but I should have thought from the relations that appear to exist, which are very intimate in this case, that both the children and the parent would have been quite happy about the terminology which I used.
There is no doubt at all as far as the facts go that the companies have benefited more than any other section of the community from the series of tax concessions which the Chancellor has given.
To do him justice he does not deny that. What he says is, "That is the right thing to do. That is what I believe in."
I would add one word on the most remarkable argument which he has brought forward today, saying he was so mesmerised by Mr. Gladstone's portrait that he thought he ought to do the same thing as Mr. Gladstone did. There is nothing very surprising about that because Sir Stafford Northcote quailed beneath the fierce eyes of Mr. Gladstone, and he was the Leader of the Conservative Opposition after Disraeli. He quailed beneath the ferocity of Mr. Gladstone's glare from the Treasury Bench, and I suppose it is natural that the Chancellor, like his Conservative predecessor, should feel a little alarmed. I think it was wise to take the portrait down, but it was not so wise to follow the budgetary example, because I would remind the Chancellor that a few months after Mr. Gladstone made that reduction in Income Tax there was a major financial crisis.
For the rest, the Chancellor's argument is a very general one, that somehow or other giving this money to the companies—the Chancellor used the phrase "giving away money"—is right, is good, is going to help the country, is going to make the economy sound, and is all the other platitudinous things which we have heard. I do not think they are very convincing.
I agree with my hon. Friend the Member for Stechford (Mr. Roy Jenkins) that if the Chancellor was interested in investment, as we all are in this Committee, then undoubtedly the right thing to do was to give incentives to investment as he did last year, by investment allowances. We supported him on that occasion. Merely to allow companies to retain a larger proportion of their profits certainly carries with it not the slightest guarantee that there will be any increase in investment whatever. There is, therefore, no special inducement in that direction.
It may be argued that they will be able to retain physical possession of a larger amount of money in undistributed profits than otherwise would have been the case. If there really were any evidence to show that investment at present is held back by a shortage of funds in the hands of companies, there might be something to be said for it, but, of course, that evidence is not there. On the contrary, if one examines the Economic Survey one finds that year after year the total of undistributed profits—I am not saying that they are all liquid—exceeds the amount of investment, and the right hon. Gentleman really cannot justify any kind of argument that companies keen to invest except for taxation will now have the money to do so, whereas they did not have it before.
All this is difficult to reconcile with the Chancellor's monetary policy, which he himself admits must be designed in the last resort to check investment. All it amounts to, if anything at all, is that an established company is going to find it easier to invest than a new company which has not large undistributed profits, which is, I should have thought, the sort of company, we want to help.
I could have understood if the Chancellor had given any kind of differential in favour of the saving of undistributed as against distributed profits, but of course he has not done anything of the kind.