Orders of the Day — FINANCE (No.2) BILL

Part of the debate – in the House of Commons at 12:00 am on 13th July 1956.

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Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering 12:00 am, 13th July 1956

If I may add yet another law to what is rapidly becoming "Boyle's Code," I would suggest that the attendance on the Third Reading of the Finance Bill is in inverse proportion to the inadequacy of the Budget, the reason being that an inadequate Budget is usually a dull Budget, and that on the Third Reading we are confined to what is in the Budget and we must not digress too far into questions of its adequacy.

Well, there it is. I would suggest that the course of this Finance Bill through the House and Committee conforms to this definition of it. It is perfectly true that we proceeded with speed—sometimes with lightning speed—through the Clauses. We took a great deal more time on the proposals to supplement the Budget and, with two exceptions—here I would like to associate myself with the compliments which have been paid to my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton)—those efforts were unsuccessful.

Those two new Clauses have considerable importance in some ways, for the one about small bottles represents not only the disappearance of a hardy annual but also a mild kick by a Tory Government against an injustice originally put on and kept on at the instance of the brewers, while the second one, relating to the Victoria Cross, has at this time an obvious moral appeal and value to all of us. But they represent quite small amounts in monetary terms.

The only other concession that the Opposition has wrung from the Government in this matter is the inclusion of Oliver Cromwell's trousers or whatever it is that the right hon. Gentleman had in mind when he admitted articles of historical value, as well as articles of aesthetic interest, to be taken in for purposes of Estate Duty. Therefore, I may say that while we are always grateful to the Chancellor, the Financial Secretary and the Economic Secretary to the Treasury for their constant courtesy and attendance here, we really have not got very much to thank them for in the way of concessions to the Opposition during the course of the Budget.

Let us see what the Budget is about. This is a savings Budget and, according to the Financial Secretary, "we must fortify the surplus." That sounds very good. The object of it, of course, is to help public saving, and, so far as I can judge—and, no doubt, a learned economist will correct me if I am wrong—that is a fair summary of the total effect of fortifying the surplus. As a result, there will be, in many of the changes proposed, some conflict between public saving and private saving, for the private saving that it is desired to encourage, if it is to be encouraged in the Budget, is to be encouraged to some extent by taxation concessions, and that actually is the position we have to consider in relation to some of the Clauses in the Bill.

Let me take two instances. I suggest that there has been a remarkable difference between the extent to which financial concessions have been made to encourage some private saving and the extent to which they have been made to encourage other private saving. The first tax concession that I want to mention is in Clause 9 of the Bill, where £15 interest on certain deposits, Post Office savings banks, trustee savings banks, and we now add the Birmingham Municipal Savings Bank deposits, are to be free of tax, and that is to be an encouragement to saving.

At this point the right hon. Gentleman draws a very sharp and, it seems to me, a completely unconvincing line. He says, "I will encourage saving in this matter just so far as the money in question goes directly into the Exchequer, and I will not go any further." He therefore refuses to encourage saving in the form, for instance, of co-operative dividends and in the form of deposits in other savings banks which substantially fulfil the same general purpose as the particular savings banks selected by the Government. In short, when it comes to small savings by small men, we find that the right hon. Gentleman draws a very sharp line and says, "I will only encourage these if and in so far as they come directly into public funds."

The right hon. and learned Member for Kensington, South (Sir P. Spens) in his remarks, to which I shall have to make some further answer shortly, expressed the hope, no doubt the generous hope, that this concession would be enlarged still further, but it is one of those things that are to happen, like increases in Members' pay, in years to come. We have to consider what is happening this year, and apparently this year that particular enlargement, obvious though it is both I should have thought on moral grounds and on the general principle of encouraging savings, has to wait.

We now come to another concession also made to encourage savings and it is, of course, to encourage such savings in a very different class of people. Here, we notice that so eager is the Chancellor to extend this concession that he has actually done so in the course of the progress of the Bill through Committee. I am referring, of course, to the Millard Tucker concession—roughly the Millard Tucker concessions because they do not quite follow that—made in Part III of the Bill.

What is the effect here? I ask the House to bear in mind that this is the same right hon. Gentleman and the same Government who refused to make concessions in favour of small savings purely on the ground that these particular small savings do not go directly into public funds; nor do these savings go directly into public funds, but they have been very differently treated. Let me say at once—it has been said already and I repeat it—that we are glad of the acceptance in principle of the proposition that there is a class of people in employment, small businesses, and so on, who have not had a fair share of the opportunities to save and of the tax inducements given to encourage saving of that kind. There is no dispute about that.

We entertain some doubts on the whole business, which I shall mention in a minute, but on the principle, none whatever. What we do take exception to is that the Chancellor, having refused extension to cover small savings in the matter of co-operative dividends, municipal bank deposits, except the Birmingham one, and the like, then goes out of his way to accept an Amendment in Committee for the purpose of letting in people who are making incomes of between £5,000 and £7,500 a year.

It is said, as regards those people, "Well, there are persons who make a great deal of money for a short time, and it would be fair to make some allow- ance for that, and to provide for the cases where they have a long waiting period at the commencement of a short earning career, or where, as perhaps in the case of skilled surgeons, their working career, by the advance of age, cannot be as long as it could be in other cases."

We appreciate the point, but it is highly significant of the attitude of the Government, and of Government supporters in this matter, that although that kind of case was used as an argument, no attempt whatever was made to limit this concession to that kind of case. We suggested one form of doing it. We have not the ingenuity or the resources of the Treasury in this matter, and if we could suggest one form, I venture to suppose that the Treasury could have suggested dozens, if it had wanted to. It could quite easily have been met. That concession, even if it were justifiable at all, could only have been justifiable, as we see it, to meet that particular type of case.

No attempt whatever was made to limit it in that direction. I say quite bluntly that this seems to me to be a most serious matter in this Budget, not so much in itself, but as the clearest possible indication that the Tory Government have not changed their spots in the least, and that in dealing with questions of savings in a time of national crisis and national emergency, the attitude that they take towards those who are earning between £5,000 and £7,500 a year is entirely different from the attitude they take towards those who put their savings into co-operative societies and small municipal banks.

I ask everyone in the House and others outside, to take note of that difference of attitude, and to draw their own conclusion as to how much of the country is really represented by the Tory Party, and how much ought to be represented at the next time the country has a chance of expressing its opinion on the matter.

I took leave to make one reservation—and I make it still—about the general proposition here. I think that it is very significant that towards the end of the discussion on the Millard Tucker proposal, two supporters of the Government who have a particular experience of these matters from the point of view of life insurance made comments on exactly the same lines. I quote from what was said in HANSARD on 10th July by the hon. and gallant Member for Cheltenham (Major Hicks Beach), who sits on the other side of the House, and who cannot be accused of being a particularly mutinous Member among the Government supporters. He said: People who have experience of the insurance business"— and this is what we are talking about— are quite certain that the Clause will be largely unworkable, will create a vast amount of work for the Revenue, and do a great deal of damage to many pension and insurance schemes which, after all, are for the benefit of employees. His hon. Friend the Member for Horsham (Mr. Gough), saying much the same thing, pointed out that the other type of scheme which he suggested could have been included in this provision was the type of scheme which … mainly provide pensions for the lower salary and wage grades in the country."—[OFFICIAL REPORT, 10th July 1956; Vol. 556, c. 277–281.] I suppose that I have a most remarkably nasty and suspicious mind, but when I heard that kind of thing from the Tory benches opposite I said to myself, "Here, they are providing for one type of scheme, and failing to provide for the one which mainly provides pensions for the lower salary and wage grades of the country."

I can see objections to it. I can see difficulties. This is one of the provisions in the Budget, of which there are quite a number, the future working of which nobody can foresee. We have had that said a very great many times. "We do not know how it will work," say the Government; "it will save the country somehow, but we are not quite sure how, or to what extent." Perhaps it was a trial effort, and they may go rather farther next year; but the choice of this particular subject for their trial effort seems, to my mind—and now I think I must accept the fact that it is a very nasty and suspicious one—to be rather remarkable.

The right hon. and learned Gentleman the Member for Kensington, South, to whom I listened, as he knows, with great respect and an almost complete difference of opinion, told us that one of the things this Budget did was to remedy injustice. He picked out a number of small injustices to illustrate his contention. I have been considering those particular in- justices which have been remedied. Here again, we find the same sort of thing. Clause 12 provides for relief from tax on delayed remittances of overseas income. This will probably mainly affect limited companies; I can see a limited company, sitting in a curious place where limited companies are embodied and do sit, weeping bitterly for the injustice it has suffered for so many years and which it now finds remedied.