Budget Proposals and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 11th April 1957.

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Photo of Mr Ian Mikardo Mr Ian Mikardo , Reading 12:00 am, 11th April 1957

I shall take only a very few minutes, as I have only a single point to make. The hon. Member for Wycombe (Mr. John Hall), like others of his hon. Friends, spoke of the tax reliefs which are being given to the people in the£2,000-a-year class and upwards as being an incentive, and, therefore, in the national interest.

I want to say a word about the class of people who are, I think, extremely important to our productive effort and economy and who feel particularly aggrieved by this Budget. They are the ranks of junior management the young technicians, the young scientists, the really productive people, the vital spot at the heart of our economy, most of whom are in the salary range between£1,200 and£2,000 a year. Most of them already feel themselves to be in a process of being rapidly disadvantaged both in relation to the workers whom they supervised, at one end of the scale, and in relation to higher management at the other end of the scale. They will now see the higher management getting a great deal more money, on the ground of incentive, while they themselves are being left out.

At this stage, I do not make any cornment—many of my hon. Friends have done so, and have done it better than I could—about the social injustice of many features of the Budget. Although I share the views of my hon. Friends that this is socially a grossly unjust Budget, I am now entering the arena that right hon. and hon. Members opposite themselves have chosen. What they say, in fact, is. "We know that there is a measure of social injustice in this Budget. We cannot help it. We think that the task of the country must be to increase the efficiency of our industry, the zip in our economy, and, therefore, we intend to do something for the small number of highly-creative people, even at the cost of gross social injustice."

Even on their own grounds, I want to tell them that they have not done the job properly: that by what they have done they will create more frustrations—and hence put greater brakes upon efficiency —than they will confer benefits. I certainly do not believe that the Chancellor, before deciding on his Income Tax reliefs, looked at the industrial structure and the industrial hierarchy to see who were the men who were doing the important jobs, and what money they were earning.

I want to put this to the Financial Secretary. The largest salaries are earned, generally speaking, not in industry but in commerce. It is very often the man who runs a business with an entrepô t function and a commercial function who is more likely to be in the class most benefited by the Surtax remissions than is the man running a manufacturing business. Secondly, even in manufacturing industry itself, it is a fact that, by and large, it is the commercial men rather than the technicians who are getting the big money.

The most valuable member of the upper staff of the large industrial company today is not the man who knows how to plan production, but the man who knows how best to plan the layout of the annual accounts in order to attract least taxation. He is the man who gets the big money, though he is not contributing 1 per cent. of one horse-power to the real productive effectiveness of The organisation.

I am talking about the necessity for keeping up the heart and spirits of the 25 to 35 or 40 years age group of junior management, the scientists and technicians. They will not be advantaged at all. We have talked a great deal about industrial relations between management and men, but I remind the Committee that one of the great inhibitions on increasing efficiency in British industry is the difficulties in inter-management relations, in the relations between one sector of management and another. The tensions in many organisations between management and management are very great indeed. The war between the administrator and the technician is as tough as between the townsman and the countryman. There is, indeed, great tension of this kind in many organisations.

Above all, there are those in the£1,200 to£2,000 a year junior management sector, who feel very aggrieved indeed. The workers below them have increased their wages and I hope that we shall find, as my hon. Friend the Member for Sowerby (Mr. Houghton) pointed out, that some day we can find a way of doing that without the strikes which we have had. While I am delighted that they have increased their share, the differential between them and the men just above them has narrowed to a point at which the incentive to accept promotion in industry has gone.

Among many of these men there is a good deal of feeling that there are men above them who have passed the peak of productive usefulness and who make a purely financial rather than a production contribution to the organisation, but who get much more money and who are now to have great benefit. If the Government are worrying about incentives and efficiency in British industry, the range of incomes which they should be thinking about, leaving aside the question of social justice for old-age pensioners and other groups, is not the£2,000 to£10,000 range but the£1,200 to£2.000 range. In not doing that, the Government have made, even from their own point of view, a very great mistake.