Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 4th May 1961.

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Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire 12:00 am, 4th May 1961

The implication was that there were some economies which could be made in this direction. Every Government has tried that, and the right hon. and learned Member as Minister of Health tried it. I commend his behaviour as Minister of Health in trying to develop the Health Service. I think this suggestion was a thoughtless remark which comes from reading too much Conservative literature.

I congratulate the Chancellor on having produced some new ideas. One of the most difficult things for a Chancellor to do is to find new ideas to produce in connection with Budgets or taxation. He has introduced instruments to try to level out the humps, the slumps and booms such as we had in pre-war years and those which may come in the future. Clearly, anyone who can invent an instrument to prevent these unnecessary ups and downs of our commercial life will be doing a service to the nation. He has done his best to find solutions for these difficulties.

Whenever a Chancellor finds solutions for difficulties everyone then produces difficulties for his solutions. It is quite easy to do that. Naturally, that is one of the jobs which comes in criticism from an Opposition, or even from the Chancellor's own supporters. Everyone sees more difficulties in addition to those which the Chancellor has already discovered.

I do not say that the instruments he has proposed are perfect, but we must give them a trial. They are certainly better than using the hire-purchase method of one minute suddenly stopping the sale of washing machines and refrigerators and the next minute trying to expand their sale. If something can be done which works more smoothly that will be better. In any case, we have no option because use of the hire purchase instrument has been exhausted.

During 1959, when they were preparing for the election, banks and hire-purchase companies said, "Let it rip, boys" and everyone was invited to pledge his income for the next ten or fifteen years. Three years after that has been done that income cannot be pledged again for ten or fifteen years. That method has been exhausted as a way of putting on the brake. When brakes are put on there is squealing. The human being differs from the machine in that he squeals before the brakes go on.

If inflation threatens and the Chancellor wants to curb it, he has to stop someone spending. That is simple. The question is, who is to be stopped from spending, how is he to be stopped, where and when? Our criticism in the past has been that the stopping of spending has been too indiscriminate. In some ways, we also criticised the use of the Bank Rate as a blind instrument which injured people who were exporting, just as it held up those who were building racecourse tracks.

I have always held the view that we should discriminate between those carrying on industry for the benefit of the public and those engaged in enterprises which have no social benefit. The idea that housing should be treated in the same way as horse race and greyhound tracks has always seemed to me quite ridiculous. I have always been in favour of having graded interest charges for different types of services. There should be lower charges for public services and, say, for industrialists who go to the Highlands to start industry there rather than to the Midlands and to London where they cannot help making money. The Colonial Secretary has applied this principle to Malta. He has a wonderful scheme whereby while industry is being developed there it is relieved of paying Income Tax.

Such instruments are extremely valuable and should be used for the location of industry where it is needed. If much more industry comes to the Midlands and London, traffic there will be blocked and finally come to a stop. The Chancellor is at least to be congratulated on making an attempt to find some new instrument to deal with this problem. No one can raise objection to taxation of some kind putting a curb on spending. It would be better to start at the other end and to prevent costs rising.

We had this difficulty when we were in Government. The late Sir Stafford Cripps made an appeal to companies, trade unions and workers, to everyone, to try to restrain development of income and raise the production of the country. It is possible to do that from a moral basis where we try to treat everyone fairly. It becomes quite impossible if suddenly reliefs in taxation are given only to a certain group of people with between £2,000 and £5,000 a year. The Government have no moral basis to say to the man with £11 or £12 a week, "Hold back. We are going to give money to the Surtax payer". With the imposition of a poll tax on the one hand and this relief of Surtax on the other, it is impossible on any moral ground to apply restraint at the beginning. So the restraint has to come after costs rise, and they have to be cut down.

I wish the Government would take the hon. Member for Bath (Mr. Pitman) into consultation, because he is an expert on organisation and methods. I had the honour of introducing the Report on the Organisation and Methods Subcommittee of the Select Committee on National Expenditure. In that speech I instanced some of the things we did in this country which seemed simply fantastic. Speaking from memory, at that time there were five or six people entitled to go into a poor person's home to find out what his income was, what his conditions were and whether he was entitled to different kinds of relief. It was ridiculous.

This is going on today, because under the financial arrangements which the Government have introduced this year it is possible for an old-age pensioner who is not entitled to supplementary benefit to be obliged to travel by bus to a National Assistance office, if he is to recover money paid for prescriptions, in order to qualify for 2s. relief on a prescription. The Government tell an old lady that she must travel five or ten miles to the central office to collect 2s. or 3s. in order to take it back and to hand it over to the chemist, for him to hand it back to the Government. Is this not chasing one's tail economically? I am sure that the hon. Member for Bath, with his knowledge of organisation and methods, could greatly improve on the Government's method of doing this.

If a company had an executive officer who is not working well because his salary does not sufficiently inspire him, the company has a very simple remedy: it can give him a rise in salary, and that counts as a cost on which the company does not pay Income Tax. But the Government say, "The companies do not know what they are doing. We will give the man a rise in salary. The Government will take profits from the company by taxation, bring them to the Treasury, carry out a burdensome procedure and then hand the money to the executive as a rise in salary in terms of taxation remission." In fact it could be done without the money ever leaving the office of the firm concerned. If the firm did it, then it could be discriminatory. When the Government do it, it is non-discriminatory and everybody gets it whether they play any part in exports or not.

No one will believe the story that the Surtax relief is an inspiration to people to export more or to make progress in science. That could be done without all this circumlocution. I believe that the hon. Member for Bath left an organisation and methods department behind him, and the Government should bring it into the Treasury to examine Treasury methods of finance.

What is the purpose of the tax on television? It taxes advertisements for soap and detergents. In order to put a tax on soap and detergents, the Government start by putting a tax on television which gradually works round to the soap. If they want to tax soap, why not do so directly? Why have all this paraphernalia of going through television and pretending that we are taxing television when we are taxing the user of soap? If there is any advantage in taxing the user of soap—we previously encouraged the use of soap because we believed that cleanliness was next to godliness, but it may be different with detergents—then why not do so directly?

There is another roundabout—the machinery for the payroll tax. The arrangement for imposing an extra tax has been introduced because we might be faced with a financial crisis during the year. Where will the financial crisis arise? It will come from all the speculators who expect a big rake-off from capital appreciation if they can get the £ going up and down in the world financial centres. But instead of dealing with the speculators and those who gain from the capital appreciation rake-off if they start a crisis, the Government determine that industry must pay 4s. a head on its workers and that consumers must pay an increased tax. The crisis is being caused by one set of people and the Government are punishing another. This reminds me of the story of the whipping boy of James I. He used George Buchanan as a whipping boy; if he did anything wrong, poor George Buchanan was whipped. If the speculators cause a crisis, the Government do not deal with the speculators; they tax the consumer.

On Sunday morning I was listening to some people on the wireless talking about public schools, and I have never heard anything more tragic in my life. We heard a woman speak who went charring in the mornings and of her husband, who otherwise could have afforded a car, cycling to work and teaching at night-school in order to send their one ewe lamb to a public school. Others were doing similar things. When the question was asked why they did it, a noble Lord who took part in the programme had to admit that it was very largely snobbery. [HON. MEMBERS: "No."] They gain some advantages, as they think, through their boys being able to look after themselves and being self-controlled, but I am horrified to think of these families exhausting themselves to send their sons to public school. It is all very well for millionaires, such as some hon. Members opposite, who can easily spare the money, but these people with £2,000 a year get into all the difficulties of which the Chancellor spoke. The Chancellor wept tears about their difficulties in sending their sons to public schools, when, as the noble Lord admitted, they would get a far better education if they went to secondary schools.