Clause 26. — (Surcharges on Employers.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 13th June 1961.

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Photo of Mr William Ross Mr William Ross , Kilmarnock 12:00 am, 13th June 1961

The Chancellor of the Exchequer unburdened himself about his concern that he had been misunderstood on all this, that he had got a bad Press, that Members of Parliament as well as people outside had picked him up wrongly, that he did not really mean that the application of this regulator was to cause unemployment. If so, he has got only himself to blame. I think that it was no accident that with every day which passed during our debates on the Budget and, in particular, on this regulator we had a different interpretation of its purposes and emphasis. I doubt, indeed, whether we have got the last one yet.

It is quite clear to me now, from what the Chancellor of the Exchequer has said and from the reactions on the other side of the Committee, that the presence of this regulator as it stands is not so much to save the nation from economic crisis as to save the face of the Chancellor, because of his insistence that it is required only for a short time and that he will think again about the permanent means, and that this is the last we shall ever see of this one.

We, however, have to accept its workings in relation to the purposes as expressed by the Chancellor of the Exchequer, and our concern at the moment is not with the principle of the thing—I think that, when we get the opportunity we shall express our dis- approval of that principle—but with the effect of it if it were applied.

The Economic Secretary—I think that it was upon the second or third version of the explanation of regulator No. 2—said that it was for the purpose of raising revenue, but raising revenue at such a time and in such a way that it would not have a discriminatory effect upon industries. He instanced—if I could have his attention occasionally—the effect of changes in hire purchase. He thought it rather sad to have this effect on particular industries. The implication, I thought, was that, rather than use that type of regulator, be is prepared to use this one, which has a more widespread effect.

We go back to what the Chancellor said when he was seeking our sympathy in his choice of the weapon. He said that whichever one he used he must hurt somebody. What we are concerned about is that, if he chooses this one, he will hurt areas where employment is already badly neglected and which, in the past, in the choice of economic weapons, have been hurt. That is the position. My hon. Friend has instanced that in relation to municipal credit, industrial expansion in Scotland, unemployment in Scotland, and the negative working of the Local Employment Act.

But this will do exactly the same, and what we are entitled to ask is why it is that he is prepared to hurt Scotland—or the North-East, or Northern Ireland, or anywhere else? He presumes, when he places before us for consideration his problem, that there is a boom in England, in the Midlands and elsewhere, which is likely to get out of hand and that if he does not take action Scotland as well as the rest of the country will be hurt. He presumes that in what he is now suggesting, and we ask how he can reconcile that with the fact that when this regulator is applied it will still further hurt and impede the development of industry and employment in Scotland, and why, therefore, it is the only one that he can apply to the problem.

That is why we suggest to him that whatever instrument he uses he should not use this one. He must always bear in mind an area which is already badly hurt industrially and where employment is adversely affected. The figures have been given and I will not repeat them. I want him to appreciate them. The former Chancellor, now Lord Amory, said, in Inverness, that he would not rest while the unemployment figures in Scotland were as bad as they were compared with the rest of the United Kingdom. We know what has happened to him. He is resting elsewhere. First, he was found noble pastures; now he is going to find wide open spaces in one of our Dominions.

What I want to know is what the present Chancellor will do. I do not know who advised him about this. I have a feeling that it may have been the Patronage Secretary. However, when we examine the principle of this regulator in relation to the purposes which the Chancellor declared, it can be seen to be the most illogical piece of financial planning—anyway, that ever I came across.

Let us consider it in relation to areas with a chronic labour shortage. First, labour, say, in Scotland. All that the Chancellor spoke about was the chronic shortage of labour. So he applies an impost of 4s. per person per job. Where there is a chronic labour shortage is exactly the place where there are the highest earnings. Compare that with Scotland, where there is a shortage of employment and where earnings are very much lower. There the addition of the 4s. would have a greater effect than it would have in an area of chronic labour shortage.

If the regulator were to lead to the disgorging of labour, it would not in areas of chronic labour shortage, but only in quite other areas altogether. The very fact that there is chronic labour shortage will mean that to add 4s. will not make all that difference, and the Economic Secretary should know that. Goodness gracious, he was one of the Ministers who said at that Box, in July, that there was to be an extra 1s. per person, quite apart from this 4s., and he did not seem to think that it would have an effect on chronic labour shortage. In the very same areas in April an extra 4s. to 5s. was put on, and if we consider the employer plus the employee it amounts to an extra 10s. Will that have any effect on the chronic labour shortage?

The Chancellor says that he wants to curb consumption and reduce purchasing power. I should have thought this would be done by applying some restriction to the purchasers. But the person who is to pay this tax is the employer. What effect will this have on goods that are not for purchase in the home market? It will drive up the price. We are told, and have been told all along, that one of the troubles about Scottish industry is that we have got more than our share of heavy industries—heavy engineering, shipbuilding, coal mining, and the rest—all of which are industries of high labour content and many of which are tied to capital goods production for export. Why should the Government go out of their way deliberately to hit that type of industry when the Chancellor really wants to get at the consumer goods industries?

The Chancellor should think again. It is not good enough just to put in these provisions. They will not help. The Chancellor is honest. He refuses to accept this Amendment because he would never be able to apply it if he took into account what we ask him to take into account, namely, to have regard for full employment in all parts of the country. If he were to do that, the Amendment would never be used. I hope that hon. Members opposite will agree with us. I am sure that they agree with us in their hearts, and I hope that they will join us in the Lobby.

Incidentally, I should like to know where all the Scottish Tories are today. [An HON. MEMBER: "At Ascot."] An hon. Friend of mine suggests that they are at Ascot. I am sure that they are not. We must keep this debate going, because I am sure they are all in the Library polishing up rebellious speeches on this point. The understatement of the afternoon was made by the Chancellor of the Exchequer when he said that this proposal was not an unqualified success. It did not even start to be a success. As a matter of fact, at the Scottish Unionist Conference, in Ayr, a resolution attacking the Government on this matter and their industrial policy in Scotland was carried.

Where are the Scottish Tories? They should be carrying out their mandates from the Tory conference. But we hay., not heard one of them today attacking the Government on their record or referring to the beneficial effect that this Amendment would have on the proposal relating to regulators. I hope that the Chancellor will have second thoughts about this Amendment and, if not, that hon. Members opposite will join us in the Lobby.