Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1962.

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Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich 12:00 am, 3rd May 1962

It is always a pleasure to listen to the hon. Member for Cambridgeshire (Mr. Pym) whose optimism is always so refreshing and who is so easily pleased. How he could expect so much from this Bill is difficult to understand.

The hon. Member began by referring to the inequalities in the various tax tables which he mentioned. These, of course, are very striking and real. It is very difficult to understand exactly the point that he was making, because, if these inequalities in taxation prove anything, they prove only the inequalities in income. One of the major criticisms of hon. Members on this side arises precisely from that point. The inequalities in income have become so great, and there have been such major redistributions of wealth among the population, that it is extraordinary that, if the Government felt moved to bring in a Budget at all, they should apparently ignore this point.

Hon. Members on this side have criticised earlier what has virtually been the transference of about £450 million of taxable income from those earning under £1,500 a year to those earning over £1,500 a year. One thing which we on this side should have liked the Government to do in the Budget was to have another redistribution of incomes so that they may cancel out some of the unfairnesses and inequalities which have resulted from deliberately applied policies over the last seven years or so.

I hope that, if we achieve nothing else during the debates on this Bill, we shall be able to bring home to people, par- ticularly those earning between £1,000 and £1,500 a year, who have hitherto believed that their interests were being carefully and closely guarded by right hon. and hon. Members opposite, how much they have paid out of their own pockets for Government policy over recent years.

The hon. Member for Cambridgeshire listed among his priorities the need for relief on unearned income from investment and savings. This one has been flogged a little too hard. The arguments in favour of differential taxation, in so far as they exist—the differences between the two are very small indeed—are self-evident. There is no criticism of the investor or of the person living on savings. The fact is that capital and the income from capital provide advantages over normal earned income. If a person's income is derived from capital, he benefits in several ways. He can transfer his investment, and there is the security which goes with capital. Things like these are themselves of value to the person who draws his income in this way.

One thing which worries me about the Budget—I suppose that this is a criticism which could be made of successive Governments—is the extraordinary situation in which we find ourselves in that we appear determined to have a Budget and Finance Bill each year whether we need them or not. It is obvious from the Bill that the Chancellor of the Exchequer and the Treasury thought carefully about the economic position and discussed among themselves what they should do, and decided not to have a Budget.

There is nothing in this Budget which makes a major impact on any part of the economy. There is certainly nothing in the Bill to justify the ritual on which we shall embark for the next few weeks. That is no criticism of politics, but, it is difficult to find time to debate the many things which we should like to debate, I wonder whether we should continue to deal with a Finance Bill in this way and whether the contents of the Bill necessitate that sort of treatment. Nothing in this Bill necessitates major examination over a period of weeks by the whole House.

I know that this argument has been put forward and considered on previous occasions and, I believe, by Select Committees on Procedure, but for a House of Commons which is so sensitive to any suggestion that it should delegate its business and which finds itself so short of time to deal with legislation, this is a classic Budget on which to base arguments as to whether we should have an annual Finance Bill if we do not really need one. If the House of Commons feels that it must continue to have an annual Finance Bill of this magnitude and must devote a great deal of time to it, I only hope that future Chancellors of the Exchequer will find something to put into it.

I never have been and probably never will be one, but I suspect that the Treasury officials who permanently have to suffer the iniquities of a variety of different Chancellors of the Exchequer have bonnets positively full of bees. Every time a Chancellor totters on the brink of wondering whether to break this annual ritual and decide not to have a Finance Bill one year, he says, "There are all sorts of taxation which should be tidied up", and Members of Parliament waste a great deal of time in tidying up a lot of minutiæ.

If we on this side of the House, faced with this Finance Bill, wanted to make changes, I would have thought that the big change that needed to be made at this stage was the redistribution of incomes. There has been over the last few years a quite deliberate policy by right hon. Members opposite to redistribute incomes from the lower end of the scale, and the surplus to the higher end of the scale. I should like to have seen a Finance Bill which dealt with taxation primarily in terms of income allowances, with which the hon. Member for Cambridgshire disagreed very much. I was fascinated by his suggestion that we should tax everybody, even if it were a matter of only pence, because this was good for their immortal souls. This might well have some validity, but it would be devilishly expensive to the State in collecting the very small sums that were involved. There is no case at all for taxing people at the lower end of the scale at the present rates.

I felt at the time that the arguments put for the reassessment of Surtax levels in the last Budget were reasonable arguments. I think that very few hon. Members on this side of the House disagreed with the logic of the case which had been put for some reassessment of Surtax levels. In each case the dispute was not about whether there should be an adjustment or a change, but whether this was the most pressing priority of all tax changes.

It is significant that the Government, having £87 million to spare, had to make a choice. One could put up a good argument for both. One could put up an argument for income allowances particularly on the lower incomes. There is also a logical argument for the Surtax levels. Faced with the clear choice between the man earning an average of £50 a week and the man who is at a level far below the average earnings, hon. Members opposite had not the least bashfulness in offering £87 million to those at the top rather than at the bottom of the scale.

I should like to see more of the lowest income groups completely exempted from taxation. This is the pattern which taxation policies in the Budget should take in an endeavour to relieve as many people at the lowest end of the scale as possible and to ensure that there is a slight redress in the balance in and in the difference which has occurred in recent years through the Government's policy

My big criticism is the one made by my hon. Friend the Member for Grimsby (Mr. Grosland), in what I think both sides will agree was an impressive and entertaining speech. The point made by my hon. Friend is what worries all of us. There is no longer any dispute between the two sides of the House that the position of the country in the world is not a good one. He would be a very ardent Conservative, or a foolish one, who would say that he was happy with Britain's position vis-à-vis the rest of the industrial world. This country, which used to be the biggest industrial Power, or one of the biggest industrial Powers in the world, can now only brag that we are knocking the Luxembourgers into a cocked hat when it comes to industrial productivity. This is not something which pleases anybody, and we are now agreed that there is something wrong and very unhealthy about Britain's competitive position industrially in terms of productivity.

There is nothing whatever in the Budget that attempts to make any contribution to that problem. If we accept, as we all clearly do, that it exists, and if the Chancellor has a Budget of this nature in which he is not under enormous pressure, the Government should have stimulated incentive to try to push Britain ahead until it was neck and neck with Belgium at least and to try to make a stride forward in our comparative position.

Industry must be given financial incentives to make it do the right things. Investment incentives are always mentioned. I should like to see much more substantial allowances and greater encouragement given to technical and apprenticeship training, in which we lag behind and from which, in consequence, we suffer.

Finally, in passing, I come to Schedule A. The hon. Member for Cambridgeshire glossed over this and its electoral implications rather speedily. Schedule A has been campaigned for over many years. It affects 6 million house owner-occupiers. The Government find that they cannot do anything about it this year. A couple of weeks before the local elections, we have the Budget and the Government take the unusual step of saying that in the course of the Budget debates they will tell us about something which it does not contain. They give no guarantees about what they will do, but say that they are thinking of doing something next year. We do not know what they will do.

I would willingly lay bets that the Government will not abolish Schedule A. Next year, we may get a reduction of up to the first £15 of Schedule A and a promise of jam to come after the General Election. All Chancellors have to be optimistic. The present one has lived on nothing but optimism since taking office. He has little else to show. After the next election, however, any Chancellor could say that the position was different and the country was facing a balance of payments crisis, which is a fair bet, as happens every two years or so under the present Government and sometimes even twice a year.

I do not believe in the imposition of Schedule A on small owner-occupied properties. When applied to the person who owns several houses it is justifiable, if only for the amount of room he occupies, but I have never believed in the taxation of notional incomes in this way. The argument which is adduced in support of it is most unjust. Very often, the arguments that are put for the gathering of Schedule A are valid only if we regard the purchase of private homes as a form of speculative investment. Most people never sell their houses. They never reap the £2,000, £3,000, or £4,000 from them. Virtually, they merely pay rent and they never see their capital.

We on this side are determined to seek changes in the Schedule A position. We put down Amendments last year, and probably will do so this year, naming certain figures. The Government, however, who are in a position to determine what to do about Schedule A, have not put forward any figures. All they tell us is that they think of doing something next year, but they cannot say what it will be.

After the rather bitter experiences just before and immediately after the 1959 General Election, few people, thank goodness, are likely to trust the Government's views on Schedule A. I hope, therefore, that in the course of this debate, leaving aside the well-worn league tables, both sides of the House will get down to a method by which the country can again be got moving on a programme of long-term planning and growth so that we might again have a country with industrial stability.