Clause 33. — (Increase of Investmeni Allowances.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 21st May 1963.

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Photo of Mr William Warbey Mr William Warbey , Ashfield 12:00 am, 21st May 1963

We are now coming to a completely new chapter of the Finance Bill, that which deals with capital allowances. It is, therefore, a chapter which is concerned with the use of fiscal weapons as an instrument in economic planning. The Tory Party and the Chancellor have made an extremely belated conversion to the principle of economic planning, but they seek to do it in their own ways—ways which involve as little, interference as possible with private industry.

The whole argument between the two sides of the Committee and in the country now turns, not on whether fiscal means should be used as an instrument of planning, but on the way in which they should be used, and whether they should be used in a non-discriminatory or a discriminatory form. The essential purpose of the Amendment is to make the proposals in this Clause discriminatory, instead of being an indiscriminate tax hand-out to industry regardless of the purposes to which the new investment is put.

The Conservative Party has moved somewhat in the last eleven years and the Chancellor has urged it on a bit further since he has been in office. The proposals in this part of the Bill are proposals that he brought before the House last November in a kind of little pre-Budget speech, and in what he later described as a form of retrospective legislation. On that occasion, he approved retrospective legislation because he said that it had advantages. Because it had advantages, he was able to abandon the principle of all previous Chancellors in not engaging in retrospective legislation.

In his Budget statement, the Chancellor announced his intention to incorporate his proposals in this Bill in their present form. He was at pains to make clear their main motive and effect. In so doing, he revealed very clearly that the proposals in their present form are not so much a financial weapon as a bribe to all and sundry to enable them to make higher profits at the expense of the taxpayer, in the hope that such an inducement will encourage them to engage in investment.

What kind of investment is, apparently, of no importance? The Chancellor, being a good, if belated, Keynesian, takes the view that all investment is good investment, whether it be in manufacturing weapons of war for sale to a Fascist dictatorship, or in constructing and equipping palatial hotels and office blocks, or in simply digging holes in the ground, as the late Lord Keynes himself said—all that is a good thing in a period of depression or stagnation. Whatever type of investment it may be, however futile or wasteful its use of national resources may be is of no importance as long as it sustains demand.

The Chancellor would agree that it is an approach, but an approach that is in fundamental conflict with that of the Labour Party. The Labour Party has always taken the view that it is necessary to have public control of investment, that a Chancellor and the Government in general should intervene to guide investment into worthwhile channels. The Labour Party has not taken the view that all investment is good investment, but clearly believes that investment must not only be stimulated in amount, but purposefully directed.

That is the view put forward by the Labour Party in Signposts for the Sixties, a document that I commend to hon. Members on both sides. As I am sure that most of my hon. Friends have already read and absorbed the document, I need only remind them of what they know already, but to hon. Members opposite it will no doubt give a fresh insight into methods of economic planning.

I particularly commend to their attention the section entitled "Planning for Expansion", where it is stated: …we must have a plan for economic growth…The preparation of such a plan would require the creation of a National Industrial Planning Board …The central directive of this Board would be to ensure speedy and purposive industrial investment. I repeat, "speedy and purposive industrial investment". That, of course, is where we differ from hon. Members opposite—