Clause 1. — (Charge of Income Tax for 1965–66.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 30 November 1964.

Alert me about debates like this

Photo of Sir Kenneth Pickthorn Sir Kenneth Pickthorn , Carlton 12:00, 30 November 1964

I hope that I may be permitted a few minutes to ask three or four questions of the right hon. Gentleman who is responsible for our finances. I ask most of these questions not as part of the argument but in a genuine search for information. In respect of the first one particularly, I can put my hand on my heart and say that it is not argumentative.

Is this technique of prospective taxation new? If it is not, how old is it, and how frequently has it been used in the past? I do not suggest that the question whether it is a good thing or a bad thing depends upon the amount of precedent; I am clear in my mind—although, with respect, I do not feel so sure that the House is clear—that there are some disadvantages in fixing a rate of tax half a year before it is intended to make it effective. I do not think that any of us has considered what those disadvantages are. Some are very obvious, but there must be many which are not so obvious.

The right hon. Gentleman has had his troubles—although if he looks back in another few weeks he will doubtless think that those troubles were little. Nevertheless, he has had his troubles. But he ought to have had time, before getting into some of the troubles that he has been in lately, to know what were the arguments for and against prospective taxation.

My next question concerns the object of this taxation. I agree that it is a long while since Governments gave up passing specific taxes tied to specific needs for expenditure. That, long ago, was seen to be a clumsy method, and I am not trying to tie down the Treasury Bench to telling us how much of this taxation is for purpose X and how much for purpose Y, and so on. But some of the right hon. Gentleman's supporters have not hesitated to tell us. Some of them have made it clear that it is wholly, or almost wholly, in order to be kind to persons in receipt of retirement pensions.

Some of them have told us that it was done in order to show the trade unions that the Chancellor—in the hope of obtaining an incomes policy—was going to be fair. But the fact that one wants to show trade unions that one will be fair is not the best of reasons for adding new taxation. Nor is fairness a very easy concept in this connection. Nor is it one which our people find unanimity about. Still less is it one in respect of which people in other countries find it easy to be unanimous with us.

The same hon. and learned Gentleman who comes from one of the Manchester constituencies—at least, I think he is hon. and learned, although I do not really know whether he is silken or hempen—who told us that the purpose was to persuade the trade unions that we were getting on well towards an incomes policy, later told us that it was done in order to show the country as a whole that we were getting on towards an incomes policy. Indeed, I think it was he who went so far as to say that we ought not to do it—that is, put on 6d. extra tax—if it does not tend towards an incomes policy.

I quite understand that the hon. Gentleman was not speaking for his party, nor am I; and no back-bencher must allow himself to be bullied or try to bully others into not following an argument where it leads him, because it has not come straight from the Prime Minister or the Chancellor of the Exchequer. I think that the speeches we have had on this matter today do authorise us to ask the Chancellor to be even unusually specific in indicating which of these arguments he would rely on, or which he thinks jolly good but he would wish to have kept quiet and which he would wish to disclaim. We are entitled to hope for those answers.

There is one more thing only that I want to say; it will not take me two minutes. This taxation was necessary, another of them said, for dealing with the balance of payments and the defence of the £. It is—quotes—"taxation necessary for dealing with"—unquote—and then I think a fair attempt at recapturing the next few words would be the balance of payments and the defence of the £. If it was intended for that, God bless it, but I am bound to say that I do not think the shooting is frightfully accurate. We ought to be told which of these things are the things.

The last small thing I want to say is something about Ph.D's. I think I have known more than anyone else in the House of Commons. I was in at the birth of the Ph.D. I am sure that people will recall that Ph.Ds were called into existence in the year 1919 on the theory that too many Americans went to Germany before the war and, if they could only get something they could call a doctorate here, they would all start coming to British universities. Undoubtedly it has had a good deal of effect on them.