Orders of the Day — FINANCE (No. 2) BILL

Part of the debate – in the House of Commons at 12:00 am on 10th May 1965.

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Photo of Mr Hugh Fraser Mr Hugh Fraser , Stafford and Stone 12:00 am, 10th May 1965

The whole House would like to congratulate the hon. Member for Woolwich, West (Mr. Hamling) on having come to the support of the Government, for he is the first hon. Member to have made a speech in their favour this afternoon. Having listened to the speeches of the hon. Members for Manchester, Cheetham (Mr. Harold Lever) and Meriden (Mr. Rowland), I understand why right hon. and hon. Members on the Government Front Bench should look but not listen. I believe that in the next 20 or 30 days and nights we shall have a debate of considerable interest and many of the points which have been raised will be gone into in immense detail. I therefore do not want to weary the House for too long today when so many other hon. Members would like to state what is wrong with the Budget.

The important point which has emerged is that this is the great weapon of the Chancellor of the Exchequer which has been wheeled out to attempt to dominate the economy. One Budget was wheeled out in November and a second Budget has been wheeled out in the last few weeks. The late Damon Runyon described the Gatling gun as an equaliser, and there is a good deal of equaliser about the Budget. It will make a mash of the taller poppies so as to provide sufficient opium for the people.

In spite of the two new barrels which have been skilfully fitted to this great cannon—Corporation Tax and Capital Gains Tax—I fear that by the end of our deliberations, after 30 days, we may well find that this great cannon, which the Government will have moved into position possibly over the dead bodies of several hon. Members opposite, serves no purpose whatever in aid to the economy. That is why I wish to address the House for a few minutes to discuss the irrelevance of the Budget to the main problems which face us.

The Chancellor, recalling his gallant naval days, must remember that hideous sensation when the wheel no longer controls the movement of the ship. This is happening today; events seem to be more in control of the finances of this country than are any of the steps taken by the Government. As my right hon. Friend the Member for Bexley (Mr. Heath) made clear, it was a humiliation that within a few weeks of the Chancellor producing his Budget the Bank of England was asked to take further steps about special deposits and further letters were sent out by the Bank to the clearing banks.

The truth is that the Government have throughout under-estimated the difficulties which face us. They still base their actions on the first so-called Brown Paper which suggested that the economy was in no way overheated. It is clear to anyone connected with industry, anyone travelling on a public bus or public tube, or anyone connected with a hospital service, that the position is precisely that the economy is overheated. The Government may be suffering from cold feet, but the economy is suffering from a considerable dose of overheating. I believe that in the Chancellor we have a man who came to office determined to carry through a series of fiscal reforms, but I also believe that this is totally inappropriate at this moment. If I may mix history a little, it is just as though Savonarola, the good reformer, had become attached to the court of the Borgias when Rome was actually burning. This would have about as practical an effect as some of the things which the right hon. Gentleman is putting forward.

Had he foreseen some of the problems which would face him in the summer of this year, I believe that the Chancellor would have been wiser to turn to quite different forms of taxes which could have had some effect on the economic problems which face us—the problems of maintaining the £ sterling and seeing that our exports rise. I suggest that he could have considered a pay-roll tax. When one reads the predictions of N.E.D.C. on what the employment problems will be in the next three or four years, there must be something in this proposal. Possibly he could have considered the introduction of a turnover tax. At least it might have had some impact on our export industries. But the right hon. Gentleman and his colleagues were committed from the first to embark on the Capital Gains Tax and the Corporation Tax. My right hon. Friend and others have shown many of the dangers of such taxes to the constructive economy of the country.

Two particularly important points should be stressed. First, in the clearly overheated economy which exists, there is no step whatever in the Bill to encourage savings. Secondly, there is absolutely no step to carry out what the Prime Minister on countless occasions has promised to encourage import-saving industries.

As the House will recall, whatever attitude one takes about the aircraft industry or the agricultural industry, these two industries, which have been so gravely affected by the Government, were undoubtedly import saving industries. One can consider the precise implications. For the agricultural industry, the damage is spelt out in greater detail. Consider forestry. The problem of timber is becoming worldwide, yet no steps at all have been taken in the Bill to help our timber industry. Consider mineral exploitation in this country. Absolutely no steps, despite the promises of hon. Gentlemen opposite, to see that the Cornish mining industry, for example, is helped. The same goes for mining in Scotland and Wales. We find absolutely no change whatever from what has been done before.

Consider the small and growing industries, along with those I have mentioned—industries which are by their nature expansionist and which could be import-saving. What do we find? Precisely the same dichotomy, with the enormous amount of time, labour and effort being spent by the Government in trying to drive them down by the use of Clause 70 in their desire to see that the small closed company is harder hit. When we consider what is or is not being done for these industries, along with the trap which was so carefully baited by the Prime Minister during the election—all that business of the great surge forward of the import-saving industries—we find that not a darn thing is done to assist them.

It was promised during the Budget speech of the Chancellor that the Postmaster-General, that egregious and lavish figure, would be introducing a new savings scheme. Where is it? There is absolutely no question but that great damage is being done to the savings movement by the type of action which the Government are undertaking. The right hon. Gentleman the Leader of the Liberal Party drew attention to the grave danger inherent in public men, particularly public figures such as those on the benches opposite, offering bogus prospectuses about national savings to the unfortunate people of this country.

What steps have been taken in the gilt-edged market? This year the Government must redeem about £1,700 million worth of stock. Judging by their programme, it seems grossly inflationary, as the right hon. Gentleman the Leader of the Liberal Party pointed out, that the Government must go to the market for that amount of money this year. That is why I ask what the Government are doing about the gilt-edged market, except carrying out a betrayal. All those unfortunate creatures who indulged in or were induced to buy Dalton's are forced to suffer from the Capital Gains tax. I hope that some hon. Gentlemen opposite read the admirable letter written by Maurice Macmillan in The Times this morning. It should be recognised that four million people are involved in this matter.

Hon. Gentlemen opposite should also consider unit trusts and investment trusts. If the computations under Clause 34 are taken and if the whole matter is analysed it is absolutely clear to anyone who has anything to do with the unit trust movement that not only the incomes of the unit trusts are being diminished but the administration of them is becoming almost impossible.

Hon. Gentlemen opposite pride themselves on their sense of fairness. They pride themselves that this is a just Budget and that it will remove many anomalies. Of course anomalies exist and should be removed, but consider the degree of fairness today in our fight for our lives as a trading nation, the fairness towards one citizen in this country who is engaged in the same sort of work as the citizen doing a rival job in another country and the level of tax imposed on those who are carrying the burden of industry. It is clear that the people of this country are receiving unfair treatment at the hands of the Government compared with their rivals in Sweden, the United States, Germany, France and elsewhere in Western Europe.

These are the facts and the House and the country must realise them. We will fight the Bill every inch of the way. We will first it for 20 days and 20 nights. Hon. Gentlemen opposite will be dragged from hospital and, with the final achievement of possibly the Ayes having it, then, over the piles of the dead, many hon. Gentlemen opposite will come to realise that this has been wasted time for a Budget and a Bill which are totally irrelevant to the facts which face us today.