The hon. Member for Eastleigh (Mr. Price) and the right hon. Member for Farnham (Mr. Macmillan) made persuasive speeches. The latter produced a mass of figures which could mean almost anything. From the common sense point of view, it is obvious that the country is facing a severe economic crisis and it is reasonable that industry should have to carry on additional burden. Industry this year is expecting a corporation tax of 50 per cent. To increase it by a further 2 per cent, is a marginal increase in view of the terrible economic mess in which the Tories left this country. I suggest that there is no case for accepting this Amendment.

We must agree that, by and large, the Chancellor's Budget judgment has been very satisfactory as far as one can see into the future, and I will not quarrel with that. But having said something complimentary to my right hon. Friend, I should like to sound a note of warning. It is that I should not like this or any other Government to regard company profitis as an inexhaustible source of revenue.

It has become fashionable in this Committee to declare an interest. The right hon. Member for Farnham declared one. The hon. Member for Eastleigh declared one. My own is a very tenuous one. I am a non-executive director of a company. It gets one morning a week of my time. I have a very modest remuneration and even smaller share in the company.

It will not be in the national interest if there is any further substantial increase in corporation tax. Company profits are either distributed or, in the main, kept for investment in stocks, in new buildings and in plant. Profits which are distributed are subject to a very effective form of progressive taxation. We need not concern ourselves with that. But the part of the profit which is retained has to be used for investment, and obviously the future economy of the country depends very much on how much money is available for investment.

It is essential that companies should have adequate funds for investment and for expansion. If the Chancellor of the exchequer uses corporation tax more extensively than it is used at present, there will be liquidity crises in many companies.

The Chancellor of the Exchequer is subject to many influences. He has always the problem of raising revenue. Most of the electorate are indifferent to how much corporation tax is charged. They are concerned only with their per- sonal taxation. The Chancellor of the Exchequer also has to placate the trade unions. He has to indicate to them that the social contract is being carried out and that their members are not having to bear an unfair burden of taxation.

The Chancellor of the Exchequer also has to look over his shoulder, to an extent, to some hon. Members who feel that it would be best if most industry were under public control. That may or may not be desirable; it depends on one's political point of view. But I think that most hon. Members agree that inefficient private industry is not a good substitute for the public control of industry. For that reason, it is very important for the Government to ensure that the private sector has adequate funds for investment and for expansion and has no risk of a liquidity crisis.

Whether we like it or not, about two-thirds of industry is in the private sector. The Chancellor of the Exchequer has to co-operate with that private sector industry if we are to achieve satisfactory expansion and emerge from our present unattractive economic situation. This involves co-operation with managing directors, chairmen and the large industrialists whom one hon. Member called "political eunuchs". I do not think that that is the case. Many of them are rather bigoted Conservatives. Nevertheless, it is essential for the Chancellor of the Exchequer to co-operate with them, otherwise we are in very serious trouble.

Last Tuesday, the Chancellor of the Exchequer dined with the Confederation of British Industry and said: I can assure you that the Government has no intention of destroying the private sector or encouraging its decay. It is unfortunate that it should have been necessary to say that. But what my right hon. Friend was saying in so many words was, "I have no intention of cutting the country's economic throat, because we are dependent on the private sector." There is no escaping that as matters are at present.

Industry is carrying some quite severe burdens at present. Some of those burdens have been brought about by the policies of the previous administration, especially the massive increase in inflation, now running at about 18 per cent, a year, the ill-judged and ill-timed attempts at expansion last year and the year before, the three-day week, and the nationalised industries' price increases. These are all very heavy burdens on industry, and additional burdens are price control, short-time working and the shortage of components. I suggest that industry is at present carrying some quite severe burdens and therefore that it is desirable that the additional burden of unduly decreased liquidity should not be thrust upon it.

5.15 p.m.

British industry is in harsh competition with firms overseas to obtain a fair share of the export markets. That will not be obtained successfully if British firms are experiencing liquidity difficulties vis-a-vis foreign firms. I suggest that, although the present rate of corporation tax is probably just and reasonable in the circumstances and would not have any undesirable effect on the economy, my right hon. Friend the Paymaster General should bear in mind that it is not desirable that company profits should always be the place from which increased taxation should be raised.

Company liquidity is all important in expanding industry. It is important to jobs. It is important to our standard of life. So it is very important that the private sector of industry should be assured beyond all doubt that it is having the full co-operation of the Government and is not likely to have to expect a further large increase in corporation tax.