As the examination of this Clause proceeds, the nature of the predicament in which the Chief Secretary finds himself becomes ever clearer. Each successive debate proves how right were hon. Members who said that the manner in which he is doing what he is doing in Clause 16 is essentially evasive, for political reasons.

There are two separate objectives which are constantly confused in the Chief Secretary's exposition. One is the proposition, which featured in the Budget speech, of relieving the liquidity crisis of companies. For that purpose, what was required was a relief in taxation at this time, whether deferment or not. However, when hon. Members begin to examine the logic, in that context, of such a deferment of tax liability, they are told that this is the first instalment, a hastened instalment, of whatever is to be the perma- nent law on inflation accounting of stocks for tax purposes. There is no necessary relationship between those two objects. An attempt to improve the liquidity position of the company sector by a first essay in inflation accounting of stocks for tax purpose is bound to result in all kinds of inequities and absurdities, some of which have already been shown up.

If we are to have proper account taken of inflation in the tax system where the valuation of stocks is involved, it will be necessary to separate not only the increase in the volume of stocks from the increase in the value of stocks but the increase in the real value of stocks—by which is meant their relative value to other things—from that increase in their money value which merely reflects ongoing inflation.

As regards the clumsy 10 per cent. of trading income, this is an absurd attempt to find a formula which will somehow set on one side the sheep of inflationary increases in value from the goats of real increase in value or increase in volume. Every explanation given by the Chief Secretary is shot through with the consequences of his basic dilemma. The Chancellor of the exchequer wished to dress up the reality of what he was doing, which was to take less money in taxation from the company sector. That is what he wanted to do. But then he did not like doing that he was embarrassed to do that openly, so he said "We are doing it only by way of deferral. It will all be clawed back." That would not wash, for presently the Chief Secretary had to say "No, theoretically if we stopped here it would be clawed back. But it will not be clawed back because this operation is different. This operation is the beginning of a permanent change in the tax law" which has to do with the inflation-accounting of stocks, something not necessarily in any way related—only incidentally related, and anomalously related—to the liquidity crisis in the company sector.

I hope the amendments will be pressed because they serve to bring home the essentially evasive nature of what the Government are doing and, therefore, their failure to accomplish what they set out to do—namely, directly, specifically and fairly, as between one company and another, to relieve the liquidity crisis. The Government could do that only by means of straight relief in taxation, against which they set their faces. Hence all the confusion. Hence the unfairness which is bound to follow in the operation of this law and which I fear will be a bad introduction and a bad preface to future legislation dealing with inflation accounting in the context of taxation.