Question again proposed
That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise) and to make further provision in connection with finance."—[Mr. P. Snowden.]
§ Mr. CHURCHILL
It would obviously be impossible for any speaker to deal, even cursorily, with the far-reaching proposals and with all the aspects of the Budget which was opened to us yesterday by the Chancellor of the Exchequer, and I only propose this afternoon, in the brief demand that I shall make on the time of the Committee, to endeavour to place before the Committee the broad outlines of the main differences which, as I conceive them, exist between the Government and the Opposition. I acknowledge that the Chancellor of the Exchequer, in his speech yesterday, avoided the whole appearance of recrimination, and conveyed any reflection that he had to make upon his predecessor under the guise of impersonal form. I welcome and applaud this step towards a better line of conduct, and I also note in it that prudence which, from the very beginning of the lengthy discussions which will ensue upon finance, has realised that some caution and good temper should be shown in dealing with opponents. Nevertheless, I feel bound to attempt to disentangle our respective responsibilities for the present state of affairs, and also to contrast the different, and even opposite, policies for which the right hon. Gentleman and I stand respectively.
There are two views which can be taken about taxation. There is the view of the right hon. Gentleman, put forward on many occasions, but most forcefully in his publication "Wealth and Commonwealth." According to the Chancellor of the Exchequer, the wealth appro- 2764 priated by the idle rich is a deduction from the just share which should go to the remuneration of industry in all its forms; national revenue can be used to secure a juster distribution of th national wealth; taxation can divert the national income into more useful channels; the expenditure of national taxation can be used to stimulate trade and industry; and, lastly, taxation, instead of discouraging individual effort, tends to stimulate it.
That view, whether you think it right or whether you think it wrong, is a clear and intelligible view. If you adopt it, you would naturally seek occasions, and even pretexts, for imposing heavy taxation upon the public. If you were to argue for a largely increased Sinking Fund and for lavish expenditure upon social services, you would do this on the grounds, first, of repairing social injustices, and, secondly, of diverting the money from those whom the right hon. Gentleman calls the idle rich into far more useful channels. But there is another view which has equally been stated by the Chancellor of the Exchequer for the purpose of expressing his entire opposition to it. This is the other view, which I quote again, practically in his own words:That national taxation is a regrettable necessity, that it is a burden upon industry, that it discourages enterprise, that Governments best study the interests of the whole nation and of all classes by allowing money, to quote the famous Treasury phrase, to fructify in the pockets of the people.This is the opposite view from that which the Chancellor of the Excheouer holds. Practically every word is taken from his statement in "Wealth and Commonwealth"—not the phrase about fructifying in the pockets of the people. [Interruption.] Fancy being ashamed of that phrase! As I say, both points of view have been stated fairly. I take the second view, which has received a great reinforcement in the present situation of this country, actual and relative. We are the heaviest taxed nation in the world. We are incomparably the most heavily, directly-taxed nation. Our three great competitors, the United States, Germany, and France, are reducing by scores of millions a year their demands upon the direct taxpayer, with the avowed object 2765 of increasing their world-financial and world-competitive power. These countries take the view that direct and indirect taxation, particularly direct, are a clog upon trade and a damper upon enterprise, and, if the nation wishes to realise for its own people the immense possibilities of modern scientific production, every possible encouragement should be given to the accumulation of wealth in private hands and the fruitful use of that wealth by active individual effort.
I belong to the school that holds that taxation has reached a point where it has become a grievous impediment in the production of new wealth. High as I rank the Sinking Fund and the Social Services, I am convinced that, under the present circumstances, the emphasis and the main intention of any Chancellor of the Exchequer should be in the direction of an alleviation of the public burden. Therefore, it was my continuous endeavour to reduce taxation, and especially onerous taxation, and even to lean in the direction of reducing taxation in preference, if need be, to austere and drastic repayment of the National Debt.
I hold that we require far less of the State and less of the taxgatherer, not more, in our national affairs, and that those affairs will come round much quicker in so far as we allow a measure of free play to the saving and creative effort of the commonwealth. Therefore, when I was confronted with the disaster and outrage of the General Strike—[Interruption]. All the laughter of the Socialist party will not efface those facts from their record. None of their weariness to hear them repeated will prevent me from bringing them forward from time to time. Therefore, when I was confronted with these events, with their endless, evil repercussions on trade and finance, I sought to the best of my ability to spare the taxpayer and to nurse industry through the difficult and harassing period that followed. That is the whole explanation of the policy for which I was responsible during the last four years, and it is the only explanation which I think it necessary to offer for the half suppressed sneers and criticisms and disparagements which the right hon. Gentleman passed on my financial record. [An HON. MEMBER: "You deserved it."] That is begging the ques- 2766 tion. [Interruption.] I do not in the least mind being interrupted. I am glad to know that permission has been given.
The results of the general election placed the party opposite in power, and various political developments since that date seem to have entrenched them there. The right hon. Gentleman has largely increased expenditure. Apart from the de-rating relief, for which the money is this year provided, he has added, as I make it, £26,000,000 to our national load, and he now asks us to impose new taxation upon wealth of £46,500,000, of which about £34,000,000 arises in this current year. In fact, we are asked to return to the full severities of war-time taxation, and to do this at the same time that our rivals in other parts of the world are universally reducing their already reduced taxation.
I will deal later on with the effects of this taxation, but the first point I submit to the Committee is upon the question of whether it is necessary to have new taxation this year at all. I declare that it is not necessary and that it would not be necessary unless the Government had changed. That is my first main submission. I hold that no new taxes this year would have been needed. Let us look into that. First of all, there is the deficit on last year's Budget—a deficit of £14,500,000. £9,000,000 of that was traceable to the decisions of the present Government as to new expenditure passed through the House during the winter. Therefore, the deficit did not exceed £5,500,000. Considering Wall Street, considering the Hatry scandals, considering the inevitable want of confidence attendant upon the arrival of a Socialist Government, as well as the general depression throughout the world, that £5,500,000 deficit, the bulk of it accounted for by the failure of stamps, is not a bad result in all the circumstances. Of course, it must always be remembered that the present Chancellor had no interest in presenting a deficit on the finance of last year; in fact, his threat to the sugar trade alone cost the revenue £1,000,000, and I certainly notice that, in the first week of the new financial year, the balance of revenue and expenditure was £4,000,000 more favourable than in the corresponding first week of the year that has closed. At any rate, I 2767 say that nothing in the realised deficit of 1929–30 affords any justification for an increase of taxation.
Apart from the deficit, is there anything in the forecast of 1930 which the right hon. Gentleman laid before us yesterday that justifies new taxation? The right hon. Gentleman's estimate of revenue on the existing basis shows an advance of £5,600,000 above the yield of 1929, and I believe that is, as he said, a conservative estimate. I had arrived, without the advantages which he now enjoys, at almost exactly the same conclusion myself, that it would be a fair basis to work upon to take the yield of last year and to add £4,000,000 or £5,000,000 to the normal increase. Derating is fully provided for for this year and £4,000,000 is left over for next year. There is nothing whatever in this forecast which would have justified an increase in taxation if the Government had not changed.
I come to the Debt. I say there is nothing in the position which justifies a fresh burden. I rather anticipated that the right hon. Gentleman would have attacked the whole principle of the Fixed Debt charge, but apparently, on learning the facts about it, and studying it at close quarters, with the fullest possible information, he accepted and adopted virtually intact all my arrangements for dealing with the National Debt. The Fixed Debt charge of £305,000,000 a year will, as he reminded us yesterday, on a 4 per cent. basis extinguish the Debt in 50 years if it is maintained. That is a prodigious effort. It is foolish and vain even to under-rate the magnitude of that effort of Debt repayment. There is no country in the world where the institution of this scheme was not received with wonder and admiration. You cannot judge the working of the Fixed Debt charge upon the fortunes of a single year. It is premature altogether to judge, still less to condemn, such a system, because the second year or the first two years of its operation are poor compared with what was expected. But look at the current year, with which we have now to deal. The yield of the Fixed Debt charge for Sinking Fund and Savings Certificates in 1930 which was forecasted by me two years ago was £69,000,000 on a 4 per cent basis. The right hon. Gen- 2768 tleman is budgeting for a far lower rate than 4 per cent. for his Floating Debt. He did not tell us what the Hite was. Is there any objection to telling the Committee?
The CHANCELLOR of the EXCHEQUER (Mr. Philip Snonder)
It is easy to calculate. Calculate it yourself.
§ Mr. CHURCHILL
I find it difficult. The right hon. Gentleman did not state it in his speech, and I imagine that there is no secret about it, and perhaps he will have the courtesy at some time or other to inform the CommittEe upon it At any rate, I have always been told that a rough calculation of one per cent, fall in the money rate is a saving on our present volume of Floating Debt of something like £6,000,000 a year. But the right hon. Gentleman has said that he is budgeting for £11,500,000 reduction in the cost of the Floating Debt. Therefore, it seems to me, not knowing the exact rate on which these estimates are based, that between £75,000,000 and £80,000,000 will be available in the present year for the service of the Savings Certificates and the Sinking Fund, £23,000,000 of which, he told us, would be devoted to the Savings Certificates. I do not suppose that there is any difference between us on the figures. The sum of £5,000,000 or £80,000,000 is an immense one to be devoted to the service of Debt end Savings Certificates.
When the right hon. Gentleman was last Chancellor of the Exchequer five years ago, the comparable figure devoted to these two purposes was £57,000,000. They are strictly comparable figures. They were calculated for me when I was at the Treasury and annowiced to the House two years ago. So that in far worse times, and when we are far weaker, we are making a contribution at the present time to the service of Debt and the Savings Certificates, which are inextricably interwoven with the results of the Sinking Fund, which is nearly £20,000,000 greater than that which was thought necessary by the right hon. Gentleman five years ago before the great industrial troubles had brought such misfortune upon our affairs. I say that next year an even larger repayment will be effected. The fore lasted figure rises to £72,000,000 for next year, and, if the cheap money rates continue, there 2769 is no reason why the repayment of Debt and Savings Certificates should not exceed £80,000,000. I am not complaining; I am rejoicing in this, but I say why is it necessary to do more? In my judgment, it is not necessary to do more.
The right hon. Gentleman has taken two steps which he announced to us yesterday. The first is the Clause which we now see on the Paper making it statutory to repay deficits occurring in any year in the finance of the next year. That, of course, is very harmless and very well-meaning. No one can object to it. It is purely illusory. Nobody knows better than the right hon. Gentleman that nothing can abrogate the sovereign power of Parliament, and the Finance Bill of every year is its statutory authority for everything that is done, and for the repeal of every other Statute. There is nothing in that. It is, no doubt, a pious sentiment which may just as well find a permanent resting place upon the Statute Book.
The second step which the right hon. Gentleman proposes to take is to make good the deficit of last year, mainly because it is not additional expenditure, by payments of £5,000,000 this year, £5,000,000 next year, and £4,500,000 the year after. It is an excellent proposal if you can afford it. If the circumstances are so favourable, if you can get the money without doing more harm than good in the process, it is an excellent proposal. But it is a question to be carefully weighed, whether in all the circumstances the right hon. Gentleman would really add to the public wealth and economy by this addition to the burdens which he had already to bear and some of which were of his own creation. Anyhow, I repeat my second conclusion, that, just as there was nothing in the finances of last year—the return of last year or the forecast for this year—to justify taxing us, there is absolutely nothing in the Debt position to justify it. I will come to the reason which leads us into this present unhappy situation in a moment.
Is there any justification for an increase of taxation on account of the outlook for 1931? Still I ask, need we now take measures for 1931? Our finance is annual finance. That is the principle on which everything is based. I think that whether you should take measures 2770 for 1931 now or not should entirely depend upon the public convenience and upon your general view of what is most required of the national resources for national interests. I will answer the tacit complaint that £15,000,000 of de-rating relief will come to the Exchequer for payment in 1931 against which there will only be £4,000,000 left in the Suspensory Fund. I feel bound to repeat what solution the late Government would have applied to that problem if they had remained responsible. We had looked to an expansion of trade and revenue. It was not then so ludicrous as it may seem now.
The Income Tax is suffering from a kind of cramp. The Exchequer is not getting its natural, normal and true expansion—the true expansion proportionate to the wealth and accumulated capital of the country and of the growth of population and of the development of industry. Many hundred thousands more people are employed, and many more people are alive here in this Island. There are the annual aggregations of the capital savings of the State. But the Income Tax is not expanding. We are not getting that result. The right hon. Gentleman should ask to see, if he has not already seen them, the returns which were shown to me two years ago of the details of the Income Tax of the great productive trades. I was astounded to find these vast trades, largely the basic trades,, coal, iron and steel—all these great trades, which were the foundation of revenue not so long ago contain an enormous number of firms which, though they are carrying on their business, are making no profits or very little profit, and where there are no profits, of course, there is no tax.
Look at it for a moment from the Treasury point of view. We would like them to make profits and to pay tax on the profits. A very little, it seems to me, may lift these trades on to a healthy level. The President of the Board of Trade has borne witness himself to the fact that our measures of de-rating relief had already made a considerable improvement in the profitability of the coal trade. Let the tide of depression ebb ever so little, let the burdens be lightened ever so little, and whole areas of taxable assets which are now submerged will come again into review and will come again 2771 into use. That I am certain is the truth of the present situation in the Income Tax sphere. Very, very little, and you be getting a much retarded expansion of revenue because of a great number of firms and businesses resuming profit-making as well as merely carrying on their work. It was to this that I was looking. It might well have been achieved in 1931. It is not only a question of increasing the volume of trade. It is a question of increasing the volume of profitable trade, for it is on the volume of profitable trade that this important part of the Inland Revenue depends for its expansion. If the recovery had been delayed beyond the year 1931, I quite agree that £15,000,000 more would have had to be found for the de-rating scheme by new taxation.
As everyone knows, I do not accept the Protectionist hypothesis, but I am bound to say, that, confronted with such a need of raising £12,000,000 or £15,000,000 more, I believe it could have been done with far less injury or discouragement to the productive energies of the people at this time if it had been raised by an import duty on foreign manufactured articles, either of a finished or semi-finished character. I observe that Holland, which professes and practices a Free Trade policy, has a general revenue tariff of 8 per cent. ad valorem on all manufactured imported goods, but even if in this country you applied it only to finished or nearly finished goods, a very substantial yield could be gained by the Exchequer without any discouragement, but rather, on the contrary, with encouragement to the general trade of the country.
Therefore, I conclude this portion of my argument that there is no justification for new taxes in the past year's deficit, nor in the Debt position, nor in the outlook for 1930, and that it is premature and improvident to decide at this moment upon the task of 1931, and that by so doing you may only cripple the prospects of trade revival in this year, which is already so heavily laden. No, the only cause of all this new taxation is now plainly and mercilessly exposed. It is the additional expenditure of the Socialist Government. There alone lies the reason for the Budget presented yesterday.
2772 I will speak about the character of these additions to our burdens and of the causes which have led to this expenditure later on, but first let me examine for a few moments the new taxation. Nearly £47,000,000 of new taxes are to be imposed. They are all direct taxes, or virtually direct taxes; Lone are to be passed on to the consumes. They are to be levied upon a very restricted class, already the most heavily tayed but still the most loyally responsive it the whole world. [Interruption.] It is not denied. The Chancellor of the Exchequer will not deny it. It is levied 11 years after the War is over. It may be necessary because of the new expenditure to which the Government have committed themselves, but do not lit them or their followers behind underrate or be blind to the gravity of their proposals or to the consequences which will follow from them. The right hon. Gie itleman the Member for Carnarvon Boroughs (Mr. Lloyd George) spoke of the;e proposals and likened them to a six-inch shell. They indeed may be a six-inch shell bursting with a shattering detonation in every board room and business house throughout the country.
First let me take the Income Tax. The long battle that I have waged over this 6d. off the Income Tax is ever. For four years I successfully defended that remission. I defended it against the assaults of the General Strike—I beg 5.0 p.m. pardon, the assaults of the difficult events of 1926. But at last I am beaten. The Chancellor of the Exchequer and his party have had their way. They have won their victory, and the standard rate goes back, in a time of full and assured pirate, to the 4s. 6d. level which had been reduced nearly five years ago. The popularity of the measure is assured by reducing the number of taxpayers involved to limits where the voting power of those who are left may be considered negligible. It is a thumping blow at every form of enterprise and saving, and it will be deeply felt and resented. The Chancellor of the Exchequer himself, in a passage remarkable for him, inconsistent with almost everything he had previously said, made a most valuable and important admission at the close of his speech yesterday, when he said: 2773Though I am imposing no new direct burdens on industry, I am fully aware of the psychological effect on trade and commerce of increased taxation even when no material burden is imposed."—[OFFICIAL REPORT, 14th April, 1930; col. 2681, Vol. 237.]But what is the difference between a psychological and a direct effect? What matters to practical men is what happens. Psychological reasons are just as real as any other reasons. The right hon. Gentleman feels deeply the danger of the discouragement of trade. He told us some months ago in a speech in the country that all the business community needed was more pluck, or something like that. Here is his remedy. But at the same time that he is encouraging himself to apply this drastic remedy as a stimulus to greater efforts, he has his own misgivings, which he imparted to us yesterday, and he knows that the step he is taking is one which will discourage trade and will dishearten productive enterprise. A substantial portion of this addition to the standard rate of Income Tax, which causes so much hilarity among the party opposite now, will fall upon company reserves; that is to say, it will fall upon what the Colwyn Committee called money at the very point of becoming fruitful to industry. [Interruption.] It is only a proportion, but still a substantial proportion—one-fifth of the total of £5,000,000. Is that so? I am so glad that the Chancellor and I are in agreement. I cannot guarantee to answer every question on the spur of the moment.
There is another way in which, I am told, the increased taxation as proposed tends to deplete companies' resources. Shareholders will want dividends to give them the same income as before the tax was raised. It is a tendency the most evil and undesirable. The right hon. Gentleman told the Labour Congress a few years ago that no one need fear a Labour Budget except the idle rich. Does he pretend that 6d. on the standard rate of Income Tax, apart from these other imposts, affects no one but the idle rich? Is he really making his task easier by stigmatising the class who will pay him as if they were the worthless wastrels of society?
I come now to Super-tax and Death Duties. I am not going to waste much time or any tears upon the personal sufferings of the millionaires. Where 2774 direct taxation uproots families from the homes in which they have lived for centuries it does inflict a great sentimental injury upon them. [Interruption.] There is no real gain to British democracy when some family leaves the home of its ancestors and hands it over to a trans-Atlantic millionaire or wartime profiteer. [Interruption.] If the hon Gentleman who interrupts has a keen and poignant feeling about it he will perhaps realise that it is not confined to his party alone. But as far as new wealth is concerned I think that the Chancellor of the Exchequer is probably right in saying that his new taxation will not, in his own words, mean any deprivation of the necessaries of life, or of reasonable luxuries. That may be true, but it has nothing whatever to do with the issues that we have to settle here.
The main part of this new levy will not, I believe, be drawn from personal expenditure; it will be drawn from funds which otherwise would have been devoted to investments. The modern productive millionaire is a highly economic animal. He saves far more than he can consume. He is, although he does not always realise it, the potent ally of the Chancellor of the Exchequer. It is upon the continuous multiplication of these great fortunes that virtually all modern systems of progressive taxation depend for their revenue. It is easy and popular to lead the multitude against such a class, but the question now is whether a point has not been reached when the increased taxation may not begin to defeat its own object, namely, an easily obtained revenue.
Everyone knows the right hon. Gentleman's motto, that in these matters of taxation—I reminded him of it some years ago and he repeated it with gusto only two years ago—you must not look at what is taken away but at what. is left. Let us look at what is left. The Treasury calculated for me a year ago that the largest taxpayer who provided annual insurance for his Death Duties would pay in Super-tax, Income Tax and Death Duties, something between 14s. and 15s. in the £ annually to the Exchequer. The present Budget adds 6d. to the Income Tax, ls. 6d. to the Sur-tax, and 1s. 3d. I suppose, for the insurance of the increased Death Duties. I have not the facilities of calculation that the Chancellor of the Exchequer has, but it is 2775 something in the nature of 3s. 9d. in the £. I hope that the Committee will follow these figures. On that basis, the 14s. or 15s. becomes 17s. or 18s., and what is left becomes 2s. or 3s. in the £. I think that that is a very striking result of the taxation which has now been imposed. One wonders whether, when the Chancellor of the Exchequer or his agents arrive to collect the 17s. or 18s. in the £, they will always find the fortune there. It may have been divided, and if it has been divided it falls into a far lower scale of taxation not comparable in its remunerative character to the Exchequer. Et may not even be reposing on our hospitable soil; it may have become so fenced about with legal barbed wire that a siege of years may be necessary to obtain it.
Certainly the incentive to run the grave risks of modern business, the incentive for creating new wealth or for accumulating money for reinvestment, seems to be very seriously impaired when, as the right hon. Gentleman says, it is no longer a question of looking at what is taken away, but of looking at what is left, and when what is left does not in these cases appear to exceed 2s. or 3s. or 4s. in the £. If the great incentive to saving and reinvestment on the part of the very rich is impaired, injury will follow to the whole community. It is by this guidance of business and industry by capital that is massed in the hands of individuals who have the power of land planning and of creating the large-scale enterprises which are needed now—the creation of these enterprises on a solid basis by substantial people who are not in a hurry to make their fortunes—it is this process which has been found in every country, and particularly in the United States of America, to be the most swift and powerful means of rationalising industry, of discovering and gaining and commanding markets, and thus creating new wealth and employment.
It may even be true—I have not made the calculation—that the standards of life of the wage earners in all the principal modern communities of the present day vary in proportion to the number of very wealthy citizens in their midst. It is very remarkable. Certainly, it would seem to give food for thought, indeed to all of those who are anxious to obtain the maximum contribution from capital to 2776 the well-being of the general community. Certainly, every effort will be made in many businesses to pass on the burden of extra taxation wherever possible. It does not follow that it is always possible, but I firmly believe that there are many cases, when whole classes of competitors are equally taxed, where something will be recovered from the con rimer in the form of an increased cost of production and an increased price; and where such articles, showing an increased price, reach the area of foreign competition, our competitive power wilt be pro tanto reduced.
There is a burden which falls, through this taxation, very heavily upon the highly-paid brain worker and the skilled technician, who are absolte,ely essential in our modern life. To ask the surgeon or the engineer or the scientist or the professional man to pay these very heavy charges at this time is indeed to ask much of him when he kncws that this additional burden is cast upon him partly for the purpose of providing out-of-work benefit to persons who need not even be asked to prove that they are genuinely seeking work. Therefore, the Chancellor of the Exchequer seems to me to be running a great risk in what he is doing, and he may be going too far by prejudicing the basis of his existing di rect revenue, while hampering the production of new wealth. All these tendencies that I have traced upon the super-rich will operate in a lesser degree upon every grade of taxpayer over whom the Chancellor of the Exchequer is wielding what he has, I believe, called the weapon of taxation. If once the loyal co-operation of the mass of direct taxpayers, for which this country is renowned, were to be shaken, irreparable injury n fight be done to the whole structure of our taxation system. The right hon. Gentleman is making proposals for preventing legal avoidance. In that, he will get full assistance from all parties in this House, but no legal avoidance provisions, however elaborate, however complicated—as they become complicated they may be found to impinge upon many other legitimate aspects of our nitional life—can possibly be any compem ation for the alienation of the general good will of the main body of Income Tax payers.
We are asked to pay an immense price. The Government are clemanding from the nation an immense price. What have 2777 they to show for it? What have they to show for all this new expenditure, which I claim that I have proved—I would like to see the argument upset, if it can be—is the sole cause of the heavy additional taxation this year. What have they to show? Here, I have no doubt that the right hon. Member for Carnarvon Boroughs will agree with me in what I am about to say. I cannot see the right hon. Gentleman as well as I did; the Gangway has grown so much broader. It is becoming too blurred and mixed up with the Chancellor of the Exchequer, until one can almost hear the echo of the psalms they chant in common. The right hon. Member for Carnarvon Boroughs will agree with me in asking the question, "What have the Government to show for the £40,000,000 of new taxation which they are imposing upon the country?"
There was the question of the solvency of the Unemployment Insurance Fund. We have heard a lot about that. Its bankruptcy had to be prevented. Large sums of money were voted from the Exchequer for that purpose, but before three months were out the Government came down here and did the very thing which they had sought to avoid. They reopened borrowing and they compromised again that Fund which, at great expense, they said it was so indispensable to rescue. That is all about the solvency of the Unemployment Insurance Fund. It was achieved for three months and afterwards lost again owing to the great expansion of unemployment and unemployment benefit. There have been better benefits paid to more persons out of work, but there has been, as I have said, a demoralisation of the administration of the Fund.
Then we have a handful of oddments and scraps, a few oddments of hard cases in connection with the great scheme of widows' pensions. [HON. MEMBERS: "Oddments!"] Well, it was a scheme which dealt with 12,000,000 widows, whereas the hard cases dealt with, I believe, only half-a-million. All this is mixed up with some complicated tale which the Chancellor of the Exchequer has told about wishing to avoid the step up in 1935, when the existing scale of Exchequer contributions, as originally planned, comes to an end. Well, we have that. The Lord Privy Seal has 2778 been given about £2 per head for every extra unemployed man added to the live register during his tenure of office—£1,100,000 or £1,200,000 altogether in order to cure the problems of unemployment.
In effect, the taxpayer has been exposed to the worst of both worlds; at one end, we have had the right hon. Gentleman in the capacity of financial purist and pedant, professing to practise principles of financial orthodoxy, and, on the other hand, we have bad the Socialist agitator handing out lush doles with both hands to great crowds, and both are sending in their accounts to the taxpayer. That is all there is. I beg pardon, I forgot one recipient of the Chancellor of the Exchequer's bounty —the bookmaker. The right hon. Gentleman may leave a name execrated by every industrialist, but sometimes it may be remembered with expressions of good will among that confraternity who raise their voices so loudly on the race courses, because of his benevolent action in freeing them from the grinding licence duty of £10 a head. I address myself particularly to the representatives from the Clyde. This is the whole programme. Here is the whole shop window. This is all that we are being given for the £45,000,000 of additional burden which are going to strike a blow at the reviving trade of the country. More than that, it is all that there is going to be, because the right hon. Gentleman, losing confidence in his policy of stimulating industry by taxes, and with grave misgivings, gave us an undertaking that:In the absence of unforeseeable calamities or of heavy increases of expenditure no further increases of taxation will need be imposed next year."—[OFFICIAL REPORT, 14th April, 1930; col. 2681, Vol. 237.]There is the end, if those words stand, of the programme of the embattled proletariat of "Labour and the Nation." It is worked out. They have come to an end. I wonder whether the hon. Member for Bridgeton (Mr. Maxton) is going to countersign that assurance of the Chancellor of the Exchequer. Nobody disputes the courage of the Chancellor of the Exchequer or his power of standing against opponents in every quarter, but, nevertheless, he may not be able to stand against the pressure that will be put upon him. We know perfectly well 2779 that pledges have been given by the party opposite to delude and bribe their voters, that shoals of schemes of expenditure are moving towards this House and that long queues of Bills, all involving further charges, are standing at the turnstile. I can only say that we were told on the Widows' Pensions Debates and on the Unemployment Insurance Debates that these were only instalments. I must say to hon. and right hon. Members opposite, if all your contributions towards the social life of this country is summed up in these foolish, these expensive items that I have read out, if that is all that you have to say to it, then the pain and irritation felt by the Income Taxpayers at the larger burdens that you are going to impose upon them will only be equalled by the pain and irritation felt by the gentlemen from the Clyde at what they are never going to get.
What help will this Budget be to trade I Unemployment is the central feature of our life at the present time. It can only be removed by a trade revival. Is not this taxing Budget the very worst and the most inopportune policy which could possibly be applied to our affairs at this moment? Will it not aggravate the very causes which made the new taxes necessary? Will it not chill enterprise, discourage saving, promote the expatriation of capital, delay the recovery of trade and, indeed, the operation of some great conversion scheme from which we all had hoped so much? All this will be done at the very moment when the opposite processes are at work in all our chief competing countries. Would it not—I ask this not only as an indictment of the right hon. Gentleman but in my own defence—be worth while, I will not say by strict economy but by keeping the expenditure rigidly at a fixed level, even by some mitigation in the process of repaying Debt to the extent of not adding this additional,£5,000,0100, to try to bring our country round the corner of depression in which it is languishing and open again the high roads to better trade, to buoyant enterprise, to expanding revenues, and to the profits on which those revenues are based? These are all questions which the nation must weigh in the months that lie before us and upon their answer depends in a very large measures the immediate strength and prosperity of Britain.
§ Mr. MAXTON
I rise to continue the discussion on the Budget with that amount of humility which one who has never been in the ranks of the Chancellors of the Exchequer must feel in treading their sacred ground. While I have never been a Chancellor of the Exchequer, I have been a Socialist for a considerable number of years, and when the right hon. Member for Epping (Mr. Churchill) asks me if I propose to countersign the Chancel or of the Exchequer's Budget, I answer most emphatically, "No!" As an ex-Chancellor of the Exchequer, I imagine that the right hon. Gentleman ought to countersign it as a very businesslike handling of the ordinary finances of the country, according to tie orthodox methods established by the Treasury. If the Budget is countersigned by the right hon. Member for Epping and approved in advance by the right hon. Gentleman opposite—
§ Mr. MAXTON
Well, perhaps we assumed too much. As a very capable politician he knows how people read the signs and symbols, and that a man-in-the-street like myself, hearing about the dining and the harmony would imagine that there is also some harmony of thought and a certain amount of mutual understanding. But the point is that if it has had the counter signature of the right hon. Member for Epping, and I hope a reasonably favourable acceptance from the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) it will not suffer very serimiely if it does not receive the heartiest approval of a back bencher like myself. I am quite sure that hon. and right hon. Members opposite, whatever their spokesman may say, are really cheering inwardly that they have got off far snore easily than any of them ever believed that they would, and far more easily than they are entitled to get off.
The parties went to the country at the General Election and anpealed for the support of the electors. This party received an overwhelming mandate from the electors. The three policies, roughly, were these. The right hon. Member for Carnarvon Boroughs proposed to put £250,000,000 of revenue in.o road-making and public development schemes. [An 2781 HON. MEMBER: "Borrowed!"] That is quibbling. He proposed to remove £250,000,000 out of the ordinary commercial life of this country and put it into public enterprises, roads, bridges, docks, and so on, and whether he proposed to borrow or get it by taxation is not material. The point is that it was coming out of the ordinary development purposes of industry. The right hon. Member for Epping, in criticising that policy, said "Leave it in the hands of its present owners." He has repeated that doctrine to-day. He says, "Leave that surplus wealth in the hands of its present owners to fructify in their pockets." I thought of the 10s. in the widow's pocket, and the 17s. in the pocket of the unemployed man. Presumably, the right hon. Member for Epping was not thinking of them. He was thinking of the Super-taxpayers of this country. He says, "Leave this surplus wealth in the hands of its present owners to fructify in their pockets and to find its way into industry through the ordinary channels."
The party of which I have been a Member went to the country and argued that the surplus wealth that was in the hands of the few should be transferred into the pockets of the suffering poor—(An HON. MEMBER: "At one go! "]—I will deal with that in a moment—and from there to pass over the counters into the shops of this country and so stimulate and develop trade. I put it to the right hon. Member for Epping that the Budget that was presented to them yesterday is more in keeping with the views which the Conservative party put before the electors than either the views of the right hon. Member for Carnarvon Boroughs or of hon. Members on this side of the House. It aims at the restoration of trade and industry, of capitalist trade and industry. I am sorry the Chancellor of the Exchequer has left the House, but I see the Financial Secretary to the Treasury present, and I am glad of the substitute. I hope he casts his mind back to the days when he was the foremost prophet of the Capital Levy, which was going to do it in one bite, or two at the most. Yesterday the Chancellor of the Exchequer said:Though, as I have said, I am imposing no new direct burdens on industry, I am fully aware of the psychological effect on trade and commerce of increased taxa- 2782 tion even when no material burden is imposed. Recognising this, I am convinced that whatever my views as to the equity of the present distribution of the national wealth, in existing circumstances an essential factor in ameliorating unemployment is a restoration of a spirit of confidence and enterprise among those now responsible for conducting industry and commerce. And to encourage that spirit of confidence and enterprise it is right that, so far as is humanly possible they should know the probable full extent of their tax burden in immediately ensuing years."—FOFFiciai. REPORT, 14th April, 1930; col. 2681, Vol. 237.]And there he made the promise that, in so far as he could, there would be no further taxation. That is an indication, indeed, the whole statement is an indication, that the Socialist Chancellor of the Exchequer and his Financial Secretary are pursuing the capitalist view of restoring capitalist industry and finance, encouraging private enterprise, by imposing upon it the minimum of taxation. As a Socialist, I am bound to criticise that policy. The right hon. Member for Epping, in his criticism, tried to terrify my right hon. Friend about his extra 6d. on the Income Tax, and the small imposition on the Super-Tax by the threat that capital would leave the country. I have a quotation here from one of the friends of the right hon. Member for Epping. It is taken from the report of the annual meeting of the Yorkshire Branch of the Landowners' Association held at York on Saturday:It was worth considering whether it was not a wise move to take advantage of the Agricultural Credits Act in putting two-thirds of the value of rural property on loan for 60 years,and Sir George Courthope-the chairman of the Central Association—said that he had himself taken up £50,000 and tucked it away in Canada.He is one of the gentlemen of England—
§ Mr. MAXTON
It is not where the money is going to but where it is going 2783 from, and the purpose of its going. I do not think the Noble Lord really approves of this sort of thing:
"Sir George Courthope"
who is the hon. and gallant Member for the Rye Division—said that he had taken up £50,000 and tucked it away in Canada. If there was any scheme of land nationalisation, or anything of that sort, they would find all his property belonging to mortgagees.It is very clever, sound, conservative tactics, presumably, to desert Great Britain as soon as they do not get their own way in Great Britain. And the right hon. Member for Epping holds that up as a threat to my right hon. Friend! I wish that the Chancellor of the Exchequer had made a frontal attack on the large aggregations of capital in this country. A small handful of people, about 90,000 Super-tax payers, took something like £600,000,000 last year—[An HON. MEMBER: "And paid how much in taxes?"] I do not know how much they paid in taxes, but I know that when you add the Income Tax product and the Super-tax product together it only pays the interest on the National Debt. I know that much. I know also that Supertax payers and Income Tax payers pay to provide themselves with the interest on the National Debt, and I know, further, that all other Civil Services—National Health Insurance, Widows' and Orphans' Pensions, Unemployment Insurance—are more than paid for by the Beer and Tobacco Duties of the working-classes.
Ninety thousand people in this country every year during our worst years have taken £600,000,000 and put it in their pockets, and the Super-tax payer groans about it. The one thing I admire about hon. Members opposite is that they always know how to squeal before they are hit. The total Super-tax that went into the Exchequer was £56,000,000, and they are groaning about a tremendous burden, which is roughly only 2s. in the £, which went back into the Exchequer. I say that the £600,000,000 was produced by the toil of the cotton workers and the miners, by the toil of the agricultural workers, by the toil of engineers, shipbuilders, and the woollen operatives, who are locked out to-day against a 12½ per cent. reduction in wages. They are down on the rock bottom of life already, but we have hon. Members opposite approv- 2784 ingof their being turned out and approving of a reduction in mimics' wages. We have hon. Members opposite basing their policy on low wages—[HoN. MEM - BEES: "No!"]—fighting tooth and nail against a few more widows being paid 10s. a week, fighting against the unemployed man's youngster getting 5s. a week, and screaming like the very devil over 6d. being put on what they are already getting out of the country.
I am a very distressed and worried man. My hon. Friend who interrupted me suggested that it was too much for me to expect Socialism on the plate with my breakfast in the morning. I am not disputing the accuracy of t rat remark. I am not even so stupid as to expect all the promises of "Labour aid the Nation" to be fulfilled in tire period of one Parliament; but I have asked for one thing and one thing only,steadily and consistently, on every important occasion. in this House. It is that Wrile big constructive schemes are being put through—and mark you I am not saying that I see them here—while the statesmen are thinking and planning, we should remember that we have a duty, as an honourable body of men and women, to see that no person in this land suffers from starvation or the fear of starvation. It is not true to say that no person is suffering to-day. There is the widow with 10s. a week, where she gets a pension; the aged person with 10s. a week, where he or she gets an old age pension; the unemployed man with 17s. a. week.
I see that a £10,000,000 profit is antics gated from the Post Office. In the Post Office which is producing tint profit there are, to-day, temporary wcrkers getting from 25s. to 30s. a week. Periodically one appears in Court charged with dishonesty, and it is then brought out frat this public servant, doing responsible work and handling valuable documents, is being paid 25s. a week—and we hre calculating on the profit which we are going to make out of his labour next yew. Throughout the whole of the working-class, from one end of Britain to the other, among the industrial workers, the rural workers, the miners, the factory operatives, there ig deep, real, genuine suffering. And not one suggestion yet of a)ractical kind. from any one of the stai,esmen, to see this nation through its d Acuities. We see the old quarrels abo It Free Trade and Protection being fomented once 2785 more, although the partisans engaged on the two sides know that there is nothing in it whatever. But there is not a single statesman with a plan to show us the way through and not one penny of relief is produced in this Budget to make the lot of the workers easier while the thinking and the planning is going on.
A Socialist Chancellor of the Exchequer could quite easily have come forward with a 12 months' plan for carrying on, and a Socialist Cabinet should have come forward with a plan, covering a period of years, showing how they were going to extend the area of public ownership and control in industry, in banking, in land, in coal, and in transport. They should have shown how they were going to rehabilitate the industry of the country and equip it in the most up-to-date fashion. They should have shown, in addition, how every year we were going to proceed from a poverty basis of life for the workers on to a basis of plenty; how the unfortunate, the unemployed, the aged, the sick, the widows, the people with dependent children, should have the full support of the State behind them and how the workers actually engaged in industry should be assured of a definite living income. Those plans should have been produced, should have been tabled, should have been worked on from week to week, fearlessly, and the political consequence faced, confronted, fought out.
To-day we find ourselves confronted with this—that we are producing a purely opportunist Budget, its guiding principle the stabilisation of the capitalist system of society and its object to provide' the capitalist glass with the opportunity of becoming richer and more powerful. I enter my strongest dissent, and I hope that in the course of these discussions many of my colleagues will express themselves, to the same effect. in more detail and in stronger language.
§ Brigadier-General Sir HENRY CROFT
I am sure the Committee has listened to the speech of the hon. Member for Bridgeton (Mr. Maxton) with a great deal of interest. We are quite certain that he is speaking sincerely of tho Government's policy. In fact his speech is that which nine out of every 10 hon. Members opposite would have delivered on the platforms during the General 2786 Election. I think most hon. Gentlemen on this side have a considerable amount of sympathy with the hon. Member, believing that he has been betrayed by those who sit on his own Front Bench. They made promises which raised great hopes among hon. Members opposite, and one can understand the disastrous state of depression in which the hon. Member for Bridgeton now finds himself.
Before dealing with some points in the Budget statement, I wish to refer to the hon. Member's indictment regarding the removal of capital to Canada. Knowing the hon. Gentleman's extreme fairness in debate, I put this point to him. It may he that by your economic system you will drive a large number of people to endeavour to move their capital to foreign countries or to countries in the British Empire. Personally, I should like to see everything possible done to stop that proceeding, but does the hon. Member consider that it was immoral on the part of hundreds of thousands of workers to migrate from this country, to the British Empire overseas or to the United States, in order to improve their condition? Of course it was not. The truth of the matter was that they were in despair. The back of the camel was being broken, and though they loved their country they said, "We are going to move our capital, which is our labour, to other countries and save our homes. Nobody could condemn them; but it 2s no more true to say of those who try to shelter their worldly possessions in the British Empire that they are engaging in an immoral transaction.
§ Sir H. CROFT
I do not wish to be interrupted. I only ask that that fact should be borne in mind. There may come a point in the life of any country at which taxation becomes so vicious, and conditions so hard, that people of all classes, however much they may hate to do so, will be driven to leave the shores of that country; and that, as I see it, is the great danger involved in the Budget statement. The Chancellor of the Exchequer has informed us that the McKenna Duties and the Silk Duties are to stay for the year. From a party point of view, I suppose, some may deplore that decision, but from a national point of view I think we must 2787 all feel a great sense of relief. I think that the vast majority, even of the party opposite, were already beginning to realise the disastrous effects to many of their countrymen which would follow the removal of those Duties. I regret, however, that the Chancellor of the Exchequer announced the decision in such vague language that the uncertainty which has been prevailing in those industries will continue. Everybody knows the serious effects of that uncertainty during the past year and the Chancellor of the Exchequer is continuing it for another year. The sword of Damocles is still hanging over those industries. The right hon. Gentleman overlooks the fact that the motor industry is already planning its sales for 1931 and by leaving them in this state of uncertainty, he is prolonging the difficulties with which that industry has had to contend during the past year.
The second point to which I wish to refer is that the Chancellor of the Exchequer, while allowing the McKenna. Duties to remain, proposes that all Safeguarding Duties should lapse at the end of their time. It is remarkable that the right hon. Gentleman should allow the McKenna Duties to stay—because some of those industries might he able to carry on without the Duties although not so successfully as at present—while he is singling out for the removal of Duties the very industries which were specially proved to be suffering from such severe competition that they could not live without Safeguarding and which, in many cases, would have perished but for the advent of Safeguarding. It is to be remembered that each of these safeguarded industries had to prove its case and go through a very elaborate sifting procedure, and yet the Chancellor of the Exchequer, for months past, has ignored the appeals made both by employers and workers in this connection. Only last week a Socialist Member of Parliament presented to the Prime Minister a petition signed by 12,861 workers in the lace trade and in addition to that, some 380 embroidery workers and 800 lace workers in the Tiverton area signed similar petitions. These petitions represent the vast majority of the workers in the lace industry and they implored the Government to save the industry from disaster.
2788 No notice has been taken of three appeals coming from those who supported hon. Gentlemen opposite and assisted them to obtain so many seats at the last Election. In the petition of these woi kers, they state:We feel that the industry is drifting to a position front which recovery is impossible.Here we have 14 trade unions, all urging the Prime Minister, at least, to stay this action and urging the Chancellor of the Exchequer to put their case to a committee before subjecting them once more to a flood of competition from countries in which they declance the wages are only from 60 per cent. to 50 per cent. of those paid in this country. When I mentioned the extraordinary success of the Nottingham lace industry in overcoming its difficulties, and increashing its production during the last 1. ve years, I said that it was astonishing that the Chancellor of the Exchequer should have given no reason whatever—unless it be his recent friendship with the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George)—for abandoning this Duty ant subjecting this large number of workers, their wives and dependents to all the miseries which must inevitably follow. I am sorry that the Liberal party, who appear to be considering the situation again, are not here. I wonder what the leader of the Liberal party thieks about this matter. I understand that there is going to be a new organisation shortly and that he is going to write a slogan which is to attract, or to lure numbers of weak-kneed Members of the party opposite into the same fold as himself. I wonder if the slogan could not be somewhat prolonged, so as to read as follows:If production is to be maintained at the highest limit at home, socuriv must be given against the unfair competition to which our industries may he subjected by the dumping of goods produced abroad and sold in our markets below the actual cost of production.That was from the speech of the right hon. Member for Carnarvon Boroughs to the electors in 1918, and if that does not exactly fo, the situation 6.0 p.m. for the lace workers and the lace trade of ibis country, I am surprised. I recommend that some such foundation as that would prove very effective for the building up of the new organisation. 2789 As the Chancellor is not present now—and we all realise the fatigue to which he has been subjected, and do not complain of his temporary absence—I wonder if the Financial Secretary to the Treasury will answer a few questions. In taking this course of allowing the Safeguarding Duties to lapse, can he tell me if there is any reason for it? Is it a question of price? If so, is he aware that in every single safeguarded industry, except one, and that the least important, the price of the products has actually gone down? Is it a question of production? If so, does he not realise that production in every case shows a very marked increase, and in several cases actually an increase of 100 per cent. in five years? Is it a question of efficiency? Can he claim that there is a single one of these industries which has not increased its efficiency, which has not modernised its machinery, which has not extended its plant? Is it a question of employment? Can he deny that taking it all round, there has been an enormous increase in employment in the industries concerned?
Is it because there is an effect on any other industry? There is only one case I have ever heard quoted, and that was the case of wrapping paper, and it was said that Mr. Cadbury and Mr. Rowntree would have to wrap their chocolates in more expensive paper than before. But the answer given to me at Question Time to-day is conclusive. The President of the Board of Trade informed me that the price of wrapping paper had gone down. Not only so, but that it had gone down very considerably in home prices, and that even the foreign competitors had reduced the price by £2 per ton and were paying a large proportion of this duty before entering our markets. I make these requests seriously. The livelihood of thousands of our countrymen is at stake, and I want the hon. Gentleman to give an answer to all or any of these questions.
Finally, is it a question of exports? I know the hon. Gentleman has often been very much concerned with this question, and I think I have heard him make speeches, saying that if you give security to your home industries, you will be decreasing your exports. I wonder if this fact is known to him, that since the duties were reimposed in these various safe- 2790 guarded trades there has been a complete change in the picture with regard to the balance of trade in these safeguarded articles. It is a very astounding fact that, taking 1925 as being the first year when the duties were imposed, compared with 1929, we find that taking all the Safeguarding and McKenna and Silk Duties—
§ Sir H. CROFT
That is the way in which hon. Members opposite treat this question, but if he denies for one moment that the Chancellor of the Exchequer has stated that the McKenna Duties and the Silk Duties have a protective effect—
§ Sir H. CROFT
Then I cannot see the sense of his interruption. In these few years we find that the imports of goods which are now safeguarded in this country have decreased by 38.9 per cent., and in the same time the exports of these goods have increased by 18 per cent. The hon. Gentleman smiles again, and I am very glad to see him so happy over the position. We, on this side, are extremely happy, too. If you take non-safeguarded goods, those which have not some form of protection, you find that their imports into this country have increased by 19.5 per cent—these are manufactures—in the same period, and that their exports have actually gone down. I am sorry to weary the Committee with these facts, but if you take the results of safeguarding, the Adverse balance on safeguarded goods was £4,119,000 for the first two months of 1925, and that has been converted into a favourable balance of £643,000 for the first two months of 1930—a very remarkable fact, showing that our exports of safeguarded goods have gone up just as our imports of safeguarded goods have gone down.
Yesterday's speech by the Chancellor of the Exchequer disclosed a prolonged attack, intentionally or not, upon British industry, because whatever the right hon. Gentleman may like to say, these taxes must all fall inevitably upon industrial 2791 produce in this country. He made a remarkable wireless speech to the United States of America, when he told that country of the colossal burden of taxation on this country. He told them that it was far higher than in any other country in the world, but he has greatly increased this burden, and there will be an immediate reaction on every industry. I am old enough to remember the great fight over the so-called People's Budget of 1909–10. Nobody knew quite why it was called that at the time, but it was discovered afterwards that the reason was that all the people suffered from it. At any rate, at that time the Chancellor of the Exchequer made a remarkable speech, in which he said that all taxation ultimately falls upon the shoulders of the working class. I do not know whether he has forgotten that, and I am afraid that those who sit behind him apparently do not appreciate the importance of that fact. We have recently read a very remarkable document in the form of a report by a sub-committee of the General Federation of Trade Unions on the effect of taxes and prices, and there were some very remarkable passages in that Report. I would remind the Committee of this one:However desirable it may be to secure fairer distributions of wealth, it is fatal to national prosperity to eat up that capital which is necessary to finance present and future production.Who can deny that under this Budget we are going furtherto eat up that capital which is necessary to finance present and future production?Then again the Chancellor of the Exchequer, speaking at Keighley last year, said:Trade revival is vitally dependent on capital saving and capital development …Lack of savings was greatly hindering the trade recovery of Great Britain.That, I think, was as clear as anyone on these Benches would desire, but hon. Members opposite, who seem to laugh at the subject, ask, What is 6d. on the Income Tax? What is an extra ls. on the Super-tax? It is well known, or it ought to be, to everyone who has made a study of conditions in this country, that at the present time there is a very large number of persons who are living upon the narrowest margin that you can imagine. I am speaking of the direct taxpayer. I know that hon. Members 2792 opposite will have very little sympathy with what I am saying, but in my constituency alone I can think of thousands of persons who can just afford two or three employes in their service. Does anyone deny that this Budget is going to make all the difference, ane that many of them will undoubtedly havi to do with one employe less than before, and that that is going to have a very serious effect and reaction again on the whole of the employment question in this country? Reading from this same trade un on Report, I find this statement:Resentment engendered by the taxes not only induces extravagance at home, but leads many of these, attracted also by prospects of greater personal liberties and cheaper pleasures, to spend Heir holidays and their money abroad, in this way adding to the prosperity and capital itoeumulations of competitive countries.That is perfectly true, and everybody who is aware of these facts at all knows that there are very large numbers of the population at present who are saying, "Can I manage to continue Jiving at all in the same set of circumstances as before, and shall I not be driven to seek residence in some cheaper part of the world, where there is not this high taxation and where I can just get on with my income?" That is an absolute fact. We do not want to see that happening, but it is happening, and we want to stay it.
I was glad to hear the speech of my right hon. Friend the Member for Epping (Mr. Churchill), which I thought was a speech of great courage, which told the absolute truth on this question; and I want to say a word about. the case of the very rich man. I know it is not popular to get up on a platform in this country and, I will not say to defend the very rich man, but to resist this fcrm of taxation, but I have no hesitation in saying that what this country needs is a far greater number of those who have great accumulated wealth. If you could persuade 2,000 millionaires to come and live in this country from the United States of America on your basis of t ixation and Death Duties of last year, you would wipe off your National Dobs before all of us had passed. away. Es it not realised that the man of great wealth is contributing far more of has share of wealth in taxation than those who are less fortunately situated? When hon. 2793 Members get up and cheer words like "the idle rich," I would like them to Quote to me the idle rich who amass these great fortunes. Who are the men who have made them?
§ Sir H. CROFT
The hon. Member speaks of one individual. I dare say he is not aware of the extraordinary development work which the Duke of Westminster has carried out in South Africa. He probably knows nothing about it, or he would not have made that remark. Tie does not know of the Duke's great gallantry in many circumstances of warfare, and that he has risked his life in the most gallant, acts and has won the admiration of all who know him.
§ Sir H. CROFT
Is that a crime? When the hon. Member attacks his Grace or anyone else., he forge,ts that that money is undoubtedly to a very large extent invested in productive industry here, and that the moment you dry up such sources, that moment your country must inevitably decline. What about Lord Cowdray, the Cadburys, the Rowntrees, the Leverhulmes? All these names are those of men who have built up great constructive businesses and have given employment to thousands of their fellow countrymen, and when people talk about the idle rich, I say it is idle nonsense. We should get rid of that kind of talk and get down to realities with regard to what wealth means in relation to employment.
I know it is considered bad taste ever to talk about your own affairs here, but in America you can travel in a railway train, and before you have gone a quarter of an hour you find that the man beside you and the man in the corner have told you what they are worth. I sometimes think that, owing to the modesty of the Englishman, people do not realise the effects of taxation or how wealth is used. I am only a minor individual compared with the great men whose names I have mentioned, but I suppose that hon. Gentlemen opposite might say that a large proportion of 2794 what I possess was inherited. It was; it was made by my grandfather and my father, and was augmented by my brother and myself, but during these three generations we have paid £1,000,000 in wages to workers. I have never employed fewer than 150 to 200 individuals. I am not a. rich man; I have never drawn out of my business more than 5 per cent. as an average. I have done something also, I hope, to develop certain waste places of the British Empire, and I am bringing products into this country.
My case is not unusual. If you average the invested money of the average individual in this country, and work out the interest after allowing for the passing of dividends and the liquidation of certain concerns in which he may be interested, it works out at not more than 6 per cent. A rich man who has done wonderful things in developing institutions in this country spoke to me the other day, and I asked him if he were putting a large sum of money into a certain concern. He said, "I amgetting old. If it fails, I shall lose everything, and if it succeeds, the Government will take 15s. in the of what I make out of it. What is the inducement for me to venture my money into industry, as long as taxation is on that level? Would it not be better to make a certain 6 or 7 per cent. in foreign bonds?" Once you turn the peak of taxation, you defeat patriotism and drive people to say, "If my Government are going to put this burden on me, I am going to invest my money in foreign countries."
The right hon. Member for Epping boldly told us that the Government could have raised a considerable amount of revenue if they had extended the duties which were so successfully experimented with during the last Parliament. There is no doubt that a Chancellor with the courage could have avoided any increased taxation this year, and could have reduced Income Tax by 1s. next year, 1s. the following year and 6d. the year after, if only he would have had the determination not to go on taxing his fellow countrymen, but to make the foreigner pay a fair market toll for the right of entry into this country. The intellectuals of the Free Trade movement are now confronted with only one difficulty. They see the great start that 2795 Britain had in the struggle for world supremacy, and they point the moral with figures. The right hon. Gentleman the Member for Carnarvon Boroughs and the Chancellor of the Exchequer, and even the right hon. Gentleman the Member for Epping a year or two ago, were impressed with the same argument. They said, "Free Trade must be best because we still have the greatest exports per head of the population." It was true a few years ago.
I want the Committee to consider these remarkable facts. If you take the percentage increase of exports of manufactures per head of the population in 1913, as compared with 1929, you find that the United Kingdom increased her exports per head of the population by 26.7 per cent.; France, by 46.5 per cent.; Germany, by 54.2 per cent.; and the United States, by 115.8 per cent. These are truly remarkable figures, but I am sure that the right hon. Gentleman will say, "Yes, but what does that actually represent in figures? We Free Traders never like percentages." The actual increase per head of the population for the United Kingdom was £2 8s. 9d.; Germany, £2 12s. 11d.; and the United States, £2 19s. 3d. These remarkable facts show that the argument based on the figures per head of the population falls to the ground. The right hon. Gentleman, however, may say, "What were the total figures?" It is no use taking a short period of years, so I take the period from 1880 to the present time In 1880, we exported £42,000,000 worth more manufactured goods than France and Germany combined. In 1929 France and Germany exported £171,000,000 worth more manufactured goods than the United Kingdom. That is a remarkable transition. It is unfair to take the earlier year for the United States, which is a new country, so I take the year 1913. In that year she exported £171,000,000 less manufactured goods than the United Kingdom, while in 1929 she exported £107,000,000 more than the United Kingdom, showing a complete reversal in that short period.
This surely gives the answer to our difficulties. We rely on our export trade; we have to get our export trade going. We have nothing to fear from improving the conditions of production in this 2796 country and allowing our manufacturers to produce more cheaply. It is a remarkable fact that not a single word in the whole of the Chancellor's speech referred to any measure for improving inter-Imperial trade. On the contrary, the right hon. Gentleman announced that he was going to get rid, if he could, of all the preferential duties in existence. Is it realised that the British Empire last year had double the foreign trade of the United States of America? Is it realised that the overseas trade of the Empire last year was bigger than that of the whole of Europe? When we have this vast unit to think of, how strange it is that there is not one single proposal to extend our export trade to the Dominions overseas. It would be out of place to go into a discussion of policy, but if we could transfer a large part of the £1,300,000,000 worth of goods and produce which the British Empire is at present buying from the foreigner to our own soil and factories, and to the soil and factories of the Dominions, we would at one blow get rid of unemployment in this country and in the cities of the Empire; and we would restore our national finances to that state in which all parties desire to see the state which brings confidence to the industries and people of the land.
§ Mr. STEPHEN
I do not intend to follow the hon. and gallant Baronet the Member for Bournemouth (Sir H. Croft), except to say that one admires the perseverance with which he presses his view in regard to the development of protective duties; but, perhaps, when he has been able to persuade the right hon. Member for Hastings (Lord E. Percy) and others to accept his views, some of us may be inclined to follow him.
§ Mr. STEPHEN
I have had a good deal of experience in the propaganda of the Independent Labour Party in the country, and I find that ore of the pleasures that one gets is to meet with enthusiastic Socialists in every part of the country and to hear them say how they have waited for the coning of the day when "Philip" would introduce his Budget. When you ten them that it would not be his first Budget, and that he introduced one in 1924, they say, 2797 "Yes, but he came in at the beginning of the year, and he had to take so much that was left over; so many of the Estimates had been made up." This year, however, we came into power after the election in May, and consequently these veterans of the party felt that their expectations would be realised. Some of us came into conflict with the Government on the question of the development of the pension system and unemployment insurance. As propagandists, one found a certain amount of impatience with the position which we were taking up, because it was felt that we ought to wait until "Philip's Budget," when everything would be all right.
Now we have had "Philip's Budget," and I do not know whether these veterans in the Socialist movement will be in a position to utter their Nunc Dimittis. I am extremely disappointed with it. I was not as sanguine as some of the veterans in our movement, but I am disappointed, because it is more inadequate than I conceived to be possible. The Chancellor of the Exchequer has said that the Budget may be used as an instrument of social reform. I cannot see, however, that this Budget is in any way such an instrument. The Chancellor of the Exchequer made a speech in Plymouth, which was reported in the "Western Morning News" of 28th January, 1928. In this he pointed out with regard to the Income Tax:To-day you Income Tax payers, remember, every penny raised by Income Tax, Super-tax and Death Duties is taken for the service of the National Debt, and all the other expenses of tlhe Army, Navy and Air Force, education, old age pensions, public health and the cost of Civil Services has to be met out of indirect taxation, and four-fifths of indirect taxation is paid by the wage-earning classes of the country.All the five-fifths of this indirect taxation goes for the maintenance of the Navy, Army and Air Force, educational services, old age pensions, etc., and I want to ask what the working class, who contribute so much of the cost of the upkeep of all these Services, get out of it. What are the people in the industrial districts getting out of this great expenditure for which they have to find the money? For instance, in the woollen industry the workers who are locked out because they will not accept a reduction in their wages, have this comfort, that 2798 they have this great Army and Navy and Air Force to protect them, but if they were to call upon those Services to protect them against the reduction of wages there would be nothing for them. It is an extraordinary position of things.
I would like the Committee to allow me to put some facts before them regarding the condition of the two nations in this country, as they were described by the great apostle of the Conservative party, the rich nation and the poor nation. If one turns to the Abstract of Labour Statistics one finds that wage rates during 1925 showed a weekly reduction of £78,000 on the average. In 1926, a most extraordinary thing, there was an increase in the wage rates of the workers—a small weekly sum of £49,000. I, myself, have wondered whether in that year 1926 the rich nation were afraid that the poor nation would sweep them away, and therefore did not press wage reductions in industries, other than the coal industry, in a way that they otherwise might have done. But in 1927 the possessing classes had evidently taken courage, and again there is a wage reduction amounting to an average of £375,000 per week. In 1928—taking other figures which I have been able to get—I find that the weekly average of the reduction of wages is £142,000. In 1929 there is a weekly average reduction of £79,500. Since the Labour Government were in office in 1924, with the exception of that year which seems to the former Chancellor of the Exchequer to have been so disastrous a year for industry, there bas been a reduction of wages every year, and consequently a reduction of the purchasing power of the working class. [An HON. MEMBER: "The cost of living came down."] I will deal with that matter.
I turn to the report of the Commissioners of Inland Revenue, and find that the wage earnings which came under review by them in 1924 amounted to £371,000,000, but in 1928 the figure was down to £335,000,000, a reduction of £36,000,000 in the income enjoyed by those wage earners who are sufficiently fortunate to come under review by the Commissioners of Inland Revenue. If one were to take the unemployment figure of 1924 as 100, in 1929 we should have a corresponding figure of 107.6. Therefore, during those years we have had a reduction in the wages of the working class 2799 and also an increase in unemployment. The figures with regard to Poor Law relief are also worth putting before the Committee. According to the Statistical Abstract the number of persons relieved on one day in January, 1925, was 1,418,402, and in 1929 there was a rise to 1,461,722. From whatever aspect we regard the life of the working class we find this constant reduction in their standard of life, increasing poverty and increasing difficulties.
As against that I wish to put the position of many people who are more directly affected by the Budget. Take the gross income, excluding weekly wage earnings, reviewed by the Commissioners of Inland Revenue—taking the figures from the 72nd Report. In 1924 the gross income reviewed amounted to £2,599,000,000, and in 1928 to £2,765,000,000, an increase of more than £160,000,000. While the one nation has been getting poorer the other nation has been getting richer. [Interruption.] The cost of living was referred to by an hon. Member opposite, and an hon. Friend behind me reminds me that the cost of living went down for these people also. But I will deal with that later in connection with some other figures.
In the matter of taxation we ought to see what is the condition of the people and exactly where the burden should fall. I look again at the industrial classes, to try to see if one can find an improvement in their condition from any other source. According to the Statistical Abstract, we are told that the deposits in the Post Office Savings Bank at 31st December, 1924,, amounted to £280,373,433. At the same date in 1928 the figure was £288,619,186. One might he inclined to feel a certain amount of hope, seeing that the deposits in the Savings Bank had increased, but from the annual report of the Savings Bank Trustee I find that the deposits in the former year amounted to £82,284,550, but in 1928 had gone down to £79,331,252.
§ Mr. STEPHEN
As regards savings certificates, the figure in 1924 was £366,138,685, but in 1928 it had gone down to £361,238,312. Taking all those figures, 2800 I find that, comparing 1924 with 1928,, there was a total in the am case of £728,796,668 and in the other of £729,188,650. Therefore, those savings are practically stationary, and would show that the working people were as badly off in 1928. A former Financial Secretary to the Treasury asked me to consider the figures of building societies. I have not got those figures, but I have no doubt they would show a similar state of affairs to those I have described.
§ Mr. STEPHEN
That may be quite true. I will look into the ftgeres to see if the working class are depositing money in building societies instead of in the Savings Bank. A right hon. Gentleman has suggested that much better off people put their money into building societies to-day, and I think that is very probable. Every financial disaster, such as the Hatay scandal, tends to send a certain number of more conservative and more timid investors into building society securities.
Here I have some figures showing the other side of the picture. I think they are really important. I take them from the "Economist." I find that the monthly average of new capital raised in London in 1924 was about?£17,500,000, whereas in the first three months of this year it was £31,000,000. Then there are the figures of the London clearing, banks, which I take from the Statistical Abstract and from the accounts. I find that the amount in current, deposit and other accounts in the fourth quarter of 1924 amounted to £1,678.9 millions, and in December, 1929, the figure had gone up to £1,810.7 millions, again a tremendous increase. An hon. Member spoke about the fall of prices. This big increase in these deposit and other accounts, taking the wholesale prices into account, would really he about 25 per cent. more, if there were a strict comparison. I take one other illustration showing the development of the motor industry, and my figures are taken from the Statistical Abstract. Dealing with the number of motor cars and she number of licences, I find that on 31st March, 1924, the total was 473,528. On 31st August, 1929, the total had more than doubled, being 980,886.
§ Mr. STEPHEN
The hon. Member asks me if the buying of motor cars does not provide employment. If you set fire to this building, and you had to put another one in its place, it would provide employment. I do not know whether the hon. and gallant Member would seek to have a bonfire here in order to carry out his policy. I have shown that, as far as the working classes are concerned, there has been a reduction in the standard of life, and that as far as the richer section of the community are concerned, their progress has been just as great for a number of years past, and their wealth has continued to increase. During the years that the Conservative Government were in office they set themselves to improve the conditions of the people for whom they have always shown the most interest. The Conservative Government reduced the Income Tax and gave reductions in the Income Tax to 4,500,000 people, which meant a relief of £41,000,000 per annum. In the case of Supertax payers 95,000 persons were relieved to the extent of £10,000,000 per annum, and those two reductions amounted to £51,000,000 per annum in reduced taxation.
The former Chancellor of the Exchequer believes that that is the best way to benefit the people generally, and be claims that this money, being kept in the possession of those people, has a tendency to increase employment. I remember that when the former Chancellor of the Exchequer introduced one of his Budgets he referred to the reduction of the Super-tax and how he looked to that additional money being placed at the disposal of the Super-tax payer to find its way into investments in industry that would employ a larger number of people. That is a definite point of view, but it is a view that many millions of people would not have at the General Election. That was the point of view put forward by the Conservative party at the last election, but quite the opposite point of view was put forward by the Labour party. The Labour party at the last election said that the. Tories had been giving public money to benefit their rich friends, and that if Labour came into office they would see that, in the future, 2802 the great mass of the working classes would get the benefit.
That point of view was put before the country. [Interruption.] If hon. Members will allow me to proceed, they will find that they are in agreement with me. I am simply stating the facts. If hon. Members question my figures or my state ment then it is quite a different matter. I am putting forward the Conservative view at the last election which was that the burden of taxation in this country, pressing upon the richer taxpayers, had the effect of hindering the development of industry, and was bad for employment generally; whereas the Labour party said in the country that what was specifically wrong was that there was far too much wealth in the possession of a comparatively small section of people, and that what was more necessary than anything else was to increase the purchasing power of the masses of the people. The Labour party are in office to-day as the result of millions of people in this country accepting that thesis.
§ Mr. LOUIS SMITH
More people voted for the Conservative party at the last election than voted for the Labour party.
§ Mr. STEPHEN
I am not aware of that. I am aware that more people voted for the combined Conservative and Liberal parties. [HON. MEMBERS: "No!"] I am not concerned with that. I know that there was a sufficient number of people on the present basis of representation to return a sufficient number of Members to this House to put a Labour Government in office. The point with which I am dealing is whether the Labour Government are carrying out the policy which they were elected to carry out. There are a number of liabilities relating to additional expenditure which the present Government have accepted. A few millions are required in connection with the widows' and orphans' pensions scheme, and about £14,000,000 is required under the Unemployment Insurance Act. The larger part of that £14,000,000 is required to pay off a debt which was allowed to accrue under the transitional periods by the former Government, and this has added to the burden of the debt. So far as the people of this country are concerned, the amount of benefit to the working classes 2803 represented in this Budget is that which relates to widows' pensions, and that is simply a transference from the Poor Law to this particular charge. I admit that there is a certain amount of benefit to a section of the unemployed, but that is a comparatively small amount of the total. That is my quarrel with the Chancellor of the Exchequer so far as this Budget is concerned.
§ Whereupon, the GENTLEMAN USHER OF 1HE BLACK Ron being come with a Message, the. CHAIRMAN left the Chair.