HC Deb 30 November 1964 vol 703 cc37-117

Question proposed, That the Clause stand part of the Bill.

The Chairman

Before I call the right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray), may I take the opportunity, which I welcome, of paying tribute to him, on behalf of the Committee, for the able, devoted and distinguished services which he rendered as Chairman of Ways and Means throughout the last Parliament. Sir William Anstruther-Gray.

Hon. Members

Hear, hear.

Sir William Anstruther-Gray (Berwick and East Lothian)

I thank you for those very kind remarks, Dr. King. You make me all too conscious of the fact that, going back for a period of five years, this is a maiden speech for me to make.

I wish to draw to the attention of the Chancellor of the Exchequer a point which is far-reaching in its consequences. It is the effect, as I see it, of the increase in the standard rate of taxation on the brain drain of the most able young men in the country who, in many cases, are going overseas to complete their industrial training.

I had a letter only this morning from a friend of mine who is studying at the Institute of Advanced Technology at Boston, Massachusetts. This is what he says: What worries me for the long term is to see over here the large numbers of British students at places like this and at Harvard who are swiftly becoming completely fed up with the idea of returning to Britain ever. From their point of view, why should they? They can expect to be earning up to £10,000 a year without having all of it taken away in tax. The cost of living, unless you spend all you earn going to theatres and restaurants, is in fact no higher here than at home, and they can earn a very decent salary if they stay on in education. We ourselves will come back, but an awful lot of people who ought to be in Britain will stay out here, and I am sure that we have got to attract these people back to Britain instead of keeping them away. The demand for the limited number of people with the Ph.D degree greatly exceeds the supply, and we will have to recognise eventually that a man's brains are the easiest and the deadliest capital export that our country can possibly make. I am so glad to see the Chancellor of Exchequer nodding at that. I am sure that he has got the point. I need not underline it further, but do let him, please, when considering Budgets, take note of it and not raise too lightly the general standard rate of Income Tax.

Dr. Jeremy Bray (Middlesbrough, West)

I intervene only to answer the point made so eloquently by the right hon. Gentleman the Member for Berwick and East Lothian (Sir W. Anstruther-Gray). As, perhaps, rather more belonging to the category of persons involved in this, I am quite persuaded that this is not an important influence on the brain drain. Nor is it an important influence on the use of these people in the British economy. Rather, this class of person is being exploited by hon. Gentlemen opposite, who know very well that it affects far more greatly members of the public who are paid vastly more than scientists and engineers in Britain.

This is a matter where the people concerned must be given opportunity to use their special abilities, and certainly they must get the rewards, but the rewards to this kind of person depend primarily on their rate of promotion, on the rate of expansion of industry. It is to secure this that this Committee is now seeking to put through a Finance Bill to make sure that that expansion does continue, instead of being throttled in the way in which it was under the previous Government.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

I am very pleased to see sitting on the Government Front Bench the three Treasury Ministers, because I remember that all of them have been rather eloquent about the disadvantages of a high Income Tax. I think that the Chief Secretary went to great lengths, one or two Budgets ago, to assure us that the basis of taxation was too narrow and that the rates were too high. That was before this new rate which his right hon. Friend the Chancellor has brought in. I am bound to say that, though I had expected to disagree with the right hon. Gentleman on most of his measures, I did not expect that on Income Tax his views would change so quickly as they evidently have done.

The basis which the right hon. Gentleman, in his Budget speech, claimed for the prospective rise in Income Tax—and I shall be coming back to the word "prospective" later—was that it was to be a measure of social justice in paying for pension benefits which were also foreshadowed in that speech. What I should like to look at rather closer is how far these matters were directly allied.

One of the things which is too often slurred over, but which we cannot make too clear, is that of the 6 million people of pensionable age who will benefit from the proposed legislation l½ million who are the neediest and depend on the National Assistance Board to reinforce their pensions will not themselves directly benefit from the pension proposals. They will eventually benefit through the Assistance Board proposals. If it was a matter of raising the Board's scales—and I for one would not argue about that; no one who lives in political life can fail to appreciate how very deeply poverty bites in that section of our population—the actual cost of raising the scales is the relatively modest sum of £23 million.

If we add to that the prescription charges, which will cost another £22 million, it would appear to be £45 million which has to be raised to keep the amount of funds at public disposal, roughly speaking, level with what it was before the changes were made. Then we also have the petrol duty, which is to raise £93 million. Therefore, it seems to me at first glance that the £93 million petrol duty is more than enough to cover the actual payments to those in need and the amount of the prescription charges which the right hon. and hon. Gentlemen opposite did not put in their election address and have hurried to carry out.

So it does seem to me that we are engaged on a deflationary spiral, and, while it is entirely a matter for the right hon. Gentleman and his colleagues to decide whether they want to do that or not—they are in the position of giving the orders—I would say they were not brought forward in any way as an avowed and deliberate act of deflation; rather the Government obscured the position by indicating that the proceeds of the imports surcharge of £200 million would be taken as inflating the economy to that extent.

I really wonder how far this is an accurate assessment. After all, this is not a revenue duty, this £200 million; it is a duty to discourage imports, and we really have no idea how much of it will be carried out by what companies spend abroad, or how it will result, and to what extent, in reducing prices for our exports, and we do not know how much we shall save as the result of it in the imports world. We shall have a chance of discussing it at considerable length in the next two or three days.

It would seem to me quite fanciful to put the figure at more than the extra purchasing power going into the economy as the result of the pensions and assistance proposals, whereas, on the other side, it would seem that the export rebate of £75 million is going into the coffers of companies which, in most cases, have done their exporting and are, therefore, getting £75 million extra. I think that one could add it up and say that the £75 million represents the amount of the Assistance Board scales and the prescription charges. I really wonder why it is necessary to increase the Income Tax, and particularly to increase it in advance.

If one studies the population statistics, as I recently had the opportunity of doing, one finds the very surprising and interesting fact that the number of children in this country is growing—due, no doubt, to 13 years of life under Conservatism—and the number of old people is increasing because, of course, of the improved medical care for which we can also take the credit; but the working population is continuously being diminished.

4.0 p.m.

The figures in the Registrar-General's Statistical Review of England and Wales for 1962 are very striking. As of now, the under-15s represent 22.6 per cent. of our population, and the people normally retired from work, that is to say, men over 65 and women over 60, 14.9 per cent., making a total of 37.5 per cent. The working population, therefore, represents 62.5 per cent., or, to put it another way, the ratio of the working population to dependants is 5 to 3.

I do not particularly want to inflict all these statistics on the Committee, but they are all in the Registrar-General's Review. According to his forecast, in 1967—which is not very far off—the proportions will have grown to 38.8 per cent. for dependants, to 61.2 per cent. for the working population. In other words, the proportion of the working population to dependants will be about 3 to 2, which means that every person at work will be responsible for two-thirds of a dependant. By 1972, the proportion of dependants will have risen to 40.4 per cent. This is not allowing for the effect of the increase in the school-leaving age. My suspicion, therefore, is that by 1972 the proportion of dependants to working population will be rather more than 2 to 3.

This is a continuing tendency. Why is it necessary, therefore, to fasten round the necks of the productive part of our population this extra impost and extra discouragement? Let us not forget that the cost of the pensions increases, in the stamp alone, will be 5s. 3d. for every man in work, and 4s. 7d. for every woman. These are direct burdens on people who are doing the work and producing the goods by which we live and which we hope to export.

These direct burdens which are being fastened on them have a largely illusory benefit. It is largely illusory, because this will not directly benefit the poorest part of the population. No one is so hardhearted as to say that it is not right that the 6 million taxpayers who are to bear the tax should not be willing to pay tax to benefit the 1½ million people who are really in need—I think that we as a country accept that—but what I say most inequivocally is that a tax on everybody who is at work for the benefit of 4½ million people who are not themselves of the neediest is a tax at which we ought to look very carefully indeed.

The Chancellor of the Exchequer said in his Budget statement that he intended to avoid any retrospection in his legislation, but I wondered whether he did not indulge a little too much in a policy of prospection. I cannot help feeling that adumbrating and imposing taxation in advance—as I think he has learnt over the last 10 days—can have severe disadvantages indeed. This is not the time and place to make more of that point, but it is clear that over the last fortnight what we have been suffering from is not too little information, but too much information, and too much misleading information.

The tax rate which it is proposed to impose will not be effective until April, 1965, always supposing that there is not a General Election before then. I do not know whether the right hon. Gentleman will then think it appropriate to reduce or increase that tax. I cannot understand how he is in a position to fix that rate firmly for April of next year, when the whole economic situation is in its present state of mistiness, and when the proposals which he has adumbrated are in such vague terms, and I doubt whether his reasons for imposing this tax are purely economic at all.

As Chancellor of the Exchequer, it is his duty to impose taxes to meet our economic requirements. I do not consider—and I do not think the Committee would, either—that it is his duty to impose taxes for anything other than taxation reasons. I think that forecasting an Income Tax rate to be effective only from April of next year is going against the right hon. Gentleman's own principles, because he does not like higher Income Tax, and he has been very eloquent in telling us the faults of it. I think that he is giving one extra hostage to fortune. Over the last three weeks we have seen many massive hostages given to fortune. I hope that this is one which we might reconsider, and that my right hon. and hon. Friends will do their best to see that this tax is strangled here.

Sir Alexander Spearman (Scarborough and Whitby)

I do not take the view that because we are in opposition we ought automatically to attack everything the Government do, particularly as they give us so many legitimate opportunities of doing so. Therefore, I do not criticise them for raising taxes.

In spite of what right hon. Gentlemen said when they took office, and have repeated since, I believe that for some time there has been excessive pressure of demand, which has meant that imports have been sucked in, and exports have been diverted. In an open economy such as ours the first effect of excessive pressure is on the balance of payments, whereas in a closed economy the first effect is on prices. In the long run, it comes to the same thing. Since they have been in office the Government have done a good deal to increase the excessive pressure of demand. It seems to me, therefore, that they have to ensure that they spend less, or that industry spends less on equipment, or that consumers spend less.

Some of my hon. Friends may make the case that the Government need not have imposed this tax, because they could have saved the money by avoiding waste in their own Departments. I am sure that there is a good deal of waste in Government Departments. I think that this is inevitable with huge bureaucratic set-ups. This is one reason why so many of us are against nationalisation. However, I do not believe that it is practical to cut down Government expenditure, by getting rid of waste, sufficiently to deal with this situation.

We all agree that we do not want the social services to be cut. In recent years industrial investment has forged ahead, particularly as a result of the wise stimulation provided by my right hon. Friend the Member for Barnet (Mr. Maudling), and no one would want to see that cut back. Therefore, there has to be some cut in consumer expenditure.

If the Chancellor wants to reduce consumption for a time, why does he not tax spending rather than producing? We want to encourage production as much as possible. A Government in an authoritarian State can do almost everything except make people happy, but a Government in a free society must vigorously use both the stick of competition and the carrot of reward. This tax will penalise the very people whom we want to encourage to work harder.

The agreed object of us all is to raise the general standard of living. In the old days people took the view—it is now completely out of date—that that could be done by a redistribution of existing wealth. We now know that it is no good giving people extra money if the goods are not there for them to buy at a reasonable price. We know that the only way in which we can raise the standard of living and the standard of the social services is by raising the national income. That means stimulating production, and it demands a greater and not a lesser differentiation in rewards.

If there is one thing more than another which damages our chances of attaining our agreed object of raising the standard of living it is the Government's obsession with equality. I remember hearing Lord Waverley—then Sir John Anderson—make a most impressive speech, a long time ago. I do not believe that the Chancellor of the Exchequer was here. Lord Waverley put just what I want to say so infinitely better than I can put it that I want to quote from a speech he made on 24th October, 1945. He said: My study of the natural sciences has taught me that, in order that energy may expend itself in useful work it is necessary that there should be inequality—inequality of pressure, of temperature, of electrical potential. Unless you get inequality, no work is done. May not something similar be true in human affairs? May not equality, if we could achieve it, which we never shall, make for stagnation? … I would say … that economic inequality, from a national point of view, is not an evil thing but is positively good, subject to two conditions. The first is that the lowest level is not too low by whatever standard of human needs is judged reasonable. The second condition … is that the higher levels are attainable to all, as rewards of character, ability and enterprise".—(OFFICIAL REPORT, 24th October, 1945; Vol. 414, c. 2022–37.] I believe that Sir John Anderson, as he then was, was one of the wisest and greatest men who have been in this House for the past 25 years. What is more to the point, I believe that the last Labour Prime Minister and most of his closest colleagues would take that view. I ask the right hon. Gentleman to bear in mind that it is not always the hastiest traveller who arrives first.

Mr. Geoffrey Hirst (Shipley)

It is quite exciting to be able once again to take part in finance debates from this side of the House. For many years I have been an unlicensed rebel. I have now become entirely respectable, but I will not pursue that point. I agree with all the speeches which have been made from this side of the Committee. The point has been made admirably. I am, naturally, disappointed, Dr. King, that you were not able to select the Amendment in my name, but I may be able to refer to it in general terms on the Question, "That the Clause stand part of the Bill."

I support what was said by my right hon. Friend the Member for Berwick and East Lothian (Sir W. Anstruther-Gray). Contrary to what was put forward by the hon. Member for Middlesbrough, West (Dr. Bray), my right hon. Friend was absolutely right in saying that increased taxation of this character is a disincentive, in that it frustrates and makes fed up those in higher management and in science. It must add inevitably to the brain drain that we have heard so much about.

But its effects are felt lower down the scale. Admittedly, some of the people of whom we have been talking are well salaried, and are more interested in Surtax rates, but there are vast numbers of our people in the lower groups who are now fighting their way up—clever young men, with good degrees, who are coming along into the management classes, and into our professions and into science—who are earning rather less than the highest salaries. They are earning up to £2,500 a year.

4.15 p.m.

It is those people who feel very disturbed at the proposed alteration in the standard rate, which they were not warned about in the General Election. I know that many of these people in my constituency are very angry about it. The Conservative Party has been disappointing to some of them, and they thought that Labour, with its brave new world, would do better for them. Now their feelings have changed.

I do not want to say anything which may be regarded as sour grapes, provided that this situation can be put right. That is why, through my Amendment, I was attempting to find some way of touching on the problem. Although my Amendment has not been selected, I hope that the Chancellor will have something to say about this matter. The partial relief which I am advocating would help that very important element in our society of which I am speaking. The idea is that approximately the first £1,300 of taxable income should remain taxable at the old rate of 7s. 9d. in the £. They would pay the new rate of 8s. 3d. only on the income remaining after that.

I know it can be argued that the sum involved is not very great. That always can be argued. But if a little bit is added to another little bit, and so on, it acts as a disincentive and a discouragement, whereas we must encourage people to feel that if they achieve the promotions that we have been told about by hon. Members opposite they will not be penalised. They are being penalised, and that is why I deprecate the change in the rate. I am against it in general, but it would not be reasonable to go over the whole ground, much of which was done in the Second Reading debate. I wanted to refer particularly to one important sector of the economy where keen disappointment is felt. I can understand and sympathise with that disappointment.

I am glad that my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) is here. I hope that he will be able to say a word in this discussion. I am associated with him in another important matter which affects many people, namely, those who want to feel able—and it is a highly social and desirable thing that they should be able—to make some contribution to help their parents and elderly dependants. They are exactly the sort of people who will be hit by this provision.

I have had many associations with the Chancellor of the Exchequer in Finance Bill debates in recent years, and I hope that he will not disappoint me entirely today, otherwise, my smile will grow rather thin as the days and weeks go by.

Mr. Harold Lever (Manchester, Cheetham)

We can all say that our principles have come to a fairly close approximation, as expressed in general terms by hon. Members on both sides of the Committee. The difficulty is that when we consider the practical applications of those principles we reach different conclusions. The hon. Member for Scarborough and Whitby (Sir A. Spearman) pointed out that egalitarianism, or a tendency to equality by a redistribution of tax rates, led in the direction of stagnation. If egalitarianism leads to stagnation, the Conservative Party must have a considerable record in egalitarianism, certainly in recent years.

Are we to infer from that that once we have established rates of tax they are to be regarded as sacrosanct, and that there should be no readjustment of the burden as between one section of society and another? If the Labour Party has any purpose it is to redress the balance struck by purely economic means in the nation's allocation of the wealth which we produce.

In saying this, I do not dissent from the general proposition advanced by the hon. Member for Scarborough and Whitby that the road to greater wealth for us all is an increase in the total to be distributed, rather than an assessment of the correct redistribution of what exists at the moment, but I would point out that even a physical redistribution of our present wealth may play a part in creating greater wealth for all of us.

I venture to think that my right hon. Friend the Chancellor had that in mind when he produced this Income Tax change. What he was seeking to do was to see the trade union movement and the working people join with a Labour Government in seeking an incomes policy. He was seeking to have a fair- minded view in apportioning the national wealth and it was not going to be as one-sided a view in that apportionment as that of the Tory Government. One of the handicaps of that Government in getting a wages and an incomes policy was, of course, that the Tory Government were unable to wean or win the confidence of ordinary working people in the trade union movement.

Commander Anthony Courtney (Harrow, East)


Mr. Lever

If the hon. and gallant Gentleman wishes to intervene, I am always most generous in allowing interventions.

Commander Courtney

Is it not true that about 3 million people in the trade union movement are known to have voted for this side of the House?

Mr. Lever

Of course. That is why our task is to enlighten them and bring them to a true understanding. I happen to be one of those who do not believe in the one-party State and, therefore, it is perfectly natural that although I may not hold their view to be right, I do not altogether think that those who hold the contrary view are in the deepest pit of outer darkness. I am not in the least surprised by the well-known statistic which the hon. and gallant Gentleman quoted.

To go back to the real meat of the matter, it is that the majority of the trade union movement have not been satisfied by the action of the Conservative Government, that they have not sufficiently warranted confidence on their part to win from their own members the maximum support for an incomes policy. Now that the Conservative Party is in opposition it can indulge in the natural reflexes irresponsibility which has been so irritatingly held in check for the last 13 years. We wish to leave them in this condition for quite a number of years to come.

The right hon. Member for Barnet (Mr. Maudling) who, throughout his period of office has been, I hope with sincerity, urging an incomes policy, sits cheek by amicable jowl with the right hon. Member for Wolverhampton, South-West (Mr. Powell), who tells us that this policy is a fraud and dishonest, unattainable and in any case undesirable. I should like later to hear a little bit more about who is the true spokesman for the Conservative Party.

The Chairman

Order. If we did hear more about it, it would be quite out of order.

Mr. Lever

I hoped that I was in order, because what I wanted to say was that the reason for this Income Tax increase and for its earlier declaration in law was to show to the country as a whole that we mean to pursue our incomes policy with equity and fairness, which would be more encouraging to the majority of working folk in this land to accept the discipline of an incomes policy. I am not just quibbling for the sake of quibbling, or making a stick with which to beat the Conservative Party. I think this is relevant in deciding whether we agree to these increases, whether we think that this objective is a possible one.

If the right hon. Member for Wolverhampton, South-West is right, and the Conservative Government for the last several years are wrong, if an incomes policy is a fraud and a delusion, then we ought not to increase the Income Tax in this way perhaps, because that is one of the reasons for increasing it. I want to say in a sentence or two that I agree with what the right hon. Member for Barnet said when he was in a responsible position for several years in the last Government, that an incomes policy is possible. A perfect incomes policy has not been achieved so far, and I would agree with the right hon. Member for Wolverhampton, South-West that it is not likely that a perfect one will be achieved, not even under so perfect a Government as we are likely to develop. But the point is that there has been an incomes policy and that it has been effective to a certain degree, even under a Conservative Government, and had the trade union movement pushed to the limit of what it could have achieved in the way of wage increases from society, our economy and export position would be in a parlous situation—very different from the position we are in today.

Sir A. Spearman

Could the hon. Gentleman say where an incomes policy has worked? So far as I know, it has failed in every country in which it has been tried.

Mr. Lever

That is only so if we regard an incomes policy as something laid down from on high and followed with mathematical precision by workers, employers and the Government alike. An incomes policy has been pursued in the sense that people have been urged not to press their monetary claims to the limit of their strength. I think it true to say that of the trade union movement. Throughout the years after the war, and especially in the more critical period of labour shortage, the miners, for example, restrained their demands for wages to something very much below what they could have extorted from society, out of a sense of creative patriotism and making their contribution to the efforts of the country under its then Labour Government to extricate itself from the dangerous position in which we found ourselves after the war.

What I want to say about this increase is that it is not a harsh increase, it is not an unjust increase, it is not an inappropriate increase to the situation in which the country finds itself, it is not an increase which should be resented as part of a general incomes policy. I wonder whether those who have to bear this increase are as small-minded or mean-spirited as is sometimes alleged. I think that a man with £3,000 a year and two children will pay very little more than 10s. a week extra in Income Tax. I am quite sure that many people in that situation will welcome the readjustment in the incomes position, which enables the Government, even in their hour of difficulty—I see smiles, but there are people; and I am sure that there are some in the party opposite—who are capable of making a modest sacrifice cheerfully for the sake of redressing the difficulties of people in a very much worse position than they are—the old people, the sick and the disabled and those who have served their country in the war.

I therefore say that this increase is justified, and that not only is an incomes policy not unattainable, but it has been partially achieved, though imperfectly. We hope that my right hon. Friend, in the measures that he outlines to the country, will have a greater success with his incomes policy that in the past. That is not to say that there has not been some measure of attainment of an incomes policy already.

There is one other point I wish to make. It relates to the question of the effect abroad of this tax increase. The general assumption on the other side of the Committee—and, I am sorry to say, even on this side—is that the international bankers are waiting to pounce on the Labour Government unless they undertake to grind the faces of the poor in a satisfactory manner. Nothing could be further from the truth. Among the international bankers of this day and age are many enlightened people who recognise that whatever politics a Government may have an important matter is that they should play their part in advancing and continuously expanding the wealth of the free world.

The whole purpose of this policy is to put the Government's undertakings on a sound basis. What they do with the money from this policy is a matter strictly of their own concern. Since my right hon. Friend has undertaken these social policies he has shown a willingness to see that they are paid for. One way of paying for them is by Income Tax. There are other ways. In these circumstances, since members of the Conservative Party are always prating about the bad impact which we make abroad, it seems singularly eccentric on their part to deplore the fact that, in a most orthodox manner, my right hon. Friend is insisting that the good things we want for the old people have to be paid for by fiscal means.

While I cannot sing an enthusiastic song of appreciation about an increase in Income Tax, I unhesitatingly say that my right hon. Friend has done the right thing for the right reason.

4.30 p.m.

Commander Courtney

I always enjoy listening to the hon. Member for Manchester, Cheetham (Mr. Harold Lever). He put his case with such charm, as though he were positively enjoying the prospect of a rise of 6d. in the standard rate of Income Tax. I can assure the hon. Gentleman that in his enjoyment he is in a distinct minority among the people in the country.

I turn to a point which concerns me and take the opportunity to draw the attention of the Chancellor of the Exchequer and the Committee to the possibility not perhaps of righting an injustice so much as doing justice to a section of the community which has not been thought of quite so much as some of us would like in connection with recent Budgets.

I refer to married couples, and also to bachelors and spinsters, who support, to a varying degree, elderly parents or other elderly relatives for which, in my submission, they receive totally inadequate recognition. Because of this, as my hon. Friend the Member for Shipley (Mr. Hirst) has mentioned, we put down an Amendment referring to the standard rate of Income Tax, but it was not selected.

It appears to us that not to, shall we say, encourage this support of elderly parents is, in a way to weaken the family tie which is, perhaps, a byproduct of the machinery of social legislation which has been carried out, with the support of Members of all parties, since the end of the war. We do a great deal for old people in these days. There are old-age pensions and supplementary pensions, granny annexes, homes for old people, the work done by the W.V.S. and the St. John Ambulance Brigade, the meals-on-wheels service—all sorts of things are added on to the practical benefits which they receive from the State as of right and from voluntary organisations.

I am sure that these things meet with the approval of all hon. Members. In my submission, what we have neglected are numbers of children who support elderly relatives. If there were more incentives, more people would do so and save the country money by a possible decrease in supplementary pensions and other benefits given to old people.

Statistics on which to base any fair assessment of the scale of this question are rather difficult to obtain. I have spent some time going into the Report of the National Assistance Board for 1963. It contains rather interesting evidence to support my point. Sticking only to weekly allowances of National Assistance, quite apart from grants given periodically in support of National Insurance, sickness benefits or whatever they may be, the amount, in round figures, is £200 million which is paid to about two million people. It is interesting that about 68 per cent. or 1,333,000 of these people are of pensionable age.

My point, which has a direct bearing on the standard rate of Income Tax, is that over half of these, 68 per cent., approximately 733,000, share accommodation with other adults who are normally their sons or daughters. In fact, the families live together. The presupposition is that some measure of financial support comes for these old people from the sons and daughters. At a rough calculation, the cost to the Exchequer in respect of old people who are accommodated with sons and daughters, in the form of weekly allowances for National Assistance, amounts to about £75 million.

Mr. Ted Leadbitter (The Hartlepools)

So that I may follow the hon. and gallant Gentleman correctly, may I ask whether he is saying that before the present proposals were made the old people were treated generously?

Commander Courtney

I am saying that the old people are being treated quite generously. They are certainly being treated generously by the State £75 million is a considerable sum of money. I am presuming that they are being treated well by their own children and, if the hon. Member will wait, I will develop that point.

For the purposes of this argument do not include the old who are supported by their children and are living away from those children. The only figures which I could find to support my point are those relating to expenditure on weekly allowances made to old people living with their children.

My hon. Friends and I were hoping to achieve two things by our Amendment. The first was to strengthen the family tie by doing justice to this class of people. It is a large class which feels the need and the duty to support parents and other elderly relatives. Secondly, to persuade more wage earners, young married couples, spinsters and bachelors, to do likewise and contribute more of their disposable incomes to the support of the old people.

With the figure of £75 million in mind it would surely seem that by making this concession, and by not increasing the standard rate of Income Tax in respect of that portion of income allocated to the support of old people, the Treasury might reap a corresponding benefit from a reduction in the amount of National Assistance given to these same old people. It is very difficult to work out the figures.

The right hon. Gentleman has facilities which are denied to hon. Members on these back benches, but it seems that a great social advantage might be gained and hon. and right hon. Gentlemen opposite, who continually bang the drum of social justice may now have indicated to them a sphere in which they could make some useful progress. An advantage could be gained with much less expenditure by the Treasury than we sometimes imagine.

This is a short Finance Bill and it has been difficult to raise this point except in association with the standard rate of Income Tax. But I ask the Chancellor to take note of the point. My hon. Friends and myself will be pressing this matter. I ask him to look at it now, because when the April Budget is presented—it may well be, of course, that it will be presented by my right hon. Friend, but assuming that the present Chancellor is still in office—I hope that between now and then he will take a look at this matter, because it will be pressed by my hon. Friends and myself in relation to the next Finance Bill.

Mr. Raymond Gower (Barry)

We listened with much enjoyment to the hon. Member for Manchester, Cheetham (Mr. Harold Lever) and to the way in which he supported the Clause. I wonder whether he emphasised the relationship between the Clause and his insistence on social justice during the last election. Did he and his colleagues express the view that a sine qua non of social justice was immediately to announce an early increase in the standard rate of Income Tax?

I wonder whether some people who listened to speeches made at election meetings would have taken that relationship so eagerly as the hon. Gentleman appeared to do today. That is the reason that the Chancellor need not feel surprised when we express some anxiety and concern about the tax. We were ill-prepared during the election campaign for an impost of this nature. We were led to believe that our opponents, like the alchemists of old, had a major power of transmuting the economy and achieving all these beneficial results without having to increase taxes. That was the implication and, indeed, the expression of many of their speeches. Far from having to resort to an increase in taxation, they would be able to achieve all of these results out of an increase in production. Undoubtedly, this promise militated against us because we were unable with confidence to offer any similar benefit.

We are concerned about the increase, too, because it comes at a time when undoubtedly the Chancellor and his colleagues have a problem to face—a problem about which they knew during the election. They know that there has been a long-term problem in our economy ever since the end of the war, with a periodic imbalance of exports and imports and a tendency of our economy at periods of three or four years to show this imbalance in a profound manner. They knew all this and yet this Clause, with its promise of increased taxation ahead, does very little or nothing, to meet that problem.

Indeed, it may have the contrary effect, because nothing is more dismal or less likely to promote efficiency, as my hon. Friend the Member for Shipley (Mr. Hirst) said, than an increase of taxation; not only companies but individuals are depressed by the prospect that increased effort will lead to higher penal taxation. I would tell the hon. Member for Cheetham that it is not the amount or the proportion of the increase which raises this point, but the prospect. It is a dismal prospect which in many ways does not help the achievement of social justice or the achievement of some earnings policy.

I spoke to one of my constituents this weekend who is an employed person earning in the middle bracket of income. How has he been affected so far by the Government? He has to pay 2s. extra on his insurance stamp and he has to pay extra to get to and from work because of the petrol duty. On top of that he has the prospect, if he improves his income, of having to pay higher taxes. In three directions he has a dismal prospect. I submit respectfully to the Chan- cellor and to the hon. Member for Cheetham that this is scarcely showing the man the gay new world which he was promised during the election.

Mr. Hirst

He knows now.

Mr. Gower

He may not. This may merely be the first indication.

We sympathise with the Chancellor in the long-term problem which successive Governments, starting with a Labour Government, have faced in post-war years. This problem is not easy of solution in an island such as this or in an economy such as ours, with its double problem of supporting 53 million people and acting as the banker to the sterling area. We are aware of this problem but we feel that this impost, far from helping in this difficult job, can be a hindrance. In many ways it can discourage those upon whose efforts we must call if we are to succeed.

I therefore join my hon. Friends in expressing concern about the nature of this tax, which we had no reason to expect and for which the Labour Party had ill-prepared us.

4.45 p.m.

Mr. Donald Box (Cardiff, North)

I have returned recently from four weeks abroad with the Commonwealth Parliamentary Association delegation. During those four weeks I had the advantage or disadvantage, however hon. Members prefer to describe it, of not seeing more than three English newspapers. When I returned the first thing I had to do was to catch up with recent events, and I did this by examining the newspapers in the Library.

It was unnecessary for me to read the text. I had only to observe the changed expressions of right hon. and hon. Members of the Labour Government to understand what had been happening in the past four or five weeks. They started by being buoyant. They became less buoyant, and the smiles became a little forced. Finally, they were dismal and positively gloomy. This culminated in the events of last week, when the country was reduced to the utter humiliation of having to rattle the begging bowl round the bankers of the world to get us out of a very serious predicament.

Apart from the natural lack of enthusiasm which anyone feels about the first rise in Income Tax in 13 years, I am opposed to this rise in tax for a number of reasons. First, it seems to me to be positively inflationary. If the tax were being raised solely to relieve pressure on our financial resources, it might be well and good, but, as I understand it, at least part of the revenue raised in this way is to be used to increase pensions and other social services. This seems to me to be the right action at the wrong time, for however worthy a rise in pensions may be at the moment, I cannot see how it can be other than inflationary by placing greater purchasing power in the hands of more people.

It therefore seems to me that, despite the Chancellor's assertions that he would not cash the cheques before the money was in the bank, he is already cashing cheques on the overdraft in this respect, and that it is a great pity that he did not decide to wait just a little longer so that the proposed increases in pensions could be more soundly based.

Secondly, as several hon. Members have said, this increase in Income Tax must surely have a disincentive effect on workers and on production. In recent years a vast new group of workers have entered the £1,000 to £2,000-a-year class. I refer to the steel workers, the chemical workers, the ship repairers, the coal miners, and even the bricklayers, because I understand that in the City of Cardiff a bricklayer will laugh at anyone who offers him less than £30 a week.

Mr. Joel Barnett (Heywood and Royton)


Mr. Box

It is not nonsense. It is a fact. One of the big grumbles of these workers has been about the disproportionate amount of tax which has to be paid on overtime earnings. I believe that in some respects some workers will be deterred from making that additional effort by the higher tax.

The amount of work involved in printing and altering P.A.Y.E. and other tax scales, both in the offices of the Inland Revenue and for the army of unofficial tax gatherers in the offices of private and public companies, seems to be a very considerable burden. I recognise that the same thing applies when there is a reduction in Income Tax, but most hon. Members will agree that when there is a reduction, there is at least some incentive to undertake the additional work. Are we to see these alterations take place again in the future, when perhaps in the spring Budget the Chancellor either increases the Income Tax further, or, we may hope, reduces it? It seems to me that a great deal of work is involved if these changes are to be frequent.

For these general reasons I cannot understand why the Chancellor did not use the regulator rather than a rise in Income Tax to obtain the necessary revenue. By doing that he would have got a far quicker return and the rise could have been confined to inessentials. This shows that he could have mopped up the necessary purchasing power without having any inflationary affects and such action might not have had such an adverse effect on savings. Perhaps the Chancellor has something of this sort in mind for a later date and will be using the regulator in addition to Income Tax.

Mr. Leadbitter

I am not sure that hon. Members opposite are clear about the argument they are adducing. One hon. Member opposite tried to make out a remarkable case for reducing the charge on the Exchequer arising from old-age pensions. He suggested that, by some means, the sons and daughters of the elderly could help old mum and dad and so reduce the heavy burden on the Exchequer. To that hon. Member I say, if you were—

The Chairman

Order. The hon. Member is now a full Member and must observe the rules of debate. He must address the Chair and must never address an hon. Member personally.

Mr. Leadbitter

If the hon. Member opposite who made that suggestion were to come to The Hartlepools or constituencies in the North-East, Merseyside and Scotland he would find that the average wage is about £12 a week and nothing like the £17 a week suggested by the Leader of the Opposition. To suggest that the average wage is so high shows a total lack of appreciation of the facts, and to say that the rise in Income Tax will hit the average worker is not accepting the first principles involved. Do I see hon. Members opposite wishing to contradict me? Does anyone deny this?

The Chairman

Order. I would suggest that the hon. Member does not invite interruptions. There are usually enough spontaneous interventions in our debates without hon. Members inviting them.

Mr. Leadbitter

I thought that the hon. and gallant Member for Harrow, East (Commander Courtney) was about to rise to contradict me when he was advised by one of his hon. Friends to sit down. To that extent I was really endeavouring to give way and not to invite an interruption. However, I appreciate that I must keep in order.

It should be realised by hon. Members opposite that the rise in Income Tax is related to the higher levels of earnings. The lower-paid workers will not be affected by it. As to the use of the regulator, if the hon. Member for Cardiff, North (Mr. Box) wants to help the old folk he should consider the extent to which the elderly would be hit by its increased use. I can assure him that the rise in Income Tax will have a smaller effect on them than would an additional use of the regulator.

Hon. Members opposite should not try to claim that people are suffering because of present rates of Income Tax, or that they will suffer more as a result of my right hon. Friend's proposal. Last weekend I made some inquiries to see how many people in my constituency would be affected by the Income Tax increase. I discovered that one needs to have a substantial salary indeed before the increase bites.

Whenever hon. Members opposite speak about my hon. Friends having got ourselves into a mess after such a short period in office they should realise that the right hon. Member for Barnet (Mr. Maudling) said early in this Parliament that the Labour Government had inherited his diagnosis and solution of a problem which had been created by his party. If ever a hasty statement was made, that was it. The judgment of the right hon. Member for Barnet is irrefutably clear and sound and had hon. Members opposite listened to him in June of this year the present Government would not have these difficulties to clear up.

It has been reported that a bad egg was laid during the first few months of this year. Perhaps that egg had to be hatched during the past few weeks. I say that to show that it does not help the country if hon. Members opposite say in the House of Commons that they sympathise with my hon. and right hon. Friends, when in the corridors of power outside they are gloating their heads off. That is happening. I regret that the right hon. and learned Member for St. Marylebone (Mr. Hogg) is not in his place, because he has been gloating more than anyone about the predicament which hon. Members opposite created and which we are trying to solve. Frankly, I do not believe that hon. Members opposite have any real sympathy for us.

I suggest that my right hon. Friend the Prime Minister made an apt and proper claim when he said that there are two issues on which the House of Commons should be united; defence and the defence of the £. Hon. Members opposite have fallen far short of accepting the need to be united on those two points. Like the argument we had the other night about tied cottages, hon. Members opposite made it clear that they knew nothing—

The Chairman

Order. Defence and tied cottages do not arise on this Clause.

Mr. Leadbitter

I was likening the tied cottage to the argument we had the other night, Dr. King. I was showing the irrelevancies of the arguments used by hon. Members opposite. I have said enough to prove my point, except to mention that hon. Members opposite do not live in tied cottages. Hon. Members opposite cannot talk about social justice if, on the one hand, they do not believe in it, and if, on the other, they resent the party which does believe in social justice.

Miss J. M. Quennell (Petersfield)

I am sure that the hon. Member for The Hartlepools (Mr. Leadbitter) will forgive me if I do not follow the line he adopted in his remarks, because this is a short Finance Bill and I wish to intervene only briefly, particularly since I have a bad cold and not much voice.

I do not wish to recapitulate the arguments adduced by my hon. and gallant Friend the Member for Harrow, East (Commander Courtney). Unfortunately, his Amendment was not called. Nevertheless, I feel that this sort of question of family support is paramount and should receive the support of hon. Members on every possible occasion.

It was suggested by one of my hon. Friends that the Budget tended to represent an imposition on production and producers. I hope that it will not have such an unexpected effect. Another of my hon. Friends referred to the age structure of our population. If one considers the returns of the Registrar-General, one sees that the age structure presents a curious picture. Half the population is, oddly enough, under 30. But that does not mean that half the population is of working age. On the contrary, the large majority of under 30's is in schools.

The figures reveal that about a quarter of the population is becoming, shall we say, rather mature. We see that a narrow section in the middle represents the working, producing and wage-earning bulk of the population who must support the rest of us. That middle section of the population must support the children, old people and infirm and it is obvious that the country is more dependent on that section of the community than on any other. The smallest proportion of the population carries the greatest responsibility.

It is unfortunate, therefore, that the impact of the Budget will tend to fall most harshly on those who are already carrying the greatest burden, not only domestic in the sense that they are becoming house owners, but also in the sense of family burdens, sending their children to school, and so on. They also have a burden in that they have older members of their families—the grandparents' side of the family—who are of some concern to them. It is those people who pay not only extra Income Tax, but in other directions—in travel, stamp insurance and all sorts of ways—who are having to carry a greater burden.

I do not wish to intervene at length, because we shall be drawing the Chancellor's attention to these matters more vigorously later, but I trust that when he replies to this debate he will bear these points in mind.

5.0 p.m.

Sir Douglas Glover (Ormskirk)

I want to intervene on Clause 1 for only a few moments. I would say to the hon. Member for The Hartlepools (Mr. Leadbitter), who has left his place, that it is not only the Conservative Party which is criticising the right hon. Gentleman's Budget. I think that if the Chancellor had a second opportunity he would produce a very different Budget from the one that we are debating today.

The Temporary Chairman (Sir Herbert Butcher)

We are dealing now with Clause 1.

Sir D. Glover

I was referring to Clause 1. In fact, nearly every foreign commentator thinks that the increase in the direct rate of taxation is not only inflationary, but also a disincentive, and, therefore, does not deal with the probems that we are facing. I was saying that, having had the reaction from overseas, I think that the right hon. Gentleman, had he the opportunity, would have brought in different proposals from the one in particular that we are discussing. So much so that I think one could legitimately plead with the Prime Minister to stop at 40 days because, frankly, I do not think that the country could stand 100 days.

To raise Income Tax to 8s. 3d. in the £ is a disincentive to the very elements in the nation on whom we have to rely to overcome the problems, which the Chancellor and the First Secretary are trying to tackle, of increasing our exports, increasing our productivity and increasing our drive for modernisation. The people who are hit by this impost are the very ones who will have to try to handle those problems. It is also a straightforward increase with no exemptions. I shall not pursue that at any great length, but it seems to me that under this Clause, if it provided exemption for those people concerned with the export drive, it might provide a very big incentive for those who are doing a very difficult job and give them additional incentive to tackle it in the national interest.

It is a sad day that for the first time in 30 years we are now debating an increase in the direct rate of taxation. I cannot believe that this will increase confidence abroad of our business ability to overcome these problems. I cannot believe that the forward-looking element in the nation will be encouraged by the Chancellor's action and I hope that when the time comes we on this side of the Committee will divide against it.

Mr. Eric S. Heffer (Liverpool, Walton)

I want to make some comments on the points raised by the hon. Member for Ormskirk (Sir D. Glover). He said that this was a sad day for the country that we have been forced to introduce direct taxation of this kind. The fact is that in the past we had increases in indirect taxation, which is the most unfair method of taxation of any kind because it means that at all times the lowest-paid worker is the worst hit. If we increase taxation on any goods, it means, in an indirect way, that if one's income is £10 a week one is paying precisely the same amount in taxation as someone who has an income of £20 a week. The method of taxation which has been adopted by the Chancellor is much the fairer and is obviously the way in which we should deal with this question.

I should also like to take up points raised by some hon. Members concerning the holding back of the social services. The question of pension increases has been mentioned this afternoon. I do not know whether hon. Members opposite live in precisely the same world that I live in. I do not know whether they meet the same old-age pensioners whom I meet. I do not know whether they have ever mixed with the lower-income groups in the way that I have mixed with them and worked with them. I do not think that they can possibly live in this sort of world, because if they did they would know that the people voted for the Labour Party precisely because they intended to do something for the old-age pensioners. I say that this is absolutely justified.

Mr. Ian MacArthur (Perth and East Perthshire)

I would point out to the hon. Member that many people voted for his party at the last election simply because his party promised that there would be no general increase in taxation, and that an increase is precisely what has taken place.

Mr. Heffer

I cannot remember, at any stage in our propaganda, when we said that there would be no increase in taxation. If hon. Members opposite can give chapter and verse where this has been said, I will accept it. It was certainly not part of my election programme and not part of any of the speeches that were made by people who had any influence or authority with the Labour Party in the last campaign. Can hon. Members opposite give chapter and verse on this point?

Miss Quennell

If the hon. Gentleman likes to get the scripts of the political broadcasts at the General Election he will find the statement that there would be no general increase of taxation. When he began his speech he said that hon. Members on this side had forgotten the increase in indirect taxation in the last few years. Would he be so kind as to specify what he had in mind?

Mr. Heffer

I did not say in the last few years. I said that in the past hon. Members opposite had put forward increases in taxation by indirect methods.

The Temporary Chairman

We are dealing with Clause 1.

Lieut.-Commander S. L. C. Maydon (Wells)

Could the hon. Gentleman tell us what has happened to Purchase Tax during the last few years? That would enlighten us about this matter of indirect taxation.

Mr. Heffer

Although I am a new Member, I am quite used to being interrupted when making political speeches, but I have never had to answer two interruptions at the same time. Let me, first, deal with the interruption by the hon. Member for Petersfield (Miss Quennell) and then I will try to get round to the point raised by the hon. and gallant Member for Wells (Lieut.-Commander Maydon).

The Temporary Chairman

I hope that the hon. Member will address himself to the Question "That the Clause stand part of the Bill". He will help the Committee by doing so.

Mr. Heffer

I shall be delighted to do so, Sir Herbert.

Reference was made to a transcript of an interview given by the Prime Minister. That same point was raised the other day on the Opposition Front Bench, and the Prime Minister replied to the point. Indeed, he took the matter a little further than the point which was raised. Do not let us keep raking up something that we have already discussed and which has been amply explained by the Prime Minister.

Let me make my point again. Some of the extra money obtained should go to assist the old-age pensioners. They have suffered for a long time as a result of the policies pursued by the Conservative Government. [An HON. MEMBER: "Nonsense."] Hon. Members may call it nonsense, but I can give examples of people living in my road—and I do not live in a street full of affluent people, but ordinary honest-to-goodness working-class people—who are living on the old-age pension and are hiding their poverty behind their clean curtains. In fact, they are living on a level which should make us feel ashamed.

I accept one point which has been made from the benches opposite, that the middle income groups are to some extent affected by increased taxation, and that if it continued without an increase in productivity it could lead to a certain difficulty among that section of the population. Any intelligent person would know that those who are in that group are the very people—particularly in this technological age—who have to be given the incentive to assist increasing our productivity and get us out of a hole. But we must view the situation in relation to the overall position of the country. Are we to be satisfied with the same level of production that we have had in the past? Are we not to have an increase in productivity? Some hon. Members opposite have suggested that we ought to have done something else. I have a solution for that one. Perhaps we should have increased taxation a little more quickly, and to a greater extent, for the higher income groups. Hon. Members opposite would not be too happy about that solution.

5.15 p.m.

However, I accept the point about the middle income groups, and I hope that over a period of time steps will be taken to ensure that this section of the community is given added incentives to enable it to assist in our efforts towards higher productivity. That may seem as if I am arguing against my party's point of view, but I am not. It is a recognition of the fact that this section of the community has got to be assisted to overcome our production problems. I hope that this matter will be taken into consideration, but that does not mean that the Government have in any way acted unwisely through their measures.

We have had to take the steps we have taken purely because of the situation in which we found ourselves as a result of the policies pursued by the party opposite.

The Temporary Chairman

I would be obliged if the hon. Member would confine himself to the Question, "That the Clause stand part of the Bill".

Mr. Heffer

I am happy to conclude on that note, Sir Herbert.

Mr. A. E. Cooper (Ilford, South)

The problem in a debate of this sort is to know just how wide one can go. The Clause, as I understand it, deals with Income Tax, but it seems to me that we can discuss the economic situation of the country, old-age pensions, the difficulties in Walton and all places north of Crewe.

I want to deal with the Question. "That the Clause stand part of the Bill" and I hope the Chair will not object to that. By common consent, Sir Herbert, this is a thoroughly bad Clause in a thoroughly bad Bill. The Clause is bad, irrelevant and harmful to the economy. It is obviously conceived in haste by panic out of incompetence. I do not believe the Chancellor of the Exchequer has any experience whatsoever of industry. I believe that his past experience since before the time he took up politics was in the Treasury, but in the actual operation of industry he is, like so many of his colleagues, completely without experience. I wonder whether he has the slightest idea how industry operates, how the men who work in industry tick, and what makes the machine go.

I want to tell the right hon. Gentleman and the hon. Member for Liverpool, Walton (Mr. Heffer) that it is possible to have all these wonderful aspirations about developing the social services and providing everything one wants, but not one of these things is possible unless industry prospers. That is the basis of everything. That is the rock upon which we build our prosperity and it is also the rock upon which we founder if the country does not prosper.

The right hon. Gentleman has got his priorities all wrong. I will concede at once that there is an honest field for argument between different sections of economists, some of whom will argue that we should have higher direct taxation and lower indirect taxation, while others will argue the opposite. I support the school which says that direct taxation should be at the lowest possible level and that indirect taxation should make up the difference. I believe that men, no matter in what strata of society they have their being, find their incentive in the amount of money they take home at the end of the week or month. In other words, we should reduce taxation on our earnings and be content to have higher taxation on our spending.

Mr. Barnett

Does the hon. Gentleman include rates in indirect taxation that he would like to see increased?

Mr. Cooper

Yes, I would regard that as indirect taxation, but it is not part of this Clause. We can deal with that on another occasion, when right hon. Gentlemen opposite may fulfil one of their election promises and bring forward some measures to relieve the ratepayer.

So far, the record of the present Government is such that not one of their promises have been fulfilled. In fact, they spend their time breaking so much china in Europe that one can only imagine that the Chancellor of the Exchequer is one of those people who is like a bull and who carries his own china shop around with him.

The Chancellor is quoted as saying, during the election campaign, "We will not sign cheques until the money is in the till." It seems to me that that is another statement made by right hon. Gentlemen opposite which really does not bear analysis after the first 50 days of Harold, probably the most disastrous 50 days ever known in the history of this country. I want the right hon. Gentleman to know just what he has done. We will pinpoint this for him so that he can go to his constituents and tell these people just what he has done.

Let us consider the young and rising scientists, the men who, in this modernistic age, this technological Government want to take our country forward, the men we want to encourage. At present, they are probably earning £2,000 to £3,000 a year. At least £1,000 of that salary is taxed at the standard rate. We want to encourage them so much that we knock £50 off their salary to start with, and if we give them a rise we tax that also.

In the last Parliament the right hon. Gentleman and the Prime Minister were grumbling at the then Conservative Government because of what they were pleased to call the brain drain, the scientists who were leaving the country and going to America because they could not get sufficient rewards here. What are the Government doing? They are encouraging them by slapping another 6d. on Income Tax. That encourages them mightily! In Clause 2 we shall deal with how the Government have encouraged these young scientists and business executives upon whom the whole future of the country depends.

These young men have to be taught. They have to go either to technological colleges or to universities and be trained by professors and men of that quality. We all know that teachers, from professors downwards, are underpaid. We have tried very hard in the last few years to lift up their salaries, and much has been done to help them. In April next year the teachers are due for another increase. So what has the Chancellor done? He has not only slapped an additional 6d. in the £ on their existing pay, which is to cost them anything from £50 to £80, but if their new increases are round about £100 or £150, which is what is expected, that money also is to be taxed at the higher rate.

Is this really the way to encourage the right people to enter the teaching profession, the way in which we are going to build up a first-class industrial organisation in this country? No. The Chancellor has tried to curry favour with what he has been pleased to call his Labour supporters. That is all he has tried to do.

Mr. Callaghan

On the question of facts, the hon. Gentleman said in a previous debate that for those earning £2,500 a year the increase of 6d. in the standard rate would mean an extra £100 in Income Tax being taken out of their pay packets. It happens to be £20, about one-fifth of the figure that he mentioned.

Mr. Cooper

I do not think that the right hon. Gentleman can really sustain that for one moment. A person starts to pay the full standard rate of Income Tax round about £800 to £900 a year. Therefore, if a man is receiving a salary of around £1,600 a year and if we take the difference and multiply it by 6d. in the £, that alone give a figure of around £80. [HON. MEMBERS: "No."] I am talking about the facts; I am not talking about the theoretical nonsense which the right hon. Gentleman gets from his two Hungarian advisers.

The plain facts are that this increase in the standard rate of Income Tax is bad and harmful for and irrelevant to our economy, will do nothing whatever to help us in our present difficulties, and will be an everlasting shame to the Chancellor who, I would hope, would try to learn something about British industry.

Mr. William Baxter (West Stirlingshire)

The hon. Gentleman believes that there should be some system of taxation, that taxation is absolutely necessary in order to run the country, but he suggests that it should not be the people in the £1,000 a year bracket and upwards who should bear the heavy burden of taxation.

Mr. Cooper

It is a great pity that hon. Gentlemen opposite do not bother to listen to one's speeches. Of course there must be taxation. I said that there was an honest argument as to how that should be distributed between direct and indirect taxation. I happen to be one of those people who believe that there should be a limit to the amount paid in direct taxation and that the balance should be obtained from indirect taxation. If the hon. Gentleman opposite thinks differently, he is entitled to his point of view.

Mr. Geoffrey Lloyd (Sutton Coldfield)

My right hon. Friend the Member for Berwick and East Lothian (Sir W. Anstruther-Gray) began the discussion on this Clause by drawing the attention of the Committee to the effect of the rise in the standard rate upon the earnings of young scientists and technologists, and my hon. Friend the Member for Ilford, South (Mr. Cooper) addressed himself to the same point.

I wish to support my hon. Friends on this point, because I was rather surprised that the hon. Member for Middlesbrough, West (Dr. Bray) brushed this argument aside so contemptuously. He said that he was in touch with the people concerned and that this increase in the standard rate would not have any serious effect on them. I do not think that the hon. Gentleman was right in this, and I do not think that he is right in representing that he speaks for the young scientists and technologists in the matter.

I would attach more credence to the letter which my right hon. Friend read out—which, I believe, was a private letter sent to him—concerning an actual case of a young scientist seriously considering the balance of self-advantage and whether he should remain in this country or should go to the United States, and who was influenced by the amount of income left to him after tax and was beginning to wonder whether he ought to consider seriously going to the United States.

This is not the only example that we have had of young scientists taking this point of view. I remember quite vividly a letter which appeared in The Guardian as recently as 14th November. The writer did not give his name, but signed himself, "A young Ph.D." I think that he was one of those young scientists who, unfortunately, listened to the siren call of the Prime Minister during the election campaign when the right hon. Gentlemen was addressing himself so seriously at the time to that task. The letter was a rather bitter letter, saying that one of the first actions of the party opposite on being returned to power was to increase the standard rate and, as the writer put it, to lower his effective salary.

I think that the party opposite would be unrealistic if it began to convince itself that increased taxation of this kind and the lowering of the effective salaries of such men do not have a certain effect on them when they are looking to their future and considering whether it should be in this country or, for instance, in the United States. I can remember, some years ago, when the standard rate was higher than it was under the last Government—it was soon after I ceased to be the Minister of Fuel and Power and, therefore, must have been in 1956—when I was visiting the establishments of the Atomic Energy Authority in the North of England and was seeing quite a lot of the young scientists in an informal way.

I was rather shocked to learn the attitude of some of them concerning whether they should stay in this country or go to the United States. They approached the problem—and I realised afterwards that it was perhaps not unnatural for them to do so—in a scientific and realistic way. One of them put it to me that he had calculated what would be his net income over the period of his active scientific life. He had set out to see what was the optimum career, as he described it—a rather scientific almost statistical term—which he could have in this country or in the United States.

I am sorry to say that he had come to the conclusion, partly because of the level of taxation here and over there, that his optimum career would be in the United States. This came as a bit of a shock to me. We cannot expect our young scientists to decide on the nature of their careers purely on the grounds of patriotism and natural feelings as we would want them to do. We are not entitled to ask them and their families to take that view, although as a matter of national policy we should do everything we can to encourage them.

5.30 p.m.

Mr. George Y. Mackie (Caithness and Sutherland)

Is it not a fact that the main advantage to the young scientist going to the United States is the amount of money he will get, not the rate of tax?

Mr. Lloyd

The hon. Member makes a substantial point. It is the point which was made by the hon. Member for Middlesbrough, West and I would not disagree at all. We hope that our economy can march forward faster and that as we proceed to more modern methods of production it might be that the amount which has to be taxed will be greater and the difference in the two countries will be less. It still remains the fact that it is the net amount of effective salary, as the young Ph.D. called it in his letter to The Guardian, which is most important to them and the rate of taxation has the most immediate effect on that.

Although I understand that the Chancellor is attracted by those technical considerations in the Treasury which lead toward standard rate, I think that even he would agree that there are substantial disadvantages in the effect on young scientists and technologists which my hon. and right hon. Friends have represented in this debate and they have a very unfortunate effect in view of the action which the right hon. Gentleman has taken.

Mr. Barnett

I had not intended to speak on this subject again, having spoken on Second Reading in general terms on it, but I am compelled to come into this discussion because of some remarks made by hon. Members opposite, particularly the hon. Member for Ilford, South (Mr. Cooper).

When one considers increases in the incidence of Income Tax and the extra 6d. involved, it is entirely wrong to say that a teacher will be affected to the tune of £100. I gave an example on Second Reading, using figures with which hon. Members will be aware—£3,250, less £1,250 expenses, for a man with a wife, two children, and generally with a mortgage. The extra amount there would be about 3s. 6d. a week. Many school teachers, if not the majority, would have a wife and children and a mortgage. The hon. Member also referred to amounts of £800 or £900. There the increase would not be anything like as much as the figure he suggests.

Mr. Cooper

If the hon. Member will be good enough to read what I said on Second Reading and in this debate, he will see that when I spoke about £3,000 and £3,500 I referred to a husband and wife who were teachers, which is not uncommon in this country. I was talking about their combined tax.

Mr. Barnett

If the hon. Member was talking about their combined tax he must be aware that they both would be entitled to reduced rate of tax, £200 at 4s. and £200 at 6s., and the amount involved would be nothing like the £100 to which he refers. He should get his facts right.

Sir Knox Cunningham (Antrim, South)

Could the hon. Member help us by giving the figures for such a family where there are five children?

Mr. Barnett

I was quoting the case of a family with two children, because it is an average family. The hon. and learned Member may not be particularly interested in an average family, but the country generally is. What has appalled me more than anything else is that one hon. Member opposite after another has dealt with this problem in exactly the same way as did the right hon. Member for Barnet (Mr. Maudling). On Second Reading, I asked hon. Members opposite whether, if they did not want to see an increase in taxation—and none of us wants that—they had not voted for, or, rather, not voted against, increases in pensions. They vote against every possible method of paying for those increased pensions. Hon. Members on this side of the Committee and people in the country must be forgiven for believing that this is a somewhat cynical approach.

Mr. Hirst

Not at all.

Mr. Barnett

The hon. Member may not think it a cynical approach, but to suggest that we should have increases in pensions but have no method of paying for them is, I suggest, a cynical approach

Mr. Stephen Hastings (Mid-Bedfordshire)

The cynical approach is adopted by hon. Members opposite who went to the country and said that they would make all these increases without increasing taxation, and who are now exacting increases in taxation.

Mr. Barnett

The hon. Member should be aware of his facts. Let us be quite clear. Hon. Members opposite went to the country saying nothing at all about the deficit on balance of payments. [HON. MEMBERS: "Oh."] Oh, yes.

The Temporary Chairman

I hope the hon. Member will not get too far from the Question, "That the Clause stand part of the Bill".

Mr. Barnett

I am prepared to stick to the Question, but when I am asked a question I feel it necessary to reply to it.

The reason which impelled me to come into this discussion is that one hon. Member opposite after another said that we should not have this increase in tax. I said in my previous contribution that I was not happy about the increase, but if we are to increase pensions now, and not at some distant date, we have to adopt a responsible approach. This, I believe, my right hon. Friend has done in his Budget.

Dame Irene Ward (Tynemouth)

In view of the fact that the Conservative Government increased pensions five times, could the hon. Member say how often we put up Income Tax to meet those increases? We did not put it up at all.

Mr. Barnett

I could perhaps answer the question better by referring to the fact that one increases taxation generally—by way, for example, of an increase in rates, or tax on ice-cream or Purchase Tax.

Dame Irene Ward


Mr. Barnett

The hon. Member has the answer. What really matters to the people is that those who are worst affected—

Dame Irene Ward

Answer the question.

Mr. Barnett

I am answering the question. If the hon. Lady will be patient I will give her a full answer. Of course, there was not an increase in the standard rate of Income Tax under the last Government, but there were increases in indirect taxation which fell most harshly on people who were worse off. When I intervened to ask an hon. Member opposite whether, for an alternative suggestion by way of increasing taxation he included an increase in rates, he said that that was another question. It certainly is.

Colonel Sir Harwood Harrison (Eye)

Before coming to the main points I wish to raise, I should like to answer the hon. Member for Heywood and Royton (Mr. Barnett). Although probably he did not mean to do so, he gave a rather false impression to the Committee by suggesting that the Conservative Government raised taxation, particularly indirect taxation. The answer is that over the 13 years of Conservative government the percentage of taxation on income came down a large number of times.

I am intervening because a great deal has been said about that category of our citizens who take high degrees, such as that of Ph.D. I had the opportunity in the summer of having staying with me the first graduate of our new University of East Anglia. He is taking his Ph.D. in that university. He is taking it in biology. I did not get involved with him on that subject, but we both have a common love of saving and this question came up in our discussions. He pointed out that in their student days the grant which students receive tax-free is not sufficient. I have tabled a Question to the Minister of Education on this subject. My friend went into the question why some friends of his age group and others go for a time. maybe for all time, to the United States, and the fact that it is taxation and nothing else which makes them do so.

Before we finish with this Clause we ought to be wise in understanding that this increase of 6d. in the standard rate of Income Tax has an effect on the future of individuals. The Chancellor will deal in his next Budget statement with the whole question of company finance and corporation tax. Here, for the first time, we are dealing with a rise in Income Tax—a sad thing after 13 years in which we have had reductions—and its bearing on personal incomes.

I do not know whether I shall draw the Chancellor. We have had to go through the Clause to see what the standard rate will be after April next year. Does this mean that we shall not be debating the question in six months' time of a further 6d., 9d., or 1s. increase in Income Tax? Will the Chancellor give that assurance?

In the Committee there has been much play about whether or not the Labour Party had said that it would raise Income Tax. I ask another question. What did the Liberal Party say about raising Income Tax? Did it make great play of the fact that when it got back to Parliament on the votes of commuters who will pay the increase of 6d. one of the first votes it would give would be in favour of raising the standard rate of Income Tax? When we receive the Budget Resolutions there is very little time—[Interruption.] Hon. Members opposite have to go into a Lobby because their Whips are on. I know that, having been on that side of the Committee.

Mr. Eric Lubbock (Orpington)

We knew even less about the mess left by the Tory Party than did hon. Members opposite.

Sir H. Harrison

It is not a question of mess, but did you or did you not—the Liberal Party—say that this would be one of your first votes?

The Temporary Chairman

Order. Perhaps the hon. Baronet will direct his remarks to the Chair.

Sir H. Harrison

I am sorry, Sir Herbert. I think it right that the electors should know that the Liberal Party supports the raising of the standard rate. I hope that this Committee will not support the Clause.

5.45 p.m.

Mr. Richard Crawshaw (Liverpool, Toxteth)

I had not intnded to speak in the debate. I came hoping to hear the answer that every Chancellor of the Exchequer has hoped to hear: how to raise more money without increasing taxation. It is amazing that the party opposite, which will not vote against the increases in pensions, should say that the Government ought not to put up taxes to pay for them. Certainly, right hon. and hon. Members opposite have not mentioned any specific taxes which should be put up in place of this increase.

We are told that indirect taxation is the answer. We can argue about this all day, because our philosophies are completely opposed on that point. We do not believe that it is quite the same for a person earning £2,000 to £3,000 a year to pay 5d. extra on a packet of cigarettes as it is for a working man. The two sides are arguing at cross purposes, because we on this side can never see the point of the argument put by Members opposite. [HON. MEMBERS: "And 6d. on petrol?"] I assume that, in most cases, a person running a car can afford an extra 6d. That, however, is not always the case with a person in the lowest income group when it comes to being able to afford an extra 5d. on cigarettes.

We have been told about people threatening to leave the country because of this increase in Income Tax. The party opposite fought the election on the issue of, "Don't let the Socialists take it away from you", and got its answer. The answer came from very many people who decided that, since they had never had it, it could not be taken away from them.

Hon. Members opposite do less than justice to the ordinary workers when they talk about objections to an extra 6d. Everyone objects to taxes, but the main argument comes on the purpose. If the money is to go to Ferranti, or firms like that, then the ordinary people do not like their money taken from them for such a purpose. If one puts clearly the issue of paying extra taxation in order to give pensioners an increase, then we know the answer, for we fought the election on that issue.

We found skeletons in the cupboard when we took office. Where is the £700 million in our balance of payments deficit to come from? The Liberal Party says that it knew even less about that deficit than we did. We knew nothing about it.

Mr. Hirst

Even less now.

Mr. Crawshaw

And we shall probably go on discovering these things through to the next generation. The people do not object to this extra 6d. on the Income Tax if it goes to the right persons. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) estimated that it would mean an extra £80 on an income of £1,600. The Leader of the Opposition, using matches, managed to do better than that. I myself estimate it at £40.

The fact is that the two parties are completely opposed on this issue. Hon. Members opposite favour indirect taxation so that the poorest people pay the same amount of tax as those earning more. We do not accept that and never shall.

Dame Irene Ward

I want to get the record straight, because we are in such a muddle about what hon. Members opposite are talking about. I would like the Government's view to be stated clearly by the Chancellor of the Exchequer. As far as I know, no one has ever said that this increase in the standard rate of Income Tax is to be used for the increases in the retirement pensions.

It is true that, if we were told that these pensioners were to have the benefit of the increase in Income Tax, both sides would be prepared to pay it. [HON. MEMBERS: "Oh."] Most certainly. My complaint is that, although the Conservative Government raised retirement pensions five times, provision for the increases was made at the time and never involved an increase in the standard rate. That is the point at issue.

The hon. Member for Liverpool, Toxteth (Mr. Crawshaw) said the Con- servative Government paid for increased pensions by putting up indirect taxation. We did not increase indirect taxation to meet our obligations when we raised retirement pensions. I have a very long memory and I recall that, in the last Budget of the post-war Labour Government, in 1951, we were told that the Government could not meet an obligation to increase pensions for anyone who was entitled to a pension after October, 1951. They could not find the money for that. At the same time, however, the then Government increased the standard rate of Income Tax, Purchase Tax and fuel tax. Then, when they found how unpopular they were, they decided to go to the country, when they lost the election. That Budget was the result of six years of Socialist rule. I am sick of hearing about 13 years of Conservative rule.

The Temporary Chairman

Order. Will the hon. Lady now discuss the Question, "That the Clause stand part of the Bill"?

Dame Irene Ward

Certainly, Sir Herbert.

Hon. Members opposite talk about direct and indirect taxation and how no one will object to paying an increase if the benefit goes to retirement pensioners. We know now just where we are. But we did this without increasing either direct or indirect taxation. I hope that the Chancellor will explain exactly what the increase in direct taxation is supposed to mean. It is no good talking about balance of payments difficulties. That has nothing to do with the pensions increases. It is an entirely different situation.

The Chancellor has a clear brain, although sometimes he operates it in a rather immature fashion. I would like to hear whether he is to use the additional 6d. on the Income Tax to pay for the pension increases. If he is doing so, I am sorry that he has not included many other people who are without pensions, since a lot of us might have been prepared to accept that with appreciation.

Before you occupied the Chair, Sir Herbert, my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) asked whether the increased taxation could not be used to help spinsters and bachelors looking after elderly parents. I do not think that my hon. and gallant Friend has had the good fortune to know about an organisation called the Single Dependants' Association.

The Temporary Chairman

Order. The Question is, "That the Clause stand part of the Bill".

Dame Irene Ward

I know that, Sir Herbert. That is why I was trying to say, before, that my hon. and gallant Friend was allowed to make his point. With very great respect, I find it difficult sometimes, when there has been a change of occupancy of the Chair after I have been waiting the whole afternoon, to find that I am ruled out of order when following what another hon. Member has said.

The Temporary Chairman

Order. I am sorry to disappoint the hon. Lady, but Clause 1 deals with charges of Income Tax for 1965–66 and I would be grateful if she would address her remarks to that.

Dame Irene Ward

But this point is related to taxation. You will see that it is if you allow me to develop my case for a moment, Sir Herbert. It is a matter which has interested Conservative women Members for a long time—not necessarily the men Members—and perhaps I may be allowed to relate this point to taxation, which I am going to do.

My hon. and gallant Friend the Member for Harrow, East said he would not have the same objection to the raising of the standard rate if it were to be used to help people providing for their elderly parents. That was a taxation proposal. We get a certain amount of dependants' allowances, so I suggest that this does come within the framework of Clause 1, when considering how we are to raise the money.

Perhaps the Chancellor will say that he has received a document from the Rev. Mary Webster. This lady and some of my hon. Friends and I saw my right hon. Friend the Member for Barnet (Mr. Maudling), when he was Chancellor, and discussed the problem. The present Minister of Defence for the Royal Navy was concerned as well, together with his then colleague from Woolwich, West, Mr. Colin Turner. I want to know now if the Chancellor will answer me on this specific point.

The Temporary Chairman

Order. I am sorry, but the hon. Lady must keep herself within the rules of order.

Dame Irene Ward

Well, I look forward to hearing the Chancellor, because I know that Front Bench spokesmen are allowed to say what they like when back benchers are very often ruled out of order. I hope that the right hon. Gentleman will tell us whether he will follow the documents that the Rev. Mary Webster will no doubt have sent to him.

The Temporary Chairman

Order. I have told the hon. Lady that I cannot permit that. She will please confine herself to the Question before the Committee.

Mr. Hirst

On a point of order, Sir Herbert. I am not very clear on this matter. We are discussing the standard rate of Income Tax. In that context is it not in order to argue that it should be reduced by 6d. or used for some purposes? I accept what you say, but it would be helpful if we knew your thinking on this. It is difficult to follow.

The Temporary Chairman

If the hon. Gentleman will carefully read Clause 1 he will realise what remarks can be made which are in order and will have no difficulty in keeping within the rules of order.

Dame Irene Ward

That is very nice of you, Sir Herbert. I shall bring my remarks to a close. But, in reply to what you have said, I will ask you to read in HANSARD tomorrow the report of what was said when the debate opened. Then perhaps you will not feel quite so badly about my introducing this proposal.

I hope that the Chancellor will tell us what the increase in Income Tax will cover, because hon. Members opposite have talked in such a muddled way. I am surprised that he has not already intervened, because he really must be embarrassed to hear the commitments the Government expect this increase to meet. I look forward to hearing exactly what it is intended to cover.

6.0 p.m.

I fully agree that the bigger one's income the more one should pay to the Exchequer for purposes laid down by Parliament, but I have not yet heard what is to be done with this 6d. which is being extracted. I am a supporter of those on small fixed incomes. If the 6d. is to be used for their benefit, I shall approve, but, if it is to be used for a purpose of which I do not approve, then I shall take the view that my party is absolutely justified in welcoming the increase in retirement pensions while, at the same time, saying that the right hon. Gentleman has not done as well as the Tory Government did in finding the finance to help those who are to get these increases.

I do not think that 12s. 6d. a week will make all that difference between the standard of living of pensioners when the Tories were in power and under the new type of life which right hon. Gentlemen opposite seem to believe to be about to descend on retirement pensioners. Perhaps hon. Members opposite should have accepted the Liberal programme on this issue.

Let us have a clear and precise statement about what is to be done with the 6d. increase for certain people, but let me make it clear that I have no objection if it is to be used for old-age pensioners.

Mr. Malcolm MacMillan (Western Isles)

I hope that my right hon. Friend and the new Labour Government will be more effective in making pensions higher and in keeping pensions at their value than were hon. Members opposite, who have been boasting about the number of times pensions were increased under the Tories. They have forgotten that the locusts of the cost of living were having a five-course meal on the pensions as they were being increased five times. It would not be so necessary now to have this imposition if the cost of living had not been going up and up all the time during those 13 years, and it would not be so urgent today, under great pressure, for humanitarian considerations apart from anything else, to have to find new means of paying for increased pensions.

Today, I have seen an extraordinary exhibition which has contrasted what we saw a month ago in the first sitting of the new Parliament with the tide of argument which has now come up when sharp practice charges have seemed to ooze from hon. Members opposite when they have mentioned old-age pensions. I propose to deal with what they have said. One after another they have proposed that we should do almost anything but use the Clause—

The Temporary Chairman

Order. I should be glad if the hon. Member would make not the speech he is making, but a speech on the Question before the House.

Mr. MacMillan

I heard speeches from hon. Members opposite which I should like to answer and which, in the view of the Chair, were relevant and I shall continue to discuss them in so far as the previous occupant of the Chair allowed those speeches to be made. [HON. MEMBERS: "Oh."] I am certainly not criticising any Ruling of the Chair.

The hon. Member for Cardiff, South (Mr. Box) suggested quite solemnly that instead of raising Income Tax and finding this money in an honest straightforward way, with direct taxation, the Government should apply the regulators, in other words, that as they increase old-age pensions they should eat them away with increased Purchase Tax.

Mr. Box indicated dissent.

Mr. MacMillan

That is obviously what the hon. Gentleman had in mind. At least, that is the logic of what he is saying. [Interruption.] I am open to contradiction, but I prefer argument to interruption. The hon. Member said that the Government should apply the regulators and get the money that way instead of by this method of direct taxation. He does not deny that.

Mr. Box


Mr. MacMillan

The hon. Gentleman now describes his speech as nonsense.

Mr. Box

I suggested that as part of the increase in Income Tax was to be used for the increases in pensions that would be inflationary. I suggested that if the Chancellor of the Exchequer required to raise this additional revenue, not only for pensions, but mainly for other purposes, it would have been wiser to use the regulators for the purpose.

Mr. MacMillan

It surely flows from the hon. Gentleman's argument that the use of the Purchase Tax part of the regulator system would raise the cost of living for old-age pensioners in particular and so reduce the value of any increase in pensions. One hon. Gentleman said that sons and daughters rather than the nation should look after "Dad and Mum". I am sure that he is now furious with himself for having said it.

Commander Courtney

As a measure of social justice has so often been preached by the Labour Party, hon. Members opposite might think of that very worthy class of the population which supports its old folk and does something for them which can thereby be taken off National Assistance and so perhaps be a credit to the Exchequer.

Mr. MacMillan

That point has been made every so often in these debates and, along with similar arguments advanced by hon. Members opposite, is hardly worth considering as a general argument on policy. Quite apart from what may be done by such people, we are opposed to relating pensions to free bags of coal and what members of the family can allow in supplementation of what the State itself provides.

Commander Courtney

Does not the hon. Gentleman think that there is any virtue in strengthening family ties by encouraging people to support the old?

Mr. MacMillan

I will not go far in that direction except to say that some families are more fortunate than others in their views on this as on other subjects. There would never be a basis of uniformity in the treatment of old people, for that treatment would vary from family to family and would be left to the charity or lack of charity of the other members of the family. The hon. and gallant Gentleman is living in the nineteenth century. Of course we want to strengthen family ties, but not at the expense of the dignity of old-age pensioners.

The hon. Member for Barry (Mr. Gower) wholly opposed the Clause, because he was against this method of paying. He said a great deal about the Clause in relation to the increases for old-age pensioners, but he did not hint at any other way of which he approved. The basis on which he would justify an increase in old-age pensions was that of a steady increase in the rate of production from year to year, but that was exactly the situation which the Labour Party found not to exist when it came to power.

The hon. Gentleman was, therefore, basing his argument for an increase in old-age pensions in the near future on conditions which did not exist. These conditions were a continuing rate of increase in production year by year over a period of years. I know the story of the few months before the election, but the period just before the election was even more significant.

Mr. F. A. Burden (Gillingham)

The hon. Gentleman said that the Government did not find a continuing rate of expansion when they came in. We know that they were to do a tremendous amount in 100 days, but they could not have expected that the increase which they said they would bring about could be attained within 35 days.

Mr. MacMillan

It should not have been left to the succeeding Government to do in 50 days what the Tory Party failed to do in 13 years. While it is very flattering, that is surely asking a little too much of hon. Members on this side of the Committee.

What is extraordinary about the attitude of hon. Members opposite is that not one of them appears to oppose the use of money levied by direct taxation for the purpose of increasing social benefits. Not one of them comes out flatly and says so. Yet they do not say by what method they would propose to do what the money raised by this method of direct taxation is about to do. Can they tell us what they would do if they believe in increasing the social benefits?

It is important that hon. Members opposite should not only criticise, because in every criticism there is an implied alternative, and we have not yet had any hint of an alternative method from hon. Members opposite, although they still pay lip-service to social justice and to the importance and even the urgency of increasing pensions. Not one hon. Member opposite has courageously said, "We do not believe in that. We would not have done it". Unless hon. Members opposite have an alternative method which they can justify of financing the increases, we must use the method proposed by the Government.

Dame Irene Ward

The hon. Gentleman has not listened to the point that I made. On the five occasions that we increased the retirement pension, we did it within the framework of the Finance Bill.

Mr. MacMillan

I do not think that I am giving anything away when I say that the hon. Lady and I have been in the House for a long time. I always listen to her with pleasure, and very often with great profit. When hon. Members opposite raised pensions, we supported them every time. There was no Division on them. But there has never been since 1951 anything like the proposed scope and extent of the increases which are now proposed and which have to be financed.

Dame Irene Ward

Half a crown.

Mr. MacMillan

The hon. Lady is not quite right.

Dame Irene Ward

Yes, I am. The last increase in pensions which we made was 10s. The Government are putting them up by 12s. 6d. So all this argument is about half a crown.

Mr. MacMillan

The hon. Lady must remember that it was the Labour Party which set the post-war fashion in social advance and increased pensions. Any criticism—

The Temporary Chairman

I do not want to interrupt the hon. Gentleman, but he is going rather further than he should on the Question before the Committee.

Mr. MacMillan

I apologise, Sir Herbert. I did not want to do the hon. Lady the Member for Tynemouth (Dame Irene Ward) the discourtesy of not answering her.

Dame Irene Ward

It is very kind of the hon. Gentleman.

Mr. MacMillan

The right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray) talked about scientists flowing from this country. He used that as an analogy. I thought that it was an irrelevant comparison to make, but to use that argument is a little bit shoddy. I am sure that no scientist, whether young or old, whether he proposed to go to America or anywhere else, would grudge the old-age pensioner an increase, or, if there were no alternative way of dealing with the matter, would refuse to pay an extra 6d. on the standard rate of Income Tax. I am sure that no ordinary, average, decent citizen, for whom we should all be speaking, would refuse, or would want to refuse, to help the people who, above all, have earned their claim to consideration.

The hon. Lady the Member for Tynemouth spoke about the narrow block of the population which increasingly must bear the cost of taxation and social security benefits. Of course, what she said was perfectly right. But, at the same time, one does not forget, for that reason alone, the fact that the old-age pensioners have established their claim by a lifetime of service.

The Temporary Chairman

Order. The hon. Gentleman will please listen to the advice of the Chair and keep to the Question.

Mr. MacMillan

I was replying to the point which has been extensively made by the hon. Lady. I do not think that you, Sir Herbert, were in the Chair when the point was made. It related to the block in the population which has to bear the cost of taxation and social security benefits. However, I have finished what I wished to say on it, and I will depart from it.

One hon. Member opposite said that, in contrast with the promised 100 days, he had never known 50 days which were more disastrous than the 50 days of this Government. I thought of the 50 days of Suez and of everything which flowed from that.

The Temporary Chairman

Order. There is nothing in the Clause about Suez, and the hon. Gentleman must know that.

6.15 p.m.

Mr. MacMillan

Yes, Sir Herbert, but the method which hon. Members opposite used to finance the extortionate cost of £320 million of Suez was not this method. Their method was to increase indirect taxation, which put up the cost of living for old-age pensioners and people on fixed incomes. They had to increase old-age pensions time after time in order to catch up with their own follies and with what happened during their own mad 50 days.

Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)

How about devaluation?

Mr. MacMillan

Devaluation helped our imports at that time. Hon. Members opposite may yet be sorry if they make a dirty word of devaluation for all time.

If hon. Members opposite agree with the Labour Party and the Liberal Party that these increases should be made over the whole field of social insurance for the first time since 1951, and if they have no alternative method of dealing with the matter, should not they support the Government in using the method of increasing direct taxation as a contribution towards financing them?

Sir Rolf Dudley Williams (Exeter)

I must confess that I never thought that the hon. Member for the Western Isles (Mr. Malcolm MacMillan) would finish his speech by referring to the Suez operation. I should have thought that the behaviour of the Labour Party at that time was something which it would want to forget.

I wish to address my remarks, strange to relate, to the Clause. It is clear, without doubt, that a considerable amount of the taxation which will be raised by the increase in the standard rate of tax will be disposed of in increased social benefits. I must congratulate hon. Members opposite on the way that so many of them have managed to avoid any reduction in their standard of life because of this impost. So many of them are in the Government that no doubt they will be able easily to pay this extra instalment of Income Tax. If they are more fortunate and the recommendations of the Lawrence Committee are implemented, I have no doubt that further benefits will accrue to them. However, I should have thought that it would be better if such implementation did not take place at present.

The hon. Member for the Western Isles referred to the necessity of raising the tax in order to assist the old-age pensioner. Quite rightly and perfectly fairly, and, I thought, within the scope of the Clause, he referred to the record of the two parties in this respect. I well remember his party's record—a retirement pension of 26s. When it was first brought in reduced to 20s. by inflation by the time that the Labour Party was thrown out in 1951.

The Temporary Chairman

Order. The hon. Gentleman must realise that that does not arise on this Question. Perhaps he will confine himself to the Question.

Sir Rolf Dudley Williams

I was referring to the remarks which have been made in the debate, Sir Herbert. I thought that we were entitled to exchange views and to defend ourselves.

It is my case—and if you had allowed me to continue it would have become apparent—that the Government's policy in raising Income Tax is exactly the same policy which they used when they were last in power. It led not only to devaluation of the £, but to a great reduction in the real purchasing power of the old-age pensioners.

It is significant that at the time Sir Winston Churchill—and I am sure that all of us enjoy being alive today to be able to greet him on his ninetieth birthday—was returned to power, and became Prime Minister in 1951, there were no further increases in the standard rate of Income Tax. In fact, there was a steady reduction. It is significant also that while that reduction was taking place there was a marked reduction in the rate of inflation. It is true that when we were in power old-age pensions rose. I do not think that anyone can deny that, not even the hon. Member for the Western Isles, although he said we allowed inflation to destroy their value. It is quite untrue, and he knows it.

Mr. Malcolm MacMillian


Sir Rolf Dudley Williams

I am not giving way to the hon. Gentleman till I have finished what I have to say.

The rate of inflation when the Labour Party was in power was 6 per cent. per annum. When we were in power it was 2½ per cent. Now the hon. Gentleman can have his say.

Mr. Malcolm MacMillan

The hon. Gentleman has referred to the point at which the Labour Party went out of office and his party went in and spoke as though from that very dramatic moment everything went well, whereas previously everything went wrong. Has he forgotten that in the months before the Labour Party went out of office the terms of trade had gone monstrously against this country, due to the Korean War, of course? The hon. Gentleman should read the history of the last twenty years.

Sir Rolf Dudley Williams

They must have a very elementary knowledge of economics in the Hebrides. That is the only way the hon. Gentleman can get away with this sort of thing. In fact, it was because the Labour Party had mismanaged the country's affairs, and it will do exactly the same now. One of the great mistakes that the Government are making is to raise the standard rate of Income Tax.

Mr. Malcolm MacMillan rose

Sir Rolf Dudley Williams

I am not giving way. The hon. Gentleman has had one go. He can sit down and listen to me for a bit. I have got quite a lot to say, and I do not want to take too long, because I know that some hon. Gentlemen opposite want to get some sleep tonight.

As I said, out of all this money which will come from the pockets of the people due to the rise in the standard rate of Income Tax, some will go to raise the pensions of people like Field Marshal Lord Montgomery. I would not have thought that to be the right approach to social benefits. I would have thought that one ought to be more discriminating. Let us make it perfectly clear what will happen. Everyone will get the flat-rate increase however well paid he may be and whatever his other resources may be. I think that the approach which was made to social benefits by this party when it was in power was far better for the beneficiaries, by giving assistance through supplementary pensions.

What is happening now as a result of the proposals of the Chancellor of the Exchequer? The fact of the increase in the standard rate of Income Tax is already making itself felt on prices. Prices are rising already.

Mr. Percy Holman (Bethnal Green)

They have always been rising.

Sir Rolf Dudley Williams

I was talking to an industrialist this morning who is having a tremendous battle in the export field, and of whose production 72 per cent. goes for export, and he said that 30 prices had risen last Friday. That is the effect of the policy of the Government.

What is the position of the old-age pensioner? By the time he gets his benefits one thing is certain—the pension he is getting today will not be worth anything like what it is now.

The taxation policy which the Government are following, as I understand it, of raising the standard rate of Income Tax is certainly inflationary. All the evidence which we had when the Labour Party raised the Income Tax when it was last in power certainly leads us to think that inflation is likely to occur. At the same time, the Chancellor, as far as I can follow his policy, is attempting to be deflationary, but there is not the slightest doubt about this, that the Chancellor, even if he is a magnificent jockey, will find that he cannot ride at one and the same time two horses galloping in opposite directions.

What does he want? Does he want inflation or does he not want inflation? Because he must make up his mind. Does he want inflation or does he want deflation? If he is not careful he will get both. He will get inflation and then because of the increase in taxation he will get a collapse in the economy and possibly a sinister slump.

I have never heard of a Government coming to power, and behaving like this, having repeatedly promised, as my right hon. Friend the Member for Barnet (Mr. Maudling) has said, that there would be no rise in taxation. We all know the remark made by my right hon. Friend when he tackled the Prime Minister who denied having said there would be no rise in taxation; but my right hon. Friend was able to bring the transcript of the broadcast in which the Prime Minister made that statement that there would be no rise in taxation. It is not only the scientists and the clever men, upon whom we depend for an increase in our productivity and in our production, who will feel this burden. Right through the economy will this burden be felt.

I believe that the eventual result of it will be that those in receipt of the maximum social benefits will suffer more than anybody else because of the rate of inflation which will ensue, and it is for that reason that I think the Committee tonight should not support this proposal to increase the standard rate of Income Tax, but should reject it.

Mr. W. Baxter

Having listened with great interest to the many speeches in this debate I must say that I have come to the conclusion that a debate such as this does not enhance the reputation of Parliament. The Clause is an exceptionally important Clause, and it is a pity that hon. Members on both sides of the Committee do not try to realise the need to keep this country on an even keel, which is what I understand the Chancellor of the Exchequer is endeavouring to do. He finds, when he comes to office, a difficult state of affairs.

Sir Rolf Dudley Williams

Very difficult!

Mr. Baxter

Without apportioning blame as to who made it difficult. I think it is right that we should recognise the difficulty which faces this country, but anyone listening to this debate would think that we were a lot of children trying to knock one another about, rather than devoting our time and energy to trying to solve the difficulties which confront us as a nation.

While I do not profess to speak for a great many of the people of this country, but express my own particular point of view here, I am astonished and amazed at the audacity of hon. Members who presume to speak for the executive, who presume to speak for the scientist, who presume to say that all those people who will be called upon to pay the extra contribution by taxation are not prepared to do so.

My experience, for what it is worth, has been entirely different, it seems, from that of other hon. Members who have spoken. Many people—and I employ a quite considerable number of people: over 400, to be exact—who will be in the category of paying the extra taxation do not complain about doing so. I have not heard one complain. Many people have expressed disquiet and dissatisfaction, not at the level of taxation, but at the difficulty which our country has been in, and at the almost impossible position in which the Government find themselves in trying to implement promises which they have made to the pub- lic to increase and develop the social services. I have not found that those who will be called upon to pay this extra tax have been complaining that the old-age pension should not be increased, or that prescription charges should not be wiped away; but they say that the balance of payments and our situation as a nation should be rectified at the earliest possible moment. We all, irrespective of our incomes, or our station in life, as it were, should do all that is humanly possible, even to the extent of even greater sacrifices, to bring our country to a better position than it is at the moment not only in the eyes of hon. Members on this side or that side of the Committee but in the eyes of the world.

6.30 p.m.

I repeat that the tragedy of our Parliamentary system is beginning to be portrayed very clearly to the eyes of the world. It appears that we oppose for opposition's sake, and try to be clever at each other's expense. I do not think that this is the best way for a modern society to run its system of government, and I would counsel hon. Members to give a little consideration to that aspect of the problems which confront them. [Interruption.] I know that the hon. Gentleman is prone to mumble interjections. He never has the courage to get to his feet to express his point of view.

Mr. Hirst

Who, me?

Mr. Baxter


Mr. Hirst


Mr. Baxter

Just wait for a moment. I shall give way in due course. I do not like people who interrupt from a seated position. I like them to be more manly and courageous and to get to their feet—

Mr. Hirst


Mr. Baxter

Just a minute. As I was saying, I like people to get to their feet to express their point of view clearly and concisely, and not adopt the tactics which the hon. Gentleman has adopted from time to time in the past. Right now get up.

Mr. Hirst

If the hon. Gentleman had attended these debates regularly, he would have known only too well what right hon. and hon. Gentlemen on both sides of the Committee already know, namely, that the one thing which I have never lacked is courage, and he ought to be ashamed of himself for saying what he did.

Mr. Baxter

Courage is something which is in you, or not in you. It is for others to decide, not for you. I have expressed my point of view with regard to your interruptions.

Sir Rolf Dudley Williams

On a point of order. Sir Samuel, I heard the hon. Gentleman making disparaging remarks about the Chair. Is that in order?

The Deputy-Chairman (Sir Samuel Storey)

The hon. Member said "You" when he should not have done so. I was going to interrupt, but I did not think that it was worth delaying the Committee.

Mr. Baxter

Sir Samuel, I inadvertently used the word "you" and by doing so brought you into my statement. I humbly withdraw what I said, and perhaps I might make it clear that I was referring to the hon. Member for Shipley (Mr. Hirst) who had the audacity to interrupt when seated.

I feel very strongly about this. I have never taken the view that my right hon. Friend was introducing increased taxation for the sake of doing it, for the gratification of doing it, or for the purpose of making himself unpopular. I have always understood that he was doing it because of the conditions which prevailed when he came to office. I suggest that if a little more study was given to the problem we might find that some of the difficulties have arisen from, and go back to, the great concept that was introduced at the beginning of the last Parliament, five years ago, namely, the E.F.T.A. Agreement. If hon. Gentleman opposite gave a little more study to the problem, they might realise that what has flowed from certain agreements and from certain understandings made by the Government at that time has made the present-day problems more difficult to solve than would otherwise be the case.

I did not intend to intervene in this debate. I implore hon. Members to give a little more consideration not to their own personal advancement by propaganda or by attacks on other people, but, instead, to the difficulties in which my right hon. Friend found himself when he took over this office. Whatever the reasons for this difficulty—and they have been advanced so often that the country is tired of hearing them—we think that an increase in taxation is the best way to get over our present problems.

Mr. F. A. Burden (Gillingham)

At the beginning of his speech the hon. Member for West Stirlingshire (Mr. W. Baxter) was inclined to pour oil on the water and calm down the atmosphere of the debate, but then he did an extraordinary thing. He took a box of matches out of his pocket, lit one, threw it on the oil, and thus blew up the atmosphere again. Most of us would like to look at this problem in a factual way, and the hon. Gentleman should not object if some of us try to point out one or two failings on the part of the party opposite.

The Prime Minister said that there would be no increase in taxation to pay for the social policy of the party opposite. He said that all the improvements would be paid for out of growth. He was challenged on this only a week ago by my right hon. Friend the Member for Barnet (Mr. Maudling) and he replied that he had a transcript of the speech to which reference had been made, and he read from it. My right hon. Friend then pointed out that the Prime Minister had stopped short in his reading of the transcript, and that he had given that undertaking. He invited the Prime Minister to intervene, but the right hon. Gentleman went lower and lower on to his seat rather than stand up and answer the challenge.

The point about this is that although many people—I think most of us—would be prepared to pay extra to ensure that old-age pensioners received more, these proposals mean that the working population will have to pay more to ensure that the standard of living of old-age pensioners, in terms of money, is increased.

Perhaps I might remind hon. Gentlemen opposite of what was said by Mr. Hugh Gaitskell, who was Chancellor of the Exchequer in 1951. In his Budget statement of 1951, despite the fact that there had been raging inflation in all the years since the war, he said that it was possible to raise only the pensions of men over 70 and women over 65 by 4s. a week from 26s. to 30s. He said that there was to be no increase whatsoever for anybody else.

The Deputy-Chairman

Order. I do not think that we can discuss the rate of pensions when discussing a Clause which deals with the rate of Income Tax.

Mr. Burden

I am pointing out that increases in pensions have to be paid for out of taxation, and I am relating that to the present position. With respect, Sir Samuel, I think that this is germane to the argument, because the then Chancellor of the Exchequer went on to say specifically that this increase would have to be charged on the working population. He also went on to make the important statement that increased taxation means increased prices.

Perhaps I might remind the Chancellor of the Exchequer that on 11th March of this year he, too, admitted that increased taxation means increased prices. If he doubts that he said that, I ask him to look as carefully as I did—and I used this during my election campaign—at his statement. I say that this increase in the standard rate is inflationary, on the admission of the right hon. Gentleman himself. It must increase prices.

Let us suppose that it does increase prices. What will be the situation? The old-age pensioners will have to wait until March before they receive an increase. But there has already been a considerable increase in prices over a whole range of merchandise. I am sure that the Chancellor can easily obtain this information from the Minister of Transport. If he cares to investigate he will find that transport costs for goods have risen considerably. In the case of my own company costs in respect of delivery to the shopes have risen by £750 per annum, and that increase is bound to be passed on to the consumer.

Mr. Arthur Lewis (West Ham, North)

Where is all this to be found in the Clause?

Mr. Burden

My argument is related to the increase in taxation.

Mr. Callaghan

The increase in Income Tax does not take effect until next April, so it cannot have had any effect on costs so far.

Mr. Burden

Whether it takes place then or now, the right hon. Gentleman must accept that increased prices will be one of its effects. He has admitted it. If he will look up the record to see what he said on 11th March he will see that I am right—or is it the case that at that time he did not know what he was talking about? It may be that since then he has had a little instruction from Messrs. B and K, and that they have told him that an increase in taxation does not necessarily increase prices. But if what he said then was right perhaps he will change his mind and not go ahead with the proposed increase in Income Tax. The party opposite said that it would raise the money required out of increased production, and if it is getting on with the job it has until next March to increase production.

I will give the Chancellor a lesson, if he will learn it. Within five months of their coming to power in 1951 the Conservative Government increased all pensions to the extent of £80 million a year, and unless—

The Deputy-Chairman

Order. The hon. Member must keep to the terms of the Clause.

Mr. Burden

That is the point, Sir Samuel—I am pointing out that the Conservative Government did it without increasing taxation. The prosperity of the country in five months under a Conservative Government enabled that to be done. Since the right hon. Gentleman and his hon. Friends will have five months in which to do something, they should be able to go ahead in the next Budget without increasing Income Tax.

If we are to believe what the right hon. Gentleman and his party said at the last election, they have the answer, and they can get a terrific spurt on in production. But the threat that is lying over us in the matter of increases in taxation will reduce and not improve our ability to export. It will not increase the possibility of expanding production; it will make it more difficult.

I know that the right hon. Gentleman has had an extremely difficult time since he came to office. But his difficulties are not only those which he inherited. Those have been largely blown up—because the right hon. Gentleman and his hon. Friends knew that there were balance of payments difficulties. Nothing they have done so far has gone any way to remedy those difficulties. The right hon. Gentleman's real difficulty is that he is not master in his own house. Is his overlord master in his own house?

The Deputy-Chairman

That has nothing to do with the Clause.

Mr. Burden

I have made my point. Whether this action is the direct action of the right hon. Gentleman or of some obscure visionary in the background, the intention is to raise the standard rate of Income Tax by 6d. That is something that we have not seen in 13 years of Conservative rule.

6.45 p.m.

Sir Kenneth Pickthorn (Carlton)

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

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

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

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

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

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

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

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

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

Mr. Arthur Lewis

What has all this to do with the Question?

Sir K. Pickthorn

The question has been posed frequently from the other side, frequently in the form of whether an extra 6d. on Income Tax will deter all these chaps who come here for Ph.Ds from staying and cause them to go back across the Atlantic and cause those on this side to cross the Atlantic once and once only, in order to get back their sixpences and more. Most of this is, I think, exaggerated, but I think it certainly is real.

There is a serious risk of what are called young scientists turning into sorts of sacred cows and it wants watching. Establishment succeeds establishment continuously and it is a rule that anything which the generality of people can deride as establishment has really ceased to be such, and that there is one coming up over the horizon, a quite different, and it may be, a very much worse one; and this one I am sure wants watching.

There is a serious point in 6d., made so by the habit of inflation which this country has had ever since 1915, a ter- rible, terrible thing to have had, two generations of inflation—sometimes more and sometimes less. The seriousness is a combination of that and heavy taxation, and there are vicious circles in three dimensions. These combinations do cause more people already than ought to have done so to do what many are bound to do: a population of our size with a much greater and richer population next door to it, such a population is bound to run the risk of those people who calculate their careers beforehand, and especially those who do it mainly in terms of money, bound to run the risk of those people disappearing faster than ever; and the passage of this Clause is quite undoubtedly another small step to increasing that risk. The Committee should not take that step without being extremely conscious of what it is doing.

Mr. William Clark (Nottingham, South)

We have had an extraordinary debate. So far as I am concerned, it is extraordinary in that this is the first time that I have spoken from the Opposition Front Bench. It is extraordinary in another way. I think I am right in saying that 122 Amendments have been tabled to this Finance Bill. Of these, 17 represent second thoughts on the part of the Chancellor, five have been tabled by the Liberal Party—they are mainly duplicates of Conservative Amendments—three come from the Government back benches and two of them are duplicates of Amendments put down by my hon. Friends. The Opposition have tabled 93 Amendments. I should have thought this an indication of our serious and constructive approach.

We have had a very wide debate on the Question, "That the Clause stand part of the Bill". I hope that it will be in order to have a look at the impact of the provision in Clause 1 of a 6d. increase on Income Tax in the light of what the Government put out preceding the publication of the Finance Bill. In the Gracious Speech it was stated To the end that all may share the benefits of rising productivity. My Ministers will work for more stable prices … We should also have a look at what was stated in the White Paper, The Economic Situation, of 20th October. In paragraph 7 it says: … there is no undue pressure on resources calling for action. Paragraph 8 goes on to say: An attack must be made on the problem of increasing prices. From the number of questions posed to the Chancellor and the obviously foreshadowed pension increase, which has figured largely in the debate, I think it would be for the benefit of us all if we asked ourselves what the Chancellor has proposed.

Pensions are to cost £300 million. National Assistance will cost £23 million, prescription charges £22 million—which is a total of social benefits amounting to £345 million. How does the Chancellor suggest that he shall collect the money? A sum of £215 million will come from the increase in the National Insurance contribution, which leaves £130 million for the Chancellor to find in order to pay for the social benefits. Presumably, the import surcharge of 15 per cent. will produce £200 million. The export rebate will cost £75 million and, as a consequence, the Chancellor will get from the import surcharge a net revenue of £125 million. So, if our social benefits are to cost £130 million net, we have revenue for that amounting to £125 million. I do not think that anyone will argue about the difference of £5 million. Why, therefore, is it necessary to increase taxation? Why increase Income Tax? No doubt, Sir Samuel, you would rule me out of order if I ventured into the realms of the petrol tax, but taking Income Tax alone, why is it necessary—when the Chancellor has got most of the increase in the social services paid for—to increase Income Tax?

I would remind the Chancellor that the previous Socialist Chancellor of the Exchequer also increased Income Tax by 6d. That was in 1951. I am sure that the right hon. Gentleman has not done this merely to remain in step with the late Mr. Hugh Gaitskell.

So much has been said during this debate about what has happened over the past 13 years, that I think it would be a salutary lesson, particularly to many Members who probably have not been reading what has been happening, to point out that in the last 13 years a Conservative Government reduced Income Tax at the standard rate by 1s. 9d. in the £ and, as my hon. Friend the Member for Tynemouth (Dame Irene Ward) said, at the same time increased social benefits five times for the old-age pensioners. We also increased the Income Tax allowances.

7.0 p.m.

The hon. Member for Liverpool, Walton (Mr. Heffer) made great play about Purchase Tax and indirect taxation. I hope that he will look at the figures carefully, because Purchase Tax in the last 13 years has been considerably reduced by the Conservative Government and the percentage of the gross national product taken by indirect taxation before this Budget was lower in 1964 than it was in 1951. We must remember these things, and I think it would be as well if we did not bandy across the Floor of the Committee these wild accusations, which are absolutely baseless.

My right hon. Friend the Member for Barnet (Mr. Maudling), with his usual ability to forecast what will happen, said during the election that one of the results of a Labour Government, particularly with all their manifestoes and promises, would be an increase of 9d. in the £ on Income Tax. My right hon. Friend was wrong—in fact we have an increase of only 6d. at the moment. I am sure that the Chancellor of the Exchequer will remember that when he read of my right hon. Friend talking about 9d. Income Tax increase if the Socialists were elected, he said in his speech on 14th October in Cardiff: Infants school stuff … nursery school stuff. Hardly worth serious attention … these figures of Mr. Maudling are getting screwier and screwier. He was right to the extent of two-thirds, for we have had 6d. of the foreshadowed 9d. increase in this Clause. I hope that the Chancellor will make some reference to his Cardiff speech when he replies, because many of us on this side of the Committee, and I am sure hon. Gentlemen behind him, are rather worried about how the future Chancellor in October, 1964, during the General Election, implied that taxes need not go up.

The hon. Member for Walton queried an accusation by one of my hon. Friends, that the present Prime Minister said that there would be no general increase in taxation. I remind him that in an I.T.V. broadcast on 15th September, when he was asked, "Will your proposals involve increases in taxation?", the Prime Minister said: No. Over the period of a Parliament I believe we can do it certainly without any general increase in taxation. I would have thought, as my hon. Friend pointed out, that this was an indication to the electors of this country that all these grandiose promises and schemes put forward by the Socialist Party could be paid for without any general increase in taxation. Today these chickens are coming home to roost.

I cannot see how hon. Gentlemen opposite can say that this is taking money—and I paraphrase—from the rich to pay to the poor. I hope that I have established the argument that there is no necessity to increase Income Tax if it is only to pay for old-age pensions or social benefits, whether it be prescription charges or National Assistance. How, then, can they say that they are taking money from the rich in order to pay the poor when 6,500,000 people in this country will have to pay higher taxation because of Clause 1. I must remind the Committee that the present Prime Minister said, as reported in The Times on 20th May: We must streamline our tax system so that those who earn money will get a better deal. This is the whole burden of the argument of my hon. Friends against this increase of 6d. in the standard rate. As my hon. Friends the Members for Scarborough and Whitby (Sir A. Spearman) and Cardiff, North (Mr. Box) said, this will penalise the young executives. I urge hon. Gentlemen to look at the supplementary Financial Statement issued by the Government, from which they will see that if one earns over £700 a year and one is single, Clause 1 affects one's tax payments. The burden of my hon. Friend's argument is that if we take a young up-and-coming executive earning between £700 and £2,500 a year, he will pay considerably more tax.

It is all very well for the Chancellor of the Exchequer to say, "Oh, yes but the rate will not be very much—ten bob a week. What is 10 bob a week?" It has also to be remembered that not only will a man pay increased tax of 10s. a week, he will also, from 29th March next year, have to pay 2s. a week extra in National Insurance contributions. This affects people throughout the whole sphere. Whether one earns £400 or £4,000 a year, one will still have to pay this 2s. a week extra.

The only thing I could not agree with in the speech of my hon. Friend the Member for Shipley (Mr. Hirst) was his remark about his "new-found respectability." I have always considered him respectable and I have always thought him to have the courage to stand on his feet and to say exactly what he thinks, whether against the Opposition or against the Government of the day. I think that my hon. and gallant Friend the Member for Harrow, East (Commander Courtney) had a valid point about reduced rates and further allowances for those who help elderly people. Hon. and right hon. Gentlemen opposite must accept the fact that we should give these allowances if we are increasing taxation by 6d. in the £ standard rate. Where is the social justice in letting this increase go right over the field of taxation? Surely it should have been more discriminatory. Why should the reduced rate relief apply only to the first £300? Why was this level not increased? The ingenious Amendment of my hon. Friend the Member for Shipley, which unfortunately was not called, give a certain amount of increase in reduced rate relief.

I think I am right in saying that only on the present Clause may I talk about allowances. Nothing in the Clause helps people with small incomes. There is an age relief or age exemption relief. I should like to know what the Chancellor has to say about this. In opposition, the present Government were very strong in their comments about helping the old, the needy, the sick and people on small incomes. Why are they so silent now? Why have they not tabled Amendments to the Finance Bill? Why did they not support my hon. Friend the Member for Tynemouth, in her excellent intervention on behalf of people on fixed incomes? What we have to do is to have another look at the background of the Clause to see what is the effect of the increase of 6d. in Income Tax.

I have said that the increased National Insurance contribution of 2s. for all employed people will hit all, irrespective of income. This follows the point of the hon. Member for The Hartlepools (Mr. Leadbitter), who complained that the official statistics were wrong and that average earnings were not over £17 a week but that his statistics gave them as £12 a week. All we can say to him is that it does not matter whether one is earning £12 or £17 a week, one will still have to pay 2s. a week extra in National Insurance contribution.

There is one other matter of grave omission, and I am sure that the Chancellor of the Exchequer will pay some attention to this. It is a grave omission that nowhere in the Queen's Speech, in the White Paper—and only belatedly in the Budget Statement—have savings been mentioned. Savings are vital to the country, and any fair-minded person must accept that the increase of 6d. in the standard rate of tax must affect savings. It may be that for a man on £1,500 to £2,000 a year the Income Tax goes up by £20 to £25 a year. If we assume that he has been saving £40 to £50 a year, we must ask where he will find the extra taxation. I suggest that he can find it only from a reduction in his savings.

One of the main recommendations of N.E.D.C. before the election was that small savings must be increased. What does the present, reconstituted N.E.D.C. think of the Budget? Does it think that the increase of 6d. in the standard rate will reduce savings? Or does not the Chancellor know what it thinks, in view of the fact that, unfortunately, he is not a member of it? It will be disastrous for our economy if the Chancellor of the Exchequer is not a member of that all-powerful body.

In his Budget statement the Chancellor said that the increase of 6d. in Income Tax and the increase in petrol duty will help the balance of payments. As my hon. Friends have pointed out in numerous speeches, this additional 6d. can only add to the costs of industry and act as a disincentive to the higher executive. How will it help exports? The increased National Insurance contribution and the imports surcharge have already taken care of the extra cost of the social services. How can the extra 6d. on Income Tax help our balance of payments? If the Chancellor wants to help our balance of payments, why does he increase Income Tax by 6d. and at the same time upset people by mentioning a corporation tax and a capital gains tax without giving the structure of those two taxes? This has led to a tremendous amount of uncertainty, as was pointed out by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid).

One of the main arguments against the increase of 6d. in Income Tax arises from the fact that the Labour Party say that they must increase taxation in order to pay for increased social services, yet it is known from their own figures that the increased social services will be paid for by taxes other than the new Income Tax and the petrol duty. What can one think for the future of the country except that for doctrinaire reasons, or for some other reason still extremely obscure to us, a 6d. increase in the standard rate has been added to the costs of industry. We think that this increase is totally irrelevant to our overseas trading position, and I hope that my hon. and right hon. Friends will register their protest in the Lobby.

7.15 p.m.

Mr. Callaghan

I congratulate the hon. Member for Nottingham, South (Mr. Wiliam Clark) on his maiden speech from the Front Bench. That is always an ordeal. As we know from our past experience of him, he always marshals his facts clearly and well and presents them concisely, even though I usually find myself in disagreement with him. I expect that I shall find myself in continuous disagreement with him as the Bill proceeds. Nevertheless, it is always a pleasure to hear the way in which the hon. Member puts his case.

We have had a far-ranging debate going all the way from sacred cows to Suez via the standard rate, and the Committee will agree that practically no facet of the increase has not been debated at some length. I will deal, first, with what I might call the technique. The hon. Baronet the Member for Carlton (Sir K. Pickthorn), in what was an unusually benign speech for him, asked about the technique. Increases in taxation have been announced beforehand in earlier years. I will quote some which come to my mind, and others have been given to me. The speculative gains tax, which the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) introduced, was announced by him in July, 1961. The right hon. Member for Barnet (Mr. Maudling) announced substantial changes in the capital allowances in October or November in the course of one year. The standard rate of Income Tax has been altered in the course of one year.

I do not argue from precedent particularly, because I think that one always ought to look at these matters on their merits. I looked at the advantages and disadvantages, and I thought that there were more advantages than disadvantages in this course. I do not give to the annual Budget quite as high a place as tradition seems to give it in that sense, and I think that this has been the feeling of the House of Commons over the last few years. By the use of the regulators, the right hon. Member for Barnet showed that he needed—and maybe we shall need—to adjust the pressure of demand during the course of a year apart from what one does in April of any year. I therefore do not think that we should adhere strictly to the notion that changes in tax must always be announced as from 6th April in any year.

Sir K. Pickthorn

With respect and benignity, the right hon. Gentleman does not get away from the importance of the annual Budget by announcing taxation six months before it. One Parliament cannot bind a succeeding Parliament, still less can one announcement to one House of Commons bind the same House of Commons six months later. It will depend on what happens in the Budget.

Mr. Callaghan

I fully accept that. I prefer the hon. Gentleman's benignity to his malignity, and it was very pleasant to see his benignity this afternoon. But he is right. One cannot bind anybody in that way, any more than the right hon. Member for Barnet was binding the Budget of the following April when he announced substantial changes in capital allowances.

Nevertheless, for reasons of administrative convenience and convenience to the taxpayer, I thought, and think, it right —and even more right now that we have a P.A.Y.E. system, which is a fairly recent development in taxation terms in this country—to make this announcement. Changes of taxation announced in April, because of the operation and the relative slowness of the system, cannot come into force until about July or August. Therefore, any changes in liability are concentrated in a period of eight or nine months. An advance announcement at least enables them to be spread over the whole 12 months. From the point of view of the taxpayer's convenience, there is much to be said for that.

This is not to say that we should make a general rule of it, nor do I say that we should be slaves to convention. As I said in my Budget statement, the announcement enables the Inland Revenue to get ahead with the recoding work—assuming that the House gives us the Finance Bill—in January. They will, therefore, have that out of the way by the time the Income Tax year starts. That is the technical reason for my decision. The Committee can argue about it on constitutional grounds, but I do not think that I have invalidated any great constitutional principle.

Mr. Norman Cole (Bedfordshire, South)

Would the right hon. Gentleman refer to col. 1037 of HANSARD of 11th November? He will find that he said that in increasing the standard rate of tax he did not propose to make a corresponding increase in the reduced rates of tax charged on the first £300 of taxable income. Will he next refer to subsection (2) of the Clause, where he will find that there are corresponding increases. Will he clarify that point?

Mr. Callaghan

I noticed that and inquired into it. This is a technical matter of drafting. I could explain it if I were to go into great detail, but it is technical. I am satisfied that it makes no difference to the charge in those cases.

Mr. Cole

That is most comforting to me but, considering the position a few months ahead—the position that will arise after April of next year—can the right hon. Gentleman say whether there was any kind of Parliamentary sanction behind what he was good enough to tell the House of Commons on 11th November?

Mr. Callaghan

I do not have those words before me. Had the hon. Member had the good fortune to catch the Chairman's eye during the debate he would have had a chance to mention that to me and I could have had the matter looked up. Unfortunately, I cannot go into the matter at greater length now, but I assure him that I will look into it.

I turn to the substance of the debate. The Clause, in raising the standard rate by 6d. but not altering the reduced rates, will bring an additional yield of £122 million to the Revenue in a full year. I have been asked to divide this amount up and to say how much of it will go on pensions, how much for prescription charges, and how much for other purposes. The hon. Lady the Member for Tynemouth (Dame Irene Ward), who asked me to do this, has been an hon. Member for a long time and, while I have not been here quite as long as she has, I am sure that she is as well aware as I am that the revenue and expenditure both form part of a reservoir or pool. Therefore, it is not possible for me to divide up exactly what would be the amount that would go into any particular section or would be drawn out from any section in this way.

With respect to the hon. Member for Nottingham, South, I thought that in what I would call an accurate accountant's approach he neglected the other major aspect: that is, to measure the pressure of demand. Taxation changes, as his right hon. Friend has always emphasised, must be either questions of raising more revenue, or of altering the pressure of demand. This, I think, is the reason why modern Budgets are so much more complicated than they were when I first came here; simply because one must regard both these considerations.

I say to the hon. Member for Nottingham, South that I could have increased the borrowing requirement. I need not, in that sense, have raised the standard rate, but if I had increased the borrowing requirement I would, in my view, then have put such inflationary pressure on the economy that it would have been improper, dishonest—perhaps not dishonest, but certainly improper—and reckless to have done it in that way.

I am not ashamed to stand by what I said at the time of the election—that I do not want to cash the cheques until I have got the money in the till. That may have been a rather rough and ready way of expressing this thought, but I believe that it is right, and that people outside the Committee accept that it is right, that one should relate the additional benefits which the country as a whole wants conferred on particular groups to the capacity of the country to pay, and to the total charge that has to be made.

I believe that that is something the country will respond to and that is why, despite the fury of some of the speeches to which we have listened this afternoon, I do not find them matched by the fury of people outside. Of course people do not like paying extra taxation. However, if they know that something is fair then, on the whole, they accept that it is fair and right that they should pay. That is why although hon. Members opposite will decide their own tactics this evening, I doubt whether they will get much advantage out of voting against this increase. Indeed, I am not sure why they will vote against it.

We have heard a number of arguments from the benches opposite. Some hon. Members say that the rate of Income Tax should not be raised. Others say that it should be raised, but in different ways. The hon. Member for Scarborough and Whitby (Sir A. Spearman) said that he did not object to it being raised in this way. I agree with his quotation from Lord Waverley's remarks on the question of inequality. As I understand, Lord Waverley said that one test of what one does about taxation should be whether the level of human needs is too low. I expected to hear hon. Members opposite say, "I agree. The human needs of the pensioners are too low and Lord Waverley would have agreed, in these circumstances, that the increase in Income Tax should take place".

Remembering Lord Waverley as I do—and I seem to recall the occasion when he made that speech—I believe that he quite possibly would have said that, because he had a fine measure and balance in his mind for these considerations. That is the measure and balance I ask hon. Members opposite to apply tonight. Do they think, taking both the requirement of the Exchequer and the need to ensure that there is no undue pressure of demand, that I should have postponed the introduction of the increase in pensions or that I should not have increased taxes at the same time?

This is the question which no hon. Member opposite has answered. They have used the prerogative of all Oppositions throughout the ages of saying that they desire the ends, but are not willing to give us the means. That is happening over pensions. Of course they want higher pensions. Indeed, they want us to do more than we are doing. I recall hearing the right hon. Member for Leeds, North-East (Sir K. Joseph), speaking with all the authority of the Front Bench opposite, attacking my right hon. Friend the Minister of Pensions and National Insurance because she was not paying the benefits soon enough or big enough.

I suppose that Oppositions have done this in the past. I have no doubt that oppositions will do it in the future. This present Opposition are certainly doing it now. Nevertheless, I beg them not to believe that there is any particular currency in their doing it in this way. There is not, and there is no particular kudos in their doing it in this way. People recognise that benefits and payments go together. That is what we are trying to do. [Interruption.] I hear an hon. Member opposite reminding me of the election. There is nothing I said at the time of the election that can be quoted against me now. Indeed, the right hon. Member for Barnet (Mr. Maudling) used to quote me in his own defence. He used to quote from a debate in which I intervened—I think that it was about last May—to say that no responsible Government could go beyond his programme. As I say, he used to quote that in his own defence. He quoted it at the time of the election to say that we could not do it.

The whole Committee should face the fact—and I know that the right hon. Member for Barnet appreciates this—that in the post-Plowden era the previous Government, with rolling programmes for housing, schools, education, defence and all the other matters, committed us. I do not complain about that. But they looked forward into the future and committed the nation to expenditure up to the year 1968–69 based on three considerations.

The first was a permanent 4 per cent growth rate. The second was a constantly increasing level of savings and the third was possibly some higher measure of taxation. I do not know whether the right hon. Member for Barnet wants to take issue with that, but my investigations show that it is possible that his programme would have meant a possible increase—I go no further than "possible increase"—in the level of taxation to fulfil programmes that now exist.

The first thing that has gone wrong is that, unfortunately, the right hon. Gentleman has not produced the 4 per cent. growth rate. We will not get 4 per cent. this year and, in these circumstances, decisions will have to be taken, and there will have to be reviews, about the general levels of expenditure.

Mr. Reginald Maudling (Barnet)

The right hon. Gentleman is right in what he says about the level of expenditure to which we had committed ourselves. That was made clear in our White Paper. However, the point I made was to welcome the responsibility of the attitude which he took on these matters, but, at the same time, to regret the fact that his colleagues did not take the same attitude.

Mr. Callaghan

That is not true. If the right hon. Gentleman looks at the speeches which have been made on this subject—and I see no reason to depart from any of them—he will see that we have said that if we can get back—indeed, I will not say "if," because it must be the imperative task of the country to do it—rather, when we get back to a 4 per cent. growth rate, then I think that over the period of the lifetime of a Parliament it will be possible to do these things. But the dilemma in which the country finds itself now is that it does not have a 4 per cent. growth rate, and it does not look like getting it for the rest of this year, particularly since 11 months of it have already gone and we are now virtually in the twelfth month of the year.

The twin tasks of the Government must be to get our balance of payments under control, as we shall next year, and, at the same time to achieve a 4 per cent. growth rate. Otherwise the programme which the right hon. Gentleman published a year ago will not be meaningful in the present context. This is a problem for the whole Committee. All hon. Members must face it and I hope that during the time I occupy the office I now hold I will not attempt to dodge these very difficult problems which the nation as a whole must face. The nation wants more roads, and more quickly. The nation wants more housing, and more quickly. This means that we must get this rate of growth in the national product as quickly as we can. But, at the same time, we have to try to get the balance of payments under control.

7.30 p.m.

I am not opening old sores, but I think that it will be common ground on both sides of the Committee that we can get a fairly rapid rate of growth if we do not keep the balance of payments under reasonable control. Of course, we can; we have done it. But then we are faced with the difficulty of trying to get that under control, and in its turn—this was the first imperative at the time in the conditions of the first five weeks in which we found ourselves—this means slowing down the rate of growth.

I have said, and, of course, it is true, that a 7 per cent. Bank Rate has its immediate effect on the international situation, but I would be foolish to deny that in time it must work its way through to the domestic economy. We are now putting the balance of payments right, and in reducing the swollen deficit, we are, in fact, hampering our rate of growth. But as I understand it, people of all nations today, and especially our own, demand that we should live within our means, that we should have a higher standard, and that we should play our part in the world. This is a problem to which, I think, the whole nation has to devote its attention. [Interruption.] If we do not, we shall then get the brain drain.

I come to the point about the so-called brain drain. I very much doubt whether the difference in taxation of 6d. in the £ on this level of incomes will mean the difference between a man emigrating or staying at home. I have already shown in my intervention to the hon. Member for Ilford, South (Mr. Cooper)—I am sorry that he is not in his place—that he grossly exaggerated the additional cost. He exaggerated it by five times and that is no way in which to encourage our young scientists to stay. We all have our own views about this and examinations have been made of it. If I had to state what I regard as prime factors in encouraging the scientists and technologists to go abroad, as well as the taxation levels, I would enumerate three.

First, the level of salaries which are payable—for example, in the United States. That is where we start. Secondly, the facilities they are afforded in doing their research and the other technical work in which they are involved. I have heard this argument time and time again by our young men, whom I have seen in the United States, "We get better facilities here than in the United Kingdom". The third reason, apart from taxation which has been mentioned, is the status they have in the societies over there, whereas here I do not believe that our scientists and technologists are given the status in industry that their qualifications deserve.

Of course, it is the job of the Opposition to isolate the one factor that hits the Government, but I would say that there are these other factors. The level of taxation is one of them, but in this case I would say frankly not a very important one, because I have attempted, in raising the standard rate by 6d., to ensure that we at least try to keep out, or increase only slightly the liability of, those who are at the bottom of the income scale.

I think that hon. Members know me well enough to know that I do not increase Income Tax for the sake of popularity. I believe that in this case it is a stern necessity. It is one which I regret doing, but I know that our people, faced with the choice between leaving the pensioners at the level they were at, or increasing the standard rate in the way that I have done, would choose the increase in the standard rate, and for that I ask the Committee to support the Government.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 232, Noes 197.

Division No. 12.] AYES [7.35 p.m.
Albu, Austen Bishop, E. S. Callaghan, Rt. Hn. James
Allaun, Frank (Salford, E.) Blackburn, F. Carter-Jones, Lewis
Alldritt, W. H. Blenkinsop, Arthur Castle, Rt. Hn. Barbara
Allen, Scholefield (Crewe) Boardman, H. Coleman, Donald
Armstrong, Ernest Boston, T. G. Conlan, Bernard
Atkinson, Norman Bowden, Rt. Hn. H. W. (Leics S. W.) Corbet, Mrs. Freda
Bacon, Miss Alice Bowen, Roderic (Cardigan) Craddock, George (Bradford, S.)
Bagier, Gordon A. T. Bowles, Frank Crawshaw, Richard
Barnett, Joel Boyden, James Crosland, Anthony
Baxter, William Braddock, Mrs. E. M. Grossman, Rt. Hn. R. H. S.
Beaney, Alan Broughton, Dr. A. D. D. Cullen, Mrs. Alice
Bellenger, Rt. Hn. F. J. Brown, Hugh D. (Glasgow, Provan) Dalyell, Tam
Bence, Cyril Buchan, Norman (Renfrewshire, W.) Darling, George
Bessell, Peter Butler, Herbert (Hackney, C.) Davies, G. Elfed (Rhondda, E.)
Binns, John Butler, Mrs. Joyce (Wood Green) Davies, Harold (Leek)
Davies, Ifor (Gower) Jones, Dan (Burnley) Prentice, R. E.
Davies, S. O. (Merthyr) Jones, J. Idwal (Wrexham) Probert, Arthur
Delargy, Hugh Jones, T. W. (Merioneth) Pursey, Cmdr. Harry
Dell, Edmund Kelley, Richard Rankin, John
Dempsey, James Kenyan, Clifford Redhead, Edward
Diamond, John Kerr, Dr. David (W' worth, Central) Rees, Merlyn
Dodds, Norman Lawson, George Rhodes, Geoffrey
Doig, Peter Leadbitter, Ted Richard, Ivor
Donnelly, Desmond Ledger, Ron Roberts, Albert (Normanton)
Duffy, Dr. A. E. P. Lee, Miss Jennie (Cannock) Robertson, John (Paisley)
Dunn, James A. Lever, Harold (Cheetham) Rodgers, William (Stockton)
Dunnett, Jack Lewis, Arthur (West Ham, N.) Rogers, George (Kensington, N.)
Edelman, Maurice Lewis, Ron (Carlisle) Rose, Paul B.
Edwards, Rt. Hn. Ness (Caerphilly) Lipton, Marcus Ross, Rt. Hn. William
Edwards, Robert (Bilston) Lomas, Kenneth Rowland, Christopher
English, Michael Loughlin, Charles Sheldon, Robert
Ensor, David Lubbock, Eric Shinwell, Rt. Hn. E.
Evans, Albert (Islington, S. W.) McBride, Neil Short, Rt. Hn. E. (N 'c' tle-on-Tyne, C.)
Fernyhough, E. MacColl, James Short, Mrs. Renèe (W'hampton, N. E.)
Finch, Harold (Bedwelty) MacDermot, Niall Silkin, John (Deptford)
Fitch, Alan (Wigan) McGuire, Michael Silkin, S. C. (Camberwell, Dulwich)
Fletcher, Sir Eric (Islington, E.) McInnes, James Silverman, Sydney (Nelson)
Fletcher, Ted (Darlington) McKay, Mrs. Margaret Skeffington, Arthur
Fletcher, Raymond (Ilkeston) Mackenzie, Gregor (Rutherglen) Slater, Mrs. Harriet (Stoke, N.)
Floud, Bernard Mackie, John (Enfield, E.) Slater, Joseph (Sedgefield)
Foley, Maurice McLeavy, Frank Snow, Julian
Foot, Sir Dingle (Ipswich) MacMillan, Malcolm Solomons, Henry
Foot, Michael (Ebbw Vale) Mahon, Peter (Preston, S.) Sorensen, R. W.
Freeson, Reginald Mahon, Simon (Bootle) Soskice, Rt. Hn. Sir Frank
Garrett, W. E. Mallalieu, E. L. (Brigg) Spriggs, Leslie
Garrow, A. Mallalieu, J. P. W. (Huddersfield, E.) Stones, William
Ginsburg, David Manuel, Archie Stross, Sir Barnett (Stoke-on-Trent, C.)
Gregory, Arnold Mapp, Charles Swain, Thomas
Grey, Charles Mason, Roy Symonds, J. B.
Griffiths, Rt. Hn. James (Llanelly) Mendelson, J. J. Taylor, Bernard (Mansfield)
Grimond, Rt. Hn. J. Mikardo, Ian Thomas, George (Cardiff, W.)
Gunter, Rt. Hn. R. J. Millan, Bruce Thomas, Iorwerth (Rhondda, W.)
Hale, Leslie Miller, Dr. M. S. Thornton, Ernest
Hamilton, James (Bothwell) Molloy, William Thorpe, Jeremy
Hamilton, William (West Fife) Monslow, Walter Tinn, James
Hamling, William (Woolwich, W.) Morris, Alfred (Wythenshawe) Tuck, Raphael
Harper, Joseph Morris, Charles (Openshaw) Urwin, T. W.
Harrison, Walter (Wakefield) Morris, John (Aberavon) Varley, Eric G.
Hart, Mrs. Judith Mulley, Rt. Hn. Frederick (SheffieldPk) Walden, Brian (All Saints)
Hayman, F. H. Murray, Albert Walker, Harold (Doncaster)
Hazell, Bert Neal, Harold Wallace, George
Heffer, Eric S. Newens, Stan Warbey, William
Herbison, Rt. Hn. Margaret Noel-Baker, Rt. Hn. Philip (Derby, S.) Watkins, Tudor
Hill, J. (Midlothian) Oakes, Gordon Weitzman, David
Hobden, Dennis (Brighton, K'town) Oram, Albert E. (E. Ham S.) Wells, William (Walsall, N.)
Holman, Percy Orbach, Maurice Whitlock, William
Horner, John Orme, Stanley Wilkins, W. A.
Houghton, Rt. Hn. Douglas Oswald, Thomas Willey, Rt. Hn. Frederick
Howarth, Harry (Wellingborough) Owen, Will Williams, Alan (Swansea, W.)
Howell, Denis (Small Heath) Padley, Walter Williams, W. T. (Warrington)
Howie, W. Page, Derek (King's Lynn) Willis, George (Edinburgh, E.)
Hughes, Emrys (S. Ayrshire) Palmer, Arthur Wilson, William (Coventry, S.)
Hunter, Adam (Dunfermline) Pannell, Rt. Hn. Charles Winterbottom, R. E.
Hunter, A. E. (Feltham) Park, Trevor (Derbyshire, S. E.) Woodburn, Rt. Hn. A.
Irvine, A. J. (Edge Hill) Pavitt, Laurence Woof, Robert
Irving, Sydney (Dartford) Pearson, Arthur (Pontypridd) Wyatt, Woodrow
Janner, Sir Barnett Pentland, Norman
Johnston, Russell (Inverness) Popplewell, Ernest TELLERS FOR THE AYES:
Mr. Gourlay and Mr. McCann
Agnew, Commander Sir Peter Black, Sir Cyril Clark, William (Nottingham, S.)
Alison, Michael (Barkston Ash) Box, Donald Clarke, Brig. Terence (Portmth, W.)
Anstruther-Gray, Rt. Hn. Sir W. Brewis, John Cole, Norman
Astor, John Bromley-Davenport, Lt.-Col. Sir Walter Cooke, Robert
Atkins, Humphrey Brooke, Rt. Hn. Henry Cooper, A. E.
Awdry, Daniel Brown, Sir Edward (Bath) Cooper-Key, Sir Neill
Baker, W. H. K. Bruce-Gardyne, J. Corfield, F. V.
Balniel, Lord Buchanan-Smith, Alick Costain, A. P.
Barlow, Sir John Buck, Antony Courtney, Cdr. Anthony
Batsford, Brian Bullus, Wing Commander Eric Craddock, Sir Beresford (Spelthorne)
Bell, Ronald Burden, F. A. Crosthwaite-Eyre, Col. Sir Oliver
Berkeley, Humphry Butler, Rt. Hn. R. A. (Saffron Walden) Crowder, F. P.
Berry, Hn. Anthony Campbell, Gordon Cunningham, Sir Knox
Biffen, John Carlisle, Mark Curran, Charles
Biggs-Davison, John Channon, H. P. G. Currie, G. B. H.
Bingham, R. M. Chataway, Christopher Dalkeith, Earl of
Birch, Rt. Hn. Nigel Chichester-Clark, R. Davies, Dr. Wyndham (Perry Barr)
d'Avigdor-Goldsmid, Sir Henry Irvine, Bryant Godman (Rye) Page, R. Graham (Crosby)
Dean, Paul Jennings, J. C. Percival, Ian
Deedes, Rt. Hn. W. F. Jones, Rt. Hn. Aubrey (Hall Green) Peyton, John
Digby, Simon Wingfield Jopling, Michael Pickthorn, Sir Kenneth
Dodds-Parker, Douglas Kerby, Capt. Henry Pitt, Dame Edith
Doughty, Charles Kerr, Sir Hamilton (Cambridge) Powell, Rt. Hn. J. Enoch
Drayson, G. B. Kershaw, Anthony Price, David (Eastleigh)
du Cann, Edward Kilfedder, James A. Prior, J. M. L.
Eden, Sir John King, Evelyn (Dorset, S.) Quennell, Miss J. M.
Ellott, R. W. (N'c'tle-upon-Tyne, N.) Kitson, Timothy Rawlinson, Rt. Hn. Sir Peter
Emmet, Hn. Mrs. Evelyn Lagden, Godfrey Rees-Davies, W. R.(Isle of Thanet)
Fell, Anthony Lambton, Viscount Ridsdale, Julian
Fletcher-Cooke, Charles (Darwen) Langford-Holt, Sir John Roberts, Sir Peter (Heeley)
Fletcher-Cooke, Sir John (S'pton) Legge-Bourke, Sir Harry Robson Brown, Sir William
Forrest, George Litchfield, Capt. John Roots, William
Foster, Sir John Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Russell, Sir Ronald
Fraser, Rt. Hn. Hugh (St'fford & stone) Lloyd, Ian (P'tsm'th, Langstone) Scott-Hopkins, James
Fraser, Ian (Plymouth, Sutton) Lloyd, Rt. Hn. Selwyn (Wirral) Sharples, Richard
Gammans, Lady Loveys, Walter H. Shepherd, William
Gardner, Edward Lucas-Tooth, Sir Hugh (Hendon, S.) Sinclair, Sir George
Gibson-Watt, David McAdden, Sir Stephen Spearman, Sir Alexander
Gilmour, Sir John (East Fife) McLaren, Martin Stainton, Keith
Glover, Sir Douglas MacIeod, Rt. Hn. Iain Talbot, John E.
Gower, Raymond McMaster, Stanley Taylor, Edward M. (G' gow, Cathcart)
Grant, Anthony McNair-Wilson, Patrick Temple, John M.
Grant-Ferris, R. (Nantwich) Maginnis, John E. Thatcher, Mrs. Margaret
Grieve, Percy Marten, Neil Thomas, Sir Leslie (Canterbury)
Griffiths, Eldon (Bury St. Edmunds) Maude, Angus E. U. Thompson, Sir Richard (Croydon, S.)
Griffiths, Peter (Smethwick) Maudling, Rt. Hn. Reginald Tiley, Arthur (Bradford, W.)
Hall John (Wycombe) Maxwell-Hyslop, R. J. (Tiverton) Turton, Rt. Hn. R. H.
Hall-Davis, A. G. F. (Morecambe) Maydon, Lt.-Cmdr. S. L. C. Tweedsmuir, Lady
Hamilton, Marquess of (Fermanagh) Meyer, Sir Anthony Van Straubenzee, W. R.
Harris, Frederic (Croydon, N. W.) Mills, Peter (Torrington) Vaughan-Morgan, Rt. Hn. Sir John
Harris Reader (Heston) Mills Stratton (Belfast, N.) Walder, David (High Peak)
Harrison, Col. Sri Harwood (Eye) Miscampbell, Norman Walker, Peter (Worcester)
Harvey, John (Walthamstow, E.) Mitchell, David Walker-Smith, Rt. Hn. Sir Derek
Hawkins, Paul Monro, Hector Walters, Dennis
Hay, John More, Jasper Ward, Dame Irene
Heald, Rt. Hn. Sir Lionel Morgan, W. G. Whitelaw, William
Higgins, Terence L. Morrison, Charles (Devizes) Wills, Sir Gerald (Bridgwater)
Hiley, Joseph Morrison, John (Salisbury) Wilson, Geoffrey (Truro)
Hill, J. E. B. (S. Norfolk) Mott-Radclyffe, Sir Charles Wise, A. R.
Hirst, Geoffrey Murton, Oscar Wood, Rt. Hn. Richard
Hopkins, Alan Nicholson, Sir Godfrey Woodhouse, Hn. Christopher
Hornby, Richard Noble, Rt. Hn. Michael Woodnutt, Mark
Hornsby-Smith, Rt. Hn. Dame P. Nugent, Rt. Hn. Sir Richard Wylie, N. R.
Howe, Geoffrey (Bebington) Onslow, Cranley Yates, William (The Wrekin)
Hunt, John (Bromley) Orr, Capt. L. P. S.
Hutchison, Michael Clark Osborn, John (Hallam) TELLERS FOR THE NOES:
Page, John (Harrow, W.) Mr. MacArthur and Mr. Pym.