Mrs. Margaret Thatcher (Finchley)
J. DiamondThe Chief Secretary began with a floral tribute to the Budget, and I thought that it was rather appropriate. I must congratulate him on his verbal dexterity in proving that if Corporation Tax is at 40 per cent. it is a 5 per cent. reduction on 35 per cent. His next part will, I hope, read rather more interestingly than it sounded. It was extremely complicated, and it sounded as if the right hon. Gentleman was not, perhaps, over-familiar with it either.
He then talked about prices. I think that in his assessment of the small price increases that will come about, he has forgotten exactly how many increases in rates, National Insurance contributions and labour costs the distributive trades had last year, which they absorbed without very much rise in prices. Increases in costs far outstripped the rise in prices. When he adds those increases to the increases imposed by this Budget, he will [column 1891]find that the price rises will be a great deal above what he calculates them to be now. I note from the figures in the Economic Report that hourly wage rates rose by 10.1 per cent. last year. No industry can go on absorbing costs without raising prices.
The right hon. Gentleman said that rises greater than his own estimate would be “plain profiteering” . I shall be interested to see how big a rise there is in the price of meals in the House of Commons occasioned by the increases which the Kitchen Committee will have to bear. It will have to bear increases in food and meet the payroll tax—because I understand we are not a part of the Civil Service——
Mr. Harold Lever (Manchester, Cheetham)
My right hon. Friend did not say what is attributed to him. He said that a rise in prices of the magnitude given as an example in the motor trade of 5s. an hour on the charges for a mechanic would be either plain profiteering or claptrap. He did not say that any deviation from the percentage given as the general impact of the tax would be necessarily profiteering.
My recollection is that we had quite a contretemps about food, and the right hon. Gentleman gave a specific figure of two-thirds of 1 per cent. to cover most rises in prices. That is what a good deal of the argument was about. However, in view of his own argument and that of the hon. Member for Manchester, Cheetham (Mr. Harold Lever), the only way to bring home to hon. Members the effect of the Budget will be for them to have their own meals in the dining room raised in price. Then we shall see exactly what the effect of the Budget has been. I am told that the Budget will involve the Kitchen Committee in an increase of many thousands of £s.
The Chief Secretary went on to deal in detail with some of the tax changes. Obviously, we have to leave discussion of most of those to the Finance Bill, and scrutinise them in detail when they are published.
Every Finance Bill and Budget contains a large amount of anti-avoidance legislation, and it is now time to point out that some of the anti-avoidance devices [column 1892]are really anti-confiscatory devices. The complex of taxes, with Income Tax, Surtax, Capital Gains Tax and an 80 per cent. rate of Estate Duty, is so great on some of the top incomes that people try to take defensive action—[An Hon. Member: “Shame.” ] An hon. Member says “Shame” , but I know of no law in this country that says one should regulate one's affairs so as to pay the maximum amount of tax. If there were such a law, James Callaghanthe Chancellor of the Exchequer's issue of National Savings certificates would not do very well.
In the meantime, we have to stop some of the loopholes. Some devices are of such a nature that they are really within the scope of the tax but just outside its legal effect. We reserve our opinion on some of the points.
I noted a comment in The Times of 22nd April about the Tyndall trust which may be caught, although we shall have to look at this in detail, by friendly society legislation which the right hon. Gentleman is proposing. It states:
“But no one is allowed an investment of more than £500 in this form of saving, a mere minnow of an amount for most of the so-called surtax sharks. It would be tragic if over five million small savers were to be penalised, and the Government's fund-raising efforts were to be hampered, just to victimise the Surtax payer for trifling amounts.”
There are one or two malicious points in the anti-avoidance legislation. I refer particularly to the remarks made about Surtax relief and the suspension of Section 238 of the Income Tax Act, 1952, for one year. This really is a vengeance measure. The Chancellor of the Exchequer has got very angry because some companies have distributed rather a lot of dividends before the end of the year—as we told him when discussing the Finance Bill last year that they would. Those companies are quite different legal entities from the individual shareholders. Indeed, it is the very foundation of the Chancellor of the Exchequer's argument for Corporation Tax that the two are apart. He dislikes what the companies have done and therefore proposes to take it out on the shareholders. This is very puerile.
Section 238 directs that the Special Commissioners shall charge liability to Surtax
“… so as to give such relief as may be just …”
It is rather piquant that this year the Labour Government have decided to [column 1893]suspend justice for one year—because that is the effect of what the Chancellor intends to do. We shall have to look extremely carefully at the rest of the detailed provisions when we have the Finance Bill.
I turn to some arguments about administration—and straight away to the payroll tax. Most of us would agree that good administration is vital to good government. Whatever the payroll tax is, it is thoroughly bad administration. Just let us examine it in a little more detail from the administrative aspect. What the Chancellor is proposing to do in a time of labour shortage is to take from a large number of people 25s. a week in order to repay the same amount six months later. This is sheer lunacy. I only wish that Gilbert and Sullivan were alive today so that we could have an opera about it. Who will benefit?—more civil servants, although the reason for the tax is supposed to be greater labour shortage. Who pays?—the public.
Then one comes on to a second group of people. What the Chancellor wants to do is to pay 7s. 6d. a week in respect of employees in manufacturing industry. Why cannot he just give the industries 7s. 6d. a week? Why does he have to have a system whereby he takes away 25s. to repay 32s. 6d. six months later? This is absolute nonsense, and I really think that the right hon. Gentleman needs a woman at the Treasury. This is just sheer stupidity. If my chief had come to me and put up a cockeyed scheme like that, I should have asked him if he was feeling all right.
The only advantage it has, as far as I can see, from the Government's viewpoint is that it compels industry to give an interest-free loan to the Government while having to borrow money at 7½ per cent. itself in order to do so. So from the administrative viewpoint this is really a very absurd scheme indeed. The Government want to take away 25s. a week from about one-third of the sector. They take it away from everyone and then give some back later. This is from the party that prides itself on streamlined administration. Next, I suppose, the Chancellor will come to the House and say that he is going to have a war on waste. When we have a war on waste, it will be a war on waste that he has created. [column 1894]
The payroll tax is levied on an establishment. It is not at all clear what the definition of “establishment” is or how large head offices of manufacturing concerns are to be treated. Perhaps the Financial Secretary will tell us when he winds up, although I understand from the Financial Times today that this may not be decided for a month or two. This reinforces what my right hon. Friend said about this tax, that it was thought up in a hurry. It was thought up and has not yet been thought out.
Another point about the tax is its effect upon export houses. There is a letter in The Times today pointing out that
“there are a thousand international shipping and forwarding agents and many hundred packing companies serving exporters in all fields.”
This cost will directly go on to the cost of the goods which they handle for export. The letter says:
“When debating this Bill in the House, I trust members of all parties will think seriously of the crippling effect on the trade and the export companies they serve.”
and I therefore hope that the Chancellor will consider exempting those from the very sharp payroll tax which he is imposing.
I turn from that aspect of administration, which is a serious one, to a different aspect of administration, while we have the Chief Secretary with us. I refer to the Income Tax forms which we have all had and, more than that, to the directions we have had about how to fill them up. I should like to ask the Financial Secretary, arising from the section which refers to chargeable assets acquired—I may say in passing that I do not understand how anyone can understand that section unless he sat through the last stages of last year's Finance Bill—whether one really has to return on one's Income Tax form assets valued at below £1,000 now.
Perhaps the Financial Secretary will be able to tell us. But perhaps he will not be able to tell us, because in another issue of the form telling people how they should fill their forms up and how chargeable gains will be calculated, I notice that the Inland Revenue has got it wrong. In one of the issues of the large yellow paper—paragraph 17 entitled: “Assets held on 6th April, 1965” —it attempts [column 1895]to say how chargeable gains will be computed. It says the chargeable gain will be computed
“in the case of land the disposal price of which includes development value, by reference to its market value on 6th April, 1965, according to its then existing use.”
Those last words are nonsense. There is no authority whatsoever for them in last year's Finance Act, and it is even more than the Chancellor ever asked for. One is really getting into realms of bad administration when the Inland Revenue form gets it wrong. Who in fact can get it right if those telling us how to fill the form up do not know what the Act means? It is a very severe stricture on the Act. I wish to say very seriously that, if one has to rely on the Inland Revenue to tell one what the Act means and if the Inland Revenue does not know, it will have very serious repercussions for the future of taxation in this country and it will very quickly bring the whole system into disrepute.
I note that the new tax forms have upset the taxmen. The Daily Mail of 27th April, 1966, referring to some motions which have been tabled for the Inland Revenue Staff Federation Conference, said this:
“The Conference motions demand more money, more staff and a simplification of the tax system” .
This is after last year's Finance Bill which was alleged to simplify the tax system.
“One branch says it is ‘concerned at the ever-increasing pressure of work in the chief inspectors' branch and is alarmed at the possibility of a complete breakdown in morale’.”
If the tax gatherers' morale is breaking down, they might spare a thought for the taxpayers, who have almost no morale left.
This explains why the payroll tax is being administered by the Ministry of Labour—because the Treasury and the Inland Revenue refuse to have it; why investment incentives have had to be drafted to the Board of Trade—because the Inland Revenue cannot take it any longer; and why there is to be a special Land Commission set up to take on another 2,000 people at a cost of £7 million a year to operate a development levy in addition to a Capital Gains Tax.
Unless the Chancellor takes note of this serious position in administration and of the difficulty of finding out what tax [column 1896]is due, I think we shall reach a position where no one will have any respect any longer for the taxation system.
I turn to a different aspect altogether—the social service aspect of the Budget. The short answer is that there is not one. I have been through every spring Budget Statement and Finance Bill since 1946. This is the first one in which there has not been either some small social service relief or some relief in tax. What a comment on this Labour Government. The Chancellor knows that some of these reliefs are chickenfeed compared with the vast amount of tax he is collecting, but not one small relief is he proposing to give.
The Chancellor differs in this respect from some former Labour Chancellors and from almost all Conservative Chancellors. In 1946, Hugh Dalton exempted National Insurance contributions from Income Tax. Last year the Chancellor put them back on to Income Tax. Dalton also increased the special allowance for married women from £80 to £110. In 1947 the Budget again increased the child allowance and the dependent relative allowance. In presenting his Budget in 1948 Sir Stafford Cripps said this:
“I next propose to do something for married women in industry” .
—that is very different from the present Chancellor—
“I propose to give the wife in employment the benefit of the reduced rate reliefs” .— [Official Report, 6th April, 1948; Vol. 449, c. 75.]
Again, in 1949, Sir Stafford Cripps exempted unemployment, sickness and maternity benefits from tax.
I go on. Every single Budget has had some social service reliefs or reductions in tax, except this one. In 1950 Cripps reduced the lower rates of Income Tax. In 1951, which indeed was a difficult year, a far more difficult year than any the Chancellor has had to cope with, Hugh Gaitskell increased the pensions in the Budget. I am not suggesting that the Chancellor should increase pensions in Budgets now. We do not do it in that way these days. But I am making the point that, even in very difficult years, there has always been something for the social services.
In 1952, the first Conservative spring Budget provided special treatment for [column 1897]people on small fixed incomes. In 1953 there was a clairyoyant Budget—if I may mention this in passing—for it made certain that those who escape to the Scilly Isles do not thereby escape taxation. That Budget increased relief on small investment incomes for the over 65s. In 1954, Lord Butler reduced Entertainment Duty on cinemas and sports. In 1955, again the limit for small income relief was raised, together with child allowances.
The Chancellor of the Exchequer (Mr. James Callaghan)
And taken back in the autumn.
In every single year till now something has been given. Does the right hon. Gentleman wish to intervene?
I was pointing out that, having given that relief in spring, 1955, Lord Butler took it all back in the autumn. Indeed, he took back more.
I have not included autumn budgets. If I did, the right hon. Gentleman would not come off very well.
In 1956, there were retirement provisions for the self-employed. Again, 1957 was a difficult year, yet variable child allowances according to age and age exemption reliefs were introduced for the first time. In 1958—not an election year—there came the biggest set of reliefs ever given until those given later by my right hon. Friend the Member for Barnet (Mr. Maudling). There was exemption from Stamp Duty for certain house purchases, exemptions for the elderly were extended and there was also a change in the allowances for dependent relatives. The year 1959 was an election year, but there were only small reliefs allowing for the payment of post-war credits in certain hardship cases.
I am not giving details of all the reductions in taxation—far from it. If I were to give the figures for reductions in the standard rate, it would make much better reading for the Conservatives than for the Government. This is the first Budget in which there have been no social provisions and no reductions in tax at all. I know that hon. Members opposite do not like this, for it makes too good reading for the Conservatives.
In 1960, the dependent relative and housekeeper allowance was increased [column 1898]and certain post-war credits were paid out. In the 1961 Budget, the Chancellor improved the income limits for the dependent relative allowance and gave relief in respect of some payments to victims of Nazi persecution. None of these concessions in the successive Budgets cost much but always there was something waiting to be done.
In 1962, the relief limit on small incomes was raised, together with the level of Estate Duty exemption. In 1963, came the biggest set so far of personal reliefs, including exemption limits on Estate Duty, and the Stamp Duty on small houses. In 1964, there was an allowance for blind people. In 1965, the right hon. Gentleman the present Chancellor gave reliefs. But this year, he gives nothing The right hon. Gentleman is taking more revenue than ever before. He can surely afford to yield a small amount for small reliefs, many of which need now to be increased.
I want now to put a different aspect of the Budget—its effect on married women and widows, to whom the right hon. Gentleman is no fiscal friend. We had some debate last year on the effect of his provisions on widows—those ladies, often with young children, who have to go out to work and in doing so, as breadwinners, have to take in someone at home to look after the children. What happened last year? I acknowledge that the Government increased the pension by 12s. 6d. a week on 29th March. But within one week some of that relief had to be given back because the Chancellor withdrew the relief on the employer's part of the National Insurance contributions. Thus the widow had to face 11s. 2d. as an additional sum not being allowed for tax purposes payable in respect of the help in the house.
Now, the widow must pay this new impost of 12s. 6d. a week because, if the payroll tax is to follow the National Insurance rules, it will apply to anyone working eight hours a week or more. So the widow or married woman who goes out to work will have to face an increase out of her net taxed income of 12s. 6d. a week and I doubt whether this will be very good for recruitment to teaching or the nursing profession.
I only interrupt to reinforce what I am sure the hon. Lady [column 1899]has overlooked—that this is a tax on employers.
I do not think that the right hon. Gentleman has been listening. In this case the married woman and the widow is the employer. Why does the right hon. Gentleman think that I mentioned eight hours a week? She has to have someone in the house to run it in her absence and look after the children. Obviously the tax has been so hurriedly thought up by the Government that they have not even thought of this point. Now at least the right hon. Gentleman has thought of it. Perhaps the Financial Secretary will give an undertaking that married women and widows will not have to face this payroll levy.
Another aspect of the Budget affecting married women is the increase in prices that is forecast. I quote from that very respectable newspaper The Times. In to-day's edition it prints comments from various sectors of industry on the effect of the payroll tax. For example, the meat traders say:
“The result must be a substantial increase in the price of meat.”
The grocers say:
“The Chancellor has struck another savage blow at the distributive trade. To the grocer paying the tax without much opportunity of increasing prices, this will be most difficult” .
The dry cleaners envisage a minimum price increase of 3 per cent. in the autumn.
So once more the married woman who goes to the butcher, grocer and dry cleaner and then, when she is finished and wishes for a little pleasure, to the hairdressers, will find that prices are going up. It is a very bad Budget for women. The Chancellor is no friend to those whom some of his colleagues are trying to encourage to return to work.
I should also like to know from the Financial Secretary what has happened to the option mortgage scheme? One would have expected this to be mentioned in the Budget Statement since it concerns relief for mortgages. But no mention of it has been made. Has it been postponed for yet another year? Even with no mention in the Budget Resolutions, one would have expected the Chancellor or the Chief Secretary to mention it.
I want now to turn to the effect of the Budget on industry as I see it. I think [column 1900]that the rate of Corporation Tax at 40 per cent. is very high. I agree that some companies were expecting it to be higher and are relieved that it is not. But they are relieved because they have come to associate this Government with two things—high taxation and taking a hit at industry whenever they can. It is because of this innate view of industry in the Government that companies are relieved that the tax is not as bad as they thought it might be.
If I were in the right hon. Gentleman's position, I should be very worried indeed if any major sector of Britain took that view of the Government because I doubt—and I think that these companies doubt—whether Corporation Tax will stay at 40 per cent. and whether many hon. Members opposite would be prepared to say that it will not go up during the lifetime of this Parliament. Before the Government were returned, Harold Leverthe hon. Member for Cheetham doubted whether, we would have a 40 per cent. Corporation Tax plus the complete withholding tax that we have. I read an article by him, I believe in The Statist, which I have not with me at the moment.
Mr. Harold Lever
The hon. Lady flatters me by recalling an article I wrote so long ago and with so little effect. I advocated a flat Corporation Tax and no withholding tax, entailing a tax of something around 50 per cent.
That would be a great improvement on a 40 per cent. Corporation Tax and a 41¼ per cent. withholding tax. If we draft an Amendment to that effect during the Committee stage of the Finance Bill I hope that we will have the hon. Gentleman's vote. Last year we had his voice with us on many occasions but rarely his vote.
I turn now to investment allowances and modernisation. As the right hon. Gentleman said, the Budget will cancel the most beneficial set of investment allowances in the world. I do not think that we should let it go without making that clear.
I agree that that is not exactly what the right hon. Gentleman said but I feel sure that it is what he would have said had he thought about it before he said it. [column 1901]
I am sorry that investment allowances are being changed. The N.E.D.C. Report “Conditions Favourable to Faster Growth” includes this recommendation in paragraph 171:
“It seems desirable to increase industry's confidence in investment allowances by giving such assurance as is constitutionally possible that they will not be reduced without, say, two or three years notice.”
They are, however, being reduced. The N.E.D.C. Report goes on:
“With frequent variation they lose much of their effect because a business planning its investment cannot be sure what allowances will be in force when the expenditure is incurred.”
If I have a complaint about investment allowances it is that they have been changed far too much in the past. It was not until we came to 1963 that we got the best set of investment allowances in the world. It would have been far better for the Chancellor to have kept them as they were, increasing the percentages to retain real value.
I have one or two comments about the White Paper on Investment Incentives. Perhaps the Financial Secretary can tell us whether the legislation envisaged will give an allowance for capital expenditure on laboratory buildings. The White Paper says that the Chancellor is retaining the allowance for ordinary scientific expenditure in the laboratories but laboratory buildings are not industrial structures. Under my right hon. Friend the Member for Barnet, they warranted a 30 per cent. allowance. It looks to me that they will not get any allowance under present proposals.
I have considerable doubts about the method of giving grants only to manufacturing processes. In a highly efficient industrial concern, one cannot divide efficiency as between one department and another or one part of the processing as against another. It is just as important that those responsible for the documenting and invoicing of orders and for warehousing goods within the factory should have the best possible equipment as it is that the manufacturing side should have the best possible equipment.
A large number of industries must have excellent storage accommodation and systems for getting their stock quickly. Again, if a factory is efficient, the chances are that it will have good conditions both for its staff [column 1902]and its ordinary workpeople and everything contributes to the success and efficiency of a concern. It is wrong to suggest that the Government should give an allowance only to that part of a company concerned with the manufacturing process. Prosperity is indivisible in this way and it would be far better if we had the present system of capital allowances.
My next point about the effect of the Budget on industry relates to changes in the Capital Gains Tax which will have to come about because of the development levy. It has not been widely enough realised that when the Land Commission legislation is through, manufacturers and industrialists who extend their premises or build new factories on land which they already own will not only have to finance the extension or development, but have to pay a tax on it. It is quite absurd for a party which says that it believes in modernisation then to put a development tax on modernisation. If the Chancellor is to do that, there will undoubtedly have to be changes in the Capital Gains Tax procedure. I hope that he will tell us that he will exempt industry from yet another increase in taxes.
I come to a wider aspect of industrial policy which has been brought up by the present suggestion of a payroll tax. Personally, I dislike permanent subsidies and the premium paid back to industry will in fact be a permanent subsidy. I believe that the efficient neither want nor need subsidies. The inefficient benefit from them because they keep them in business when they ought to go out of business.
Of course, the Chancellor will be very popular with inefficient industries, but I do not wish to be popular with inefficient industries. I would rather be popular with the efficient. What he is doing is trying to keep in existence companies which hold quite a bit of labour and which are not efficient. He is to give them investment allowances, regardless of efficiency or whether they will ever make a profit, and now he is to give them a premium in respect of each man of 7s. 6d. a week. They will do well out of it, but the efficient companies will not do so well out of it. Their investment allowances are down in value, and when they get the premium, it will be taken into account as a trading receipt, and be liable [column 1903]to Corporation Tax. Structurally and philosophically this is wrong, and it will never ever solve Britain's problems if the Chancellor carries on down this path.
There is, of course, the excellent example from the construction industry which will have to bear 25s. a week tax for each man. In the debates on the Gracious Speech the other day, my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) gave certain figures relating to those given by the building trades employers of the output of men employed on different kinds of building of new houses under different agencies. The figures are interesting. Output per man per year when working for a contractor working for a private developer is £3,260; output per man working for a contractor working for a local authority is £2,825; in a direct labour organisation of a local authority it is £1,990—the lowest of the lot. Yet the direct labour men will not have to pay the 25 per cent. payroll tax, because local authorities are exempt, while the efficient contractor will have to pay. Once again, this is an example of subsidising the inefficient and not helping the efficient.
Mr. Charles Pannell (Leeds, West)
Those are the figures of the National Federation of Building Trades Employers. I used to try to be technocratic on this matter, but this is one of the perennial arguments on which I could match different sets of figures. There is a great deal of prejudice in that body against local authority building and other public sector building. I want only to say in all sincerity that, having looked at these figures many times, I could not accept them on their face value.
In that case, may I quote Richard Crossmanthe Minister of Housing and Local Government in the same debate? The right hon. Gentleman said:
“I am alarmed because in the past year the completion time for public sector houses has prolonged itself from 15½ to 16½ months.” —[Official Report, 28th April, 1966; Vol. 727, c. 981.]
That, of course, is a great deal above the completion time for private houses.
Mr. Roy Hattersley (Birmingham, Sparkbrook)
Is the hon. Lady aware that the Parker-Morris Report shows that [column 1904]in the private sector supervision is infinitely inferior to supervision in the public sector? Private contractors working for local authorities, as well as direct labour organisations, have invariably to undertake more supervision, and inevitably the cost and the time to build houses for a council are greater than the cost and the time of building houses for private individuals.
I am aware of that Report and of the many debates which we have had in the House on the subject, but to my knowledge no one has ever contended—and I notice that the hon. Member for Birmingham, Spark-brook (Mr. Hattersley) and the right hon. Member for Leeds, West (Mr. C. Pannell) did not contend—that direct labour is the most efficient way of building houses. So my point stands.
I think that the correctness of my main thesis is borne in on the Chancellor and I hope that he will change his policies. The future of Britain depends on deciding which industries are efficient and encouraging those to expand; taking a look at the inefficient and deciding which can be made efficient and helping those, in the same way as my party did with the cotton industry, to become efficient; while the rest must go. We have no room for inefficient industry and the Budget will prolong the life of inefficient industry.
I want briefly to refer to inflation. As my right hon. Friend Edward Heaththe Leader of the Opposition pointed out, this is the first Budget in which the objectives of policy have not included the maintenance of stable prices. Going back over Budgets and Royal Commissions for a long time, one sees that even as far back as the old Macmillan Committee the objectives of monetary and budgetary policy have nearly always been the same and have always included the stability of prices, and that was among the objectives put before the Radcliffe Committee.
I believe that the Chancellor's dropping of this objective from his Budget statement has rather more significance than he has been prepared to admit. I believe that a number of his advisers—and he can obviously choose whatever advisers he likes; I think that he is better with advice than without it—think that a little bit of inflation is a good thing for business. That is why the maintenance [column 1905]of stable prices has been dropped as an objective.
I note that the National Plan, taken together with the White Paper on Public Expenditure, is a blueprint for inflation, because the National Plan puts the average growth target between 1964 and 1970 at 3.8 per cent. while the White Paper on Public Expenditure proposes an increase in public expenditure of 4¼ per cent. a year. This is a blueprint for inflation. But when to that is added the performance of the rate of growth, about 2 per cent. over the past year, it can be seen that inflation is built into the economy, and we shall get it more and more under a Labour Government.
Mr. J. J. Mendelson (Penistone)
I have been worried that the hon. Lady might give us an outline of 15 Conservative Budget speeches all paying lip-service to the stability of prices. I have been thinking of inviting her to give us the facts rather than the speeches.
I should like to refer to another Budget speech, but if I were to give an outline of 15 Conservative Budget speeches it would be found that the vast majority included considerable decreases in taxation. I have been through all the aspects of all the Budget speeches. This has been fairly interesting, because the Chancellor himself emphasised that Budgets have trends and he said that he was more interested in trends and in long-term strategy than in any one Budget. The trend he is following now is almost exactly the same as the trend which was taken from about 1947 to 1951.
Going through the speeches of those days one notices that there were many direct subsidies and that very soon the amount of direct subsidy was a great headache for the Chancellors of the day. One also had a very extensive system of controls which we never got rid of. Controls and higher subsidies, and both lead to higher and higher taxation. The Budget of 1951 is the first and the only post-war Budget speech in which any Hugh GaitskellChancellor has ever said that we should have to reduce our standard of living. The point is that with a system of extensive controls there are higher subsidies leading to higher taxation, and in the end that led to the Labour Government being put out of power. [column 1906]
I believe that we have embarked on exactly the same course again—extensive subsidies, vast numbers of new controls, and higher taxation. This, I agree with the Chancellor, is the strategy of Socialism and that is the significance of this Budget—we are in one of those long corridors of power once again.
The hon. Member for Penistone (Mr. Mendelson) invited me to refer to the Conservative Budget Statements.
I shall accept the invitation whether given or not. I want to refer to a particular Budget speech which shows very well what Conservative strategy is and it compares very well with the present Socialist strategy and is much better. In one of the speeches—I will identify it in a moment—the then R. A. B. ButlerChancellor of the Exchequer said:
“I have looked for a method which will relieve corporate industry and which will not forget the vital human element … the fact that we have not been getting the best out of our productive capacity springs in part from our terrible burden of taxation … All reliefs are carefully designed for the prime purpose of giving the incentive for greater production.” —[Official Report, 14th April, 1953; Vol. 514, c. 60–61.]
Those were the aims. The facts were: Income Tax was reduced and the reduced rates were reduced. That Budget speech was 18 months after we came to power.
And the cost of living rose.
No. It was 18 months after the great financial crisis of 1951. Because we had a different philosophy and a different strategy from right hon. Gentlemen opposite, we were able to reduce taxation, quite the contrary trend to what the Chancellor is following at the moment. The hon. Member mentioned the cost of living. The year in which we had the largest rise in the cost of living was 1950–51, when it went up by nearly 13 per cent. I have quoted that figure many times from the Government Dispatch Box. It was given to me when I was a Junior Minister at the Ministry of Pensions, and so it is an official Government figure.
I believe that the whole strategy of this Budget is wrong and I think that it will finish up once again in high subsidies and [column 1907]even higher taxation. The Chancellor will never be able to do what Conservative Chancellors did—to reduce direct taxation. I think that the Budget is wrong and I have no hesitation in condemning it.