Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1966 Jul 28 Th
Margaret Thatcher

HC S 3R [Finance Bill]

Document type: Speeches, interviews, etc.
Document kind: House of Commons Speech
Venue: House of Commons
Source: Hansard HC [732/1913-31]
Journalist: -
Editorial comments: 1605-1655. MT spoke at cc1913-16 and intervened at 1926.
Importance ranking: Major
Word count: 6464
Themes: Privatized & state industries, Public spending & borrowing, Taxation
[column 1913]

Mrs. Margaret Thatcher (Finchley)

Seldom has J. Diamondthe Chief Secretary to the Treasury made a speech with which I disagreed more. I shall follow him in one respect only, in that I shall be brief. He attempted to brush aside the Selective Employment Tax. In fact, never has a Finance Bill imposed such a heavy burden of taxation as this one. It extracts about £1,100 million a year in tax.

The Selective Employment Tax need never have come about if J. Callaghanthe Chancellor of the Exchequer had got his forecasts remotely right. It has caused, and will continue to cause, a great deal of worry to the older folk, the older employed part timers and the disabled, who have to pay out money long before any will be returned to them.

Dame Irene Ward (Tynemouth)

And charities.

Mrs. Thatcher

And charities.

Although represented as a tax on services, it is, in fact, a tax on all goods and services, because the cost of distribution is as much a part of the cost of the finished product as is the cost of manufacture and the attempt to distinguish between the two elements in cost has no basis in logic or in fact.

The tax involves the collection of £1,130 million and then handing back £890 million, less administrative costs. As a means of collecting about £240 million of revenue with no contribution to greater [column 1914]productivity this is an idiotic way of proceeding. Already, the protests we have had have been terrific, but they are only a fraction of what the protests will be when the tax bites in September. This is an unusual Bill, in that its taxation provisions do not bite until the Bill has passed all its stages in this House, so the average person has not yet felt the impact of its provisions and has, therefore, not yet made his particular protest.

The Bill is also a blow to savings, especially to small savings through friendly societies. These are savings which, by law, could not have exceeded £500 per person. I will quote an example. It concerns a firm near my constituency which employs many of my constituents and many represented by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod).

The firm drew up a monthly premium savings plan for the hourly-paid workers. On the whole, therefore, it affected small savers. In March, it negotiated with the Registrar of Friendly Societies to draw up rules for an appropriate friendly society. By April, the scheme was announced to the hourly employees. On 2nd May, the rules were adopted and on 9th May the society was registered.

Then the Bill was published and it was found that this type of friendly society, although designed for small savings by hourly-paid employees, was caught badly by the provisions of the Bill. On 7th June, representations were made to the Inland Revenue. On 23rd June, the firm received a reply stating that the matter had been reported to Ministers, who had decided that the society could not be exempted.

That is a specific example where a company which was proposing a scheme to help its employees to make small savings has now had to withdraw the scheme because of the Bill. It is an example of where the more the taxation the less savings there are and is positive proof that the Government prefer taxation to savings.

This is the eighteenth Budget and Finance Bill since 1951. In analysing the additions to the tax burden imposed by each one, one finds that, for imposing higher taxation burdens Labour Governments have it every time. Of the Budgets [column 1915]between 1951 and 1966 that have imposed most taxation, that of Mr. Hugh Gaitskell, in 1951, led the field with a new tax burden of £388 million. The second in the higher taxation stakes goes to James Callaghanthe present Chancellor, with this Bill, which, in a full year, imposes a burden of £265 million.

Mr. Joel Barnett (Heywood and Royton)

I am following the hon. Lady's argument very closely, but I am not clear whether she is arguing that in the present Finance Bill there is too much deflation, or whether she would not have had as much.

Mrs. Thatcher

I am pointing out that Labour Governments are those which impose high taxation. If the hon. Gentleman wants a comparison with an emergency Budget—and he has been present when I have spoken on this subject before—he will remember that Mr. Butler 's emergency Budget of 1952, introduced in circumstances identical to those of last year's, did not impose extra taxation.

The Budget with the third highest taxation was the right hon. Gentleman's of 1965 and the fourth was the right hon. Gentleman's of 1964. Only then do we get to a Conservative Budget, the fifth highest, and it is that which was introduced in April, 1964, and it is noteworthy that that Budget, imposing the highest taxation of Conservative Budgets, was introduced in an election year. This Budget holds the second prize for introducing the highest taxation burden since 1951. Out of the eighteen, all of the nine which reduced taxation were introduced by Conservative Governments.

We face tremendous new taxes and we must consider this Finance Bill in the context of other statements. We know the crowd on the Treasury Bench fairly well by this time and that when they get their hands on extra money they tend to spend it. If the Chancellor is to spend the extra taxes which he is taking in, and not to use them to reduce the National Debt, the whole purpose of the extra taxation will be defeated. I should, therefore, like an assurance that the extra taxes which he is taking in this year will be used to reduce the National Debt and not to subsidise nationalised industries which cannot pay their way.

[column 1916]

Mr. Speaker

If the right hon. Gentleman gave the hon. Lady the assurances for which she is asking, he would be out of order.

Mrs. Thatcher

Thank you very much, Mr. Speaker. Perhaps he can give them to me another time.

This Finance Bill embodies a disastrous Budget. It is a monument to financial misjudgment and administrative lunacy, and it is, therefore, a fitting monument to this incompetent Government.

Mr. Sydney Silverman (Nelson and Colne)

Opposition to the Third Reading of the Finance Bill in my experience is rather rare. Objections to the Budget are usually raised at earlier stages. When we have reached the stage of the Third Reading, everybody knows that the money has to be provided and that the Bill cannot be amended at this stage and opposition to it is, therefore, purely mischievous and irresponsible even if it is carried with sincerity into the Division Lobby.

However, I appreciate that what the Opposition wish to do is not to defeat the Finance Bill, because that would be too absurd even for them, but to offer a challenge to the whole of the Government's management of the economy. It is a challenge which they have made repeatedly over past weeks. No one would deny that they have a perfect right to do so and that it is certainly within their rights and within Parliamentary tradition to take this further opportunity to offer the challenge. What I should like from them is a redefinition of what their challenge is.

In the course of the debate in the last two days, they have repeatedly told us not that the Government's immediate policy is wrong, not that they object to making hire purchase more difficult, not that they object to a wage freeze and not that they object to anything the Government are doing. They tell us that in their opinion what the Government are doing, although not wrong in itself, is too little and too late. I should like to know whether I have got the message correctly.

Mr. Iain Macleod (Enfield, West)

No relation to it.

Mr. Silverman

It bears no relation to it because it comes too late, because the [column 1917]Chancellor of the Exchequer gambled and should have taken what risks he was taking earlier and that what he is now doing is not only too little but too late? Have I got it right this time?

Mrs. Thatcher

The hon. Gentleman has got it quite wrong. I thought that I made it clear in my opening sentences and certainly my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) made it clear last night. When James Callaghanthe Chancellor made his Budget statement, he said that the Selective Employment Tax was an alternative to increases in Purchase Tax and petrol tax and so on. We now have increased Purchase Tax and petrol tax. The point is that we need never have had the Selective Employment Tax if the Chancellor of the Exchequer had got his forecasts right.

Mr. Silverman

Do I take it that it is no longer the Opposition's argument that my right hon. Friend's measures are too little or too late?

Mr. Speaker

The only measures which we can discuss at the moment are those contained in the Finance Bill.

Mr. Silverman

I do not propose to discuss measures other than the Finance Bill. If I am wrong in thinking that the Opposition wish to challenge the Finance Bill at this stage because they wish to challenge the Government's whole economic policy, then I have nothing further to say. They can go on opposing these measures from now until doomsday and it will not make any difference to anybody and it will not give anybody any satisfaction of any kind.

The only usefulness of the debate is whether it gives a further opportunity to consider whether the general economic policy now being pursued by the Government is right or wrong in the opinion of the Opposition and in the opinion of supporters of the Government. If such a discussion is out of order, I confess that I am not interested in this discussion at all and certainly would not wish to waste the time of the House by spending another half minute on it.

I thought that what the Opposition were doing was to say that we were in a very serious economic position, that the Government were responsible for it, that the measures which the Government have taken to deal with it were not enough, [column 1918]and that such measures as the Government have taken of which the Opposition approve were taken too late. I should like to offer my own contribution to the discussion on the basis that that discussion would be in order. If it is not, I am not interested.

Mr. Speaker

The hon. Gentleman knows that he is out of order if on the Third Reading of the Bill he pursues matters except those which are in the Bill. This is the Third Reading of the Finance Bill, and the only Measure which can now be discussed is the Finance Bill and what is in it.

Mr. Richard Wainwright (Colne Valley)

If I may presume to follow at any rate in the spirit of what was said by the hon. Member for Nelson and Colne (Mr. Sydney Silverman), one cannot help feeling a little sorry for the Chief Secretary and the Financial Secretary to the Treasury, who in recent weeks have been defending the Finance Bill while in the forefront of their minds has been the knowledge of the present situation which has been available to them as members of the Government. At times they must have felt like the Pharisees described by St. Matthew, dealing with mint and anise and cummin and omitting weightier matters. I have no doubt that as they prepared for today's debate they had in mind the words of Wystan Auden—

“And look behind you without a sound
The woods have come up and are standing round
In deadly crescent

The House will be aware that the poet's next verse goes on:

“Outside the window is the black remover's van.”

It is the intention of the Liberal Party to vote against the Bill this evening and it is our hope that it will never come into practical effect, particularly Clause 44 which is the Finance Bill portion of the Selective Employment Tax.

When I first came into the House, one of my early challenges from outside was an inquiry whether I was in favour of vivisection, and I hedged on that matter and kept the letter in my file, where it still is. But I am certainly against the kind of vivisection which Clause 44 will enforce. It has been admitted by the Government that the Selective Employment Tax is a vivisection measure. It is [column 1919]a try out, and it is only to be refined—that is the Government's hope—as time goes by. But in the time that goes by before we have the refinements many living businesses, indeed many people's means of livelihood, will be destroyed. That is why we describe it as a piece of fiscal vivisection.

One example from a very large postbag which I and my right hon. and hon. Friends have received in recent weeks is that of a firm of shipbrokers in Lerwick, Shetland, which wrote to my right hon. Friend the Leader of the Liberal Party on 20th July with regard to the Measure now before the House:

“The object of the Bill would apparently be to cut out part-time workers, but in this case we are forced by the union to employ casual dockers. An example of the difficulties that will arise: recently my firm employed 32 dockers for a vessel discharging on Monday only. This would mean that apart from having to pay each man's National Insurance stamp for the week, which we do at present, we would also have to pay £40 in tax for this one day's work.”

That is what I mean in referring to this experimental tax as a piece of vivisection.

The hon. Member for Finchley (Mrs. Thatcher) referred just now to the tax biting in September. I take leave to doubt how far it will bite in September, especially amongst traders who neither have the cash with which to buy the new stamps nor can get the necessary facilities from their bank with which to buy them. I hope that we shall be told during the debate just how the Government intend to make the tax bite in September, because it was my experience, going on audit to small businesses, that very often one of the first things I had to instruct my staff to do was to stamp the client's insurance cards—often for a long period in arrears.

Those who operate the high-value stamping procedure, are not, or were not when I last inquired, required to pay until the end of the quarter. It is well known that if a citizen presents himself at the post office and finds that he needs stamps which have gone out of circulation, because he is so much in arrear, he is told to produce the money, and the printed form of receipt is readily available to acknowledge that the cash handed over in lieu of stamps satisfies the obligation. I know that we shall be told——

[column 1920]

Mr. Barnett

I do not want to impugn any of the hon. Gentleman's clients, but would he not agree—I am sure that he would not want to exaggerate the case, and I am sure that he is right in saying that this happens—that this happens only in the case of very small businesses, and that it hardly applies to medium and larger size companies?

Mr. Wainwright

Not at all. The high-value stamping to which I referred is specially designed, and is an admirable measure, to assist the larger businesses. The operation of the high-value stamping procedure is so complicated that only a large business with a considerable wage-office staff could hope to operate it. As I think I made clear, I was speaking not entirely with regard to arrears of stamping that have happened in the past, but with regard to the very much greater arrears of stamping which I apprehend will occur in the future, now that the stamp in some cases will cost as much as 56s. 1d.

The recent revelations of the economic situation which have been debated in the House this week have destroyed a great many of the arguments to which the House listened during earlier discussion of this Measure. I refer particularly to the effect which the tax set out in Clause 44 will have upon the employment of the elderly, the part-time and the disabled. When this matter was discussed on Second Reading, we received from the Chief Secretary the following attempt at reassurance with regard to the elderly, the part-time and the disabled:

“So long as the policy of full employment is maintained—and this the Government are determined to do—it does not seem that there can be an overall falling-off in the need for workers in these groups.” —[Official Report, 25th May, 1966; Vol. 729, c. 485.]

That assurance is now largely worthless, and because this Measure, and especially Clause 44, will inflict a very great deal of personal hardship and encourage a great deal of commercial inefficiency, the Liberal Members will vote against it tonight.

Mr. Harold Lever (Manchester, Cheetham)

When we look at a Bill on Third Reading, we are best advised to look at it in its totality and see whether we are justified in accepting it or rejecting it at this stage. We have had [column 1921]exhaustive debate on the details, and I shall make a brief speech merely upon whether we are justified in accepting the Bill in totality. When we consider this, it is necessary to have in mind the very grave economic situation of the country with which the Bill is intended to deal.

It is the Tories' view that a Tory Government are equivalent to an extra couple of a thousand million pounds in the reserves and that hence when they are in office one does not need to worry about financial difficulties of this kind. I hope that no one will accuse me of excessive partisanship when I say that this view is not universally shared, even by those who are normally political supporters of the Conservative Party.

We must take the general situation into account in deciding whether the sacrifices, burdens and difficulties that we all admit are imposed by the Bill are justified. The first major criticism made against the Bill, very often from hon. Members on this side of the House, is that the measures in the Bill are not those that the Government wants to take; they are the measures that international bankers insist that they take. If that were true, and this House were of that opinion, it would feel obliged to reject the Bill.

It is true in a superficial sense that the Government do not want to take measures that will be painful and cause suffering and difficulty to the citizens of the country. But it is equally true that they want these measures for the same reason that the international bankers want them, namely, that they want this country to pay its way in the world and be in a position to maintain the stability and strength of our currency and have a strong £, which is one of the central determinations of the present Government.

In assessing the complaint against the Bill that it is dictated by international bankers, it should be remembered that the only international bankers who matter in the modern world are the financial wings of foreign Governments. These are not irresponsible and rapacious tycoons of the 19th century seeking with their cheque books to enslave this proud and independent nation. They are the financial wings of friendly Governments seeking to co-operate with the British Government in the common interest of us all to provide that collective financial [column 1922]and economic security on which the prosperity of the Western world depends.

In so far as the Bill plays a vital part in the Government's policy of defending the £ and ensuring that this country pays its way in the world, I support it, and even if there are sacrifices and burdens and some temporary anomalies I absolutely respect the courage of the Government in pursuing this course of insisting that the country pays its way in the world and preserves the value of its currency.

It is said that we need not worry about preserving the value of the currency, that sacrifices such as those exacted by the Finance Bill are unnecessary, and that all that is needed instead of a Measure of this kind is a once-for-all devaluation. My first comment is that, if we get into the habit of having once-for-all devaluations every 10 years or so, we are hardly likely to add to the wealth, prosperity and reputation of our land. We have heard this story of once-for-all devaluations before, and we are not impressed by the suggestion that it should be undertaken now.

I often think that those very sincere and knowledgeable people who put forward engaging arguments for devaluation of the £ rather than approving the kind of financial measures we are now discussing mistake the assembly in which they are speaking. The House of Commons is a debating assembly. It is not a debating society. Our resolutions have consequences. Those of a debating society have not. If this debating assembly comes to the conclusion that we should support concepts like devaluation of the £, then, in my respectful submission, it will be a very sorry and lamentable conclusion with dire consequences for the people of this country and their reputation.

Mr. R. T. Paget (Northampton)

Is not this the first time in this century when we have gone as long as 10 years without a devaluation?

Mr. Lever

My hon. and learned Friends' recollection of modern financial history is, to say the least, a little inadequate. It is not true that this will be the first time we have gone for 10 years without devaluation.

In any event, we are discussing a Finance Bill to protect against devaluation, at a time when the world has perfected international monetary arrangements on a scale and of a value never [column 1923]seen before in our history. It is idle for my hon. and learned Friend to seek to justify rash acts which would demolish the whole arrangements developed to maintain international financial stability by reference to what has occurred in a different age and in different circumstances.

My hon. and learned Friend must bear in mind that people hold sterling today on the basis of different undertakings——

The Chancellor of the Exchequer (Mr. James Callaghan)

What has this to do with the Bill?

Mr. Lever

I take it to be a justification for the Bill. I am sorry that my right hon. Friend thinks otherwise. I regard the sacrifices under the Bill which we are asked to support as being part of the necessities rightly imposed upon us in honouring our obligations internationally in relation to our currency. This was the only point which I wished to make about the Bill, and I am sorry that it does not seem to have registered.

At a time when many people seem to think that the honouring of our obligations in relation to the £ at home and abroad to friendly Governments and to trusting individuals is some kind of meglomaniac quirk, I want to go on record as entirely endorsing the Government's policy of supporting the £ at its present parity and the international arrangements and obligations which go with it. I am willing readily to support them in a Budget designed to play a notable part in putting this country in a position to pay its way in the world and honour its obligations.

Sir Cyril Osborne (Louth)

I shall make one point in following the observations of the hon. Member for Manchester, Cheetham (Mr. Harold Lever) on the question of devaluation, and I think that it will not be too unwelcome to the Chancellor. I want the Chancellor to make clear to the House and the country that devaluation is of itself no easy way out of our troubles. It would make our imports dearer and our exports earn less. [Interruption.] But this is following the argument used before with reference to the Finance Bill.

The Bill is already out of date. The most important factor in it is the Selec[column 1924]tive Employment Tax, and there will be lots of Amendments moved to Bills of which we have no knowledge yet. This Bill is completely out of date, as a result of statements made by the Chancellor and the Prime Minister in the circumstances which have arisen since the Bill was first introduced some months ago.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

indicated dissent.

Sir C. Osborne

We are talking about a dead horse. It is no good the Financial Secretary shaking his head. The real factors are not in this Bill. Other things have been superimposed, and the Chancellor knows full well that the position is totally different from that when he introduced the Bill so long ago.

I shall bring myself entirely within order now by directing attention to Clauses 17 and 18. I shall speak as a Surtax payer for Surtax payers. If the Chancellor cannot deal with the point I make this year, I hope that he will bear it in mind for another year. Clause 17 imposes a standard rate of Income Tax of 8s. 3d. in the £, and Clause 18 imposes Surtax to the limit of 10s., making a total of 18s. 3d. in the £. Thus, when the Bill was first introduced, the man on the top level with, say, over £15,000 a year, or thereabouts, was left with 1s. 9d. in the £.

Subsequently, the Chancellor has imposed a further 10 per cent., which means that the top rate Surtax payer will have 9d. in the £ out of his last earnings. I know all the argument about average earnings, but when a man is asked to take greater responsibility or to take greater risks it is his marginal risk and effort which is taxed at this ridiculous rate.

I put it to the Chancellor—I am sure he will listen to this—that 19s. 3d. in the £ is an absurd rate of direct taxation, especially when the right hon. Gentleman is himself pleading with industry for men to take greater risks and to make their businesses more efficient in order that the nation may survive. It is in these circumstances that he says to them, “Out of every 20s. you earn extra, you will get 9d.” . This is financial madness. No one can be expected to work for 9d. in the £.

The history of the matter is that, over the years since Lloyd George's famous Budget of 1909, we have inherited the [column 1925]idea that the Finance Bill should be used as a measure for social justice, for the redistribution of the national wealth and income. As matters stood in David Lloyd George 's time, there was a lot to be said for it. Now, however, we have swung to the other extreme. We all want social justice, but we also want economic efficiency. If the demand for social justice through a tax Bill like this weakens our economic efficiency, the whole is worse off.

A few days ago, the right hon. Member for Nuneaton (Mr. Cousins) said that he was not interested in a fairer distribution of the same sized national cake; he wanted a bigger cake. But this is not the way to make a bigger cake. The whole idea of taxation as embodied in the Bill and these two Clauses in particular is wrong. We ought to tax people's spending more and not tax their earnings so much. If we want men to work and take responsibility and risk, we must reward them.

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. I am following what the hon. Gentleman says with interest, but he must not discuss the general economic situation on Third Reading. He must discuss what is in the Bill.

Sir C. Osborne

I am much obliged, Mr. Deputy Speaker, and I shall try to keep in order.

I am referring to Clauses 17 and 18 of the Bill. Clause 17 imposes Income Tax at a standard rate of 8s. 3d. in the £ and Clause 18 imposes Surtax at 10s., making 18s. 3d. in all. But since then the Chancellor has imposed another 10 per cent.

Mr. Deputy Speaker

Order. Unfortunately, the 10 per cent. is not in the Bill and it is, therefore, out of order.

Sir C. Osborne

Then I shall stick to the 18s. 3d. The 18s. 3d. is a ridiculous rate to impose on top Surtax payers. [Laughter.] That is true. It is no good giggling. A responsible Member on the Government benches ought not to giggle in such a silly way.

The men who are already running businesses and taking risks with their health and wealth are being asked to work harder. It is responsibility which pulls men down quicker than manual labour. They are being asked to take on greater [column 1926]responsibilities and worries, and under the Bill they are being offered 1s. 9d. in the £ for every £ earned. It is absurd. I am asking the Chancellor to give a thought to this for another time. I remind him that at the moment our economy is a mixed one. About 80 per cent. is private and about 20 per cent. nationalised industry. If the economy is to work there has to be a mainspring, and the mainspring of the capitalist system is the profit motive.

If one taxes a man's earnings at the rate of 18s. 3d. in the £, one weakens the profit motive. Hon. Gentlemen opposite have often argued that the profit motive is bad, selfish and almost immoral, and should be abolished. The challenge that I put to the Chancellor is to ask him what he will put in the place of the profit motive. Will he tax it out of existence, or tax it so much that it will not operate properly and efficiently? What will he replace it with? In the Communist world force would be used. What will he do in the Socialist world?

I beg the right hon. Gentleman to bear this in mind for another occasion and to look at Clauses 17 and 18 to see whether really drastic reductions could not be made in Income Tax and Surtax on earned income. This is one of the greatest weaknesses in the handling of our economic affairs and until it is put right the efficiency asked for by the Chancellor will not be attained.

Mr. Joel Barnett (Heywood and Royton)

The really important question on this Finance Bill is: does it have in it the right amount of deflation?

Mrs. Thatcher


Mr. Barnett

The really important question about it, from my point of view, is whether it has the right amount of deflation, and that is what I propose to discuss, even if the hon. Lady the Member for Finchley (Mrs. Thatcher) does not wish to do so.

I want to see if it has the right amount of deflation in the context of the present circumstances. In asking that question one must also obviously ask: is it the right amount to deal with three different problems—the short-term economic position, the fundamental problems facing us, and the pressures on sterling? [column 1927]

It will be clear that there is nothing in the Bill which gets to the root of the faults of our economic situation. Neither if one takes both the economic package, which we cannot discuss today, and this Bill, can one believe that the measures are purely and simply for short-term economic reasons.

It is clear that the Bill and the general deflationary measures in it, but more particularly the other measures that we have had, have been taken because of the pressures on sterling, and it is in that context that one must ask whether the amount of deflation is right. In asking whether the Bill is right, it is necessary to ask whether one feels that it will be successful in its short-term aim of getting us over the interim period, leaving us free to deal with the fundamental problems facing us. In considering this one has to look at the general situation we are now in and see the effect so far of the measures taken and the other measures that we have debated.

It seems to be pretty clear from the effects so far seen that the measures, unfortunately, will be effective only if and when we have the 500,000 unemployed. As things are, people who are concerned with pressures on sterling—and I make no criticism here of those who deal in sterling for many quite legitimate reasons—are concerned with our general position. They will only be satisfied as and when the measures taken are effective and are seen to be effective in dealing with our basic balance of payments problem.

In looking at this one has also to consider whether it would have been better to have taken other steps. It was suggested in the House yesterday and the day before that we should have devalued the £. This, I believe, would be utterly wrong. The trouble is that many people see this as a cure-all. It is nothing of the kind. It no more deals with the short-term situation than do the deflationary measures in the Bill and the package. Only too often I have seen companies, given financial assistance, whether by way of increased overdrafts or debentures, suddenly finding themselves with an enormous amount of increased liquidity and going beserk, as it were, frittering away the money which is literally not theirs. Unfortunately, this could happen with devaluation, if it were seen as a long-term [column 1928]answer to our economic problems. There are many other arguments which one cannot deploy here, on Third Reading.

Mr. Deputy Speaker

No doubt the House is listening with interest to the remarks of the hon. Gentleman, but he is going too far. He is debating the economic situation, which is not in order on the Bill.

Mr. Barnett

I apologise Mr. Deputy Speaker. I was, I hope, relating it to the Bill and I was about to ask whether the measures in the Bill will get us over this period of uncertainty and whether the amount of deflation contained in the Bill and the package will give us this breathing space. I am not at all convinced that they will. For all its difficulties, I would have much preferred the certainty of import quotas, which, of course, I cannot discuss today, or even the measures suggested by the right hon. Gentleman the Member for Barnet (Mr. Maudling) yesterday by way of financial control on imports.

This was a very interesting suggestion which, I hope, will be followed up, although I would prefer the other alternative I have referred to. The real point is that in the longer term we have a very much more difficult problem. Here I do not believe that the Bill gets to the root of this long-term problem. This does not mean that we should go on as we have been doing, exaggerating the case as has happened only too often, in the instance of the Selective Employment Tax and of our general economic position. The difficulties of our economic situation have been grossly exaggerated. We should repeat and repeat that we are not bankrupt and nowhere near it. The longer we go on creating this psychological state of affairs into which we are talking ourselves, then all the more will people who are in a position to exert pressure on the £ continue to do so. I therefore hope that we can stop talking as though we are in a state of bankruptcy.

The position is really nothing like as desperate as has been alleged in many quarters. If one takes the 14 years since 1952 the total net deficit on the balance of payments on current and capital account totalled about £1,796 million, or an average of £128 million a year. During the past year we spent in foreign exchange abroad £454 million, of which [column 1929]£293 million was in the foreign exchange element of military expenditure. It will be clear that the Bill, or any of the other measures we have had, is not dealing with the fundamental problems. One has only to consider the sort of figures to which I have referred to see that it is not anything like so serious a problem. The main deflationary new tax in the Bill is the Selective Employment Tax. But we are literally creating the problem for ourselves.

The main item in the Bill is, of course, the S.E.T. Despite the many words of very great exaggeration we have had from the other side and despite the fact that I would like to see some changes in the field of part timers, charities and the disabled, I believe that this is a broadly based good new tax measure and that it will be a better one as and when we are able to amend it, as I hope, in the very near future.

An aspect I would like briefly to discuss is its administration. Unfortunately, for the reasons we know, the tax has been sub-contracted to the Ministry of Pensions and National Insurance and the Ministry of Labour. I hope that it will not be felt that because it has been so sub-contracted, we should leave it with them for a fairly long time. I hope that the Revenue will take it back again very quickly, indeed, because there already exists a not too difficult procedure which could be adopted. We already have a tax deduction card which would need only one or two more columns added to enable a tax of this kind to be administered very much more simply than in the way proposed.

I believe that we should do this very quickly and I hope that when we do we shall take the opportunity to do away with the millions of pieces of paper, in the form of stamps, which are stuck on National Insurance cards every week. It would be a very simple task in the administration of this new tax to have additional columns entered on the P.A.Y.E. deduction card so that we can get away from the necessity of sticking on millions of stamps every week. In a modern society, it is quite ridiculous.

Mr. Raymond Gower (Barry)

The hon. Gentleman hopes that this may be amended very soon. I respect that point of view, but does it therefore leave him [column 1930]to regret that we have not taken fairly recent opportunities of achieving that?

Mr. Barnett

I agree with the broadly based new measures and it is not so long now till next April. I hope that it will then be possible to have the appropriate amendments. For example, I am not wedded to the idea of premiums or manufacturers, as I said on another occasion.

On the administrative aspect, I hope that Her Majesty's Government will look into this because it would seem to me that it need not take long to arrive at a decision and say, “This is what we will do. We will get away once and for all from the old idea of sticking millions of pieces of paper on cards each week. We are now to have a stamp which includes the Selective Employment Tax so that when we do away with the proposed method we can do away with the stamp altogether and have on the P.A.Y.E. card the figures, one for the employee showing the amount to be deducted under National Insurance.”

This would not be difficult because already, on wage sheets, under many systems for deducting P.A.Y.E., which is referred to in the Bill—[Interruption.]

Mr. Deputy Speaker

It is entirely desirable to get rid of stamp licking, but the hon. Gentleman must refer to the tax in the Bill.

Mr. Barnett

I was, I hope, relating it to the Selective Employment Tax in Clause 44. I hope that the Government will consider this very seriously.

Finally, I hope that this will be the last major Finance Bill we shall be discussing. I hope that we can get away from this idea of a once-a-year major Finance Bill with its aura of crisis, and fear and expectation. I hope we can get away from this creation of an unnatural atmosphere. I feel that the petty jokes of the right hon. Gentleman the Member for Enfield (Mr. Iain Macleod), when he speaks of another mini-Budget or the five or six Budgets of my right hon. Friend, are unworthy of him.

I believe that we can do away with a major Budget once a year and have regular financial statements. Any businessman, company, or managing director who tried to run his business on the basis of one major decision a year would be rightly criticised. [column 1931]

I hope, therefore, that this will be the last major Finance Bill of its kind to be discussed in this House.