Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 19th April 1961.

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Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering 12:00 am, 19th April 1961

I thought that the Bank Rate had been dropped tacitly by the Government as a concession, for once, to the wisdom of the Radcliffe Committee, who pointed out what a blunt instrument it was and what bad effects it had in other directions. I should doubt, if the Bank Rate is as high as it is already, whether it would be a very suitable weapon for dealing with an emergency of the kind that I have in mind.

After all, I am dealing with these two regulators because the Chancellor, having diagnosed the illness of the patient, said that these were necessary to deal with any sudden critical condition—that is to say, as I see it, with a foreign exchange crisis. I say that they are quite unsuitable for the purpose. The payroll tax is open to two objections and I will mention them shortly. Both objections were stated clearly by my right hon. Friend the Leader of the Opposition the other day, but there is no reason why they should not be restated, because I think that hon. Members opposite have omitted to deal with them.

The first of them is this. The payroll tax is to operate uniformly all over the country, just as the stipulation about special deposits from the banks is to operate evenly all over the country. No distinction is to be made between advances in a depressed area, and other advances, just as in this case the payroll tax is to be imposed irrespective of the state of employment in the area in question. It is imposed irrespective of the industry, but, subject to the point that was made by the Economic Secretary just now, that it could be done category by category within the Ministry of Labour descriptions. We shall have to follow that out in Committee.

I would simply say that it seems to me extremely unlikely that anything of that sort can be made sufficiently flexible by that particular distinction. I am glad that the Government recognise the weakness of their own instrument by trying to provide for the possibility of doing that, but I think it is a most difficult thing to do.

As for the regional aspect, unemployment in this country now is very largely a local phenomenon and it is very bad indeed in many parts of the country. It would be a terrible thing if, because of some misconception of national necessity, the Government thought that this payroll tax should be imposed, and that it should be imposed, say, in Scotland at the same time as it was imposed in the Midlands.