Budget Resolutions and Economic Situation

Part of Orders of the Day — Ways and Means – in the House of Commons at 12:00 am on 11 April 1962.

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Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00, 11 April 1962

The Financial Secretary to the Treasury has made a cheery speech, but his misfortune is that he has to defend the record of this Government. Nothing that he has said this afternoon alters the two conclusions which have emerged from this debate: first, that the Government have no policy for expanding production in Britain this year; and, secondly, that what they really care about is pushing more and more of the tax burden on to those least able to bear it. [HON. MEMBERS: "Oh."] I will give some facts and figures about that later.

The most extraordinary thing about the Chancellor of the Exchequer's speech was that he never mentioned the production record from one end of his speech to the other. Whether this was because he was not interested in it, or because he was ashamed of it, I am not sure. Yesterday, the President of the Board of Trade made a speech of almost incredible complacency. He did not think that there was anything wrong with the economy, any more than he thinks that there is anything wrong with I.C.I. or the Imperial Tobacco Company. He was very pleased with a slight rise in exports in March to £312 million, seasonally adjusted; and we must be very grateful for any ray of hope which he can give us.

But the export figure of £312 million leaves us in this situation. Exports in the first three months of this year were ½ per cent. higher than in the final quarter of last year and about equal to the average for 1961 as a whole. But imports in the first quarter of this year were 1½ per cent. higher than in the previous quarter, and again about equal to the 1961 average. If production rises, surely it is obvious that imports will rise. I therefore cannot see how the President of the Board of Trade finds any reason to be complacent in this figure.

What we have had from the Government, and from the Financial Secretary today in this debate, is not a practical plan or proposals for increasing production and exports, but yet another sermon about incomes similar to those which we have heard many times. But the Chancellor of the Exchequer has thrown away another opportunity of achieving a real agreed incomes policy by giving us a mere mockery of a capital gains tax instead of a real one. No one is impressed by this tax. The Times said yesterday that the City of London greeted it with relief rather than with alarm. Later in the day we heard that it was all cheers in the City. In fact, the Stock Exchange yesterday had its merriest day since the economy was knocked back six months ago.

The Chancellor of the Exchequer virtually admitted that this was only a mock tax by telling us that he was unable for forecast its yield. He had no difficulty in forecasting the yield of the new tax on sweets and soft drinks, which will be £50 million in a full year. He tells us that he feels unable to make moral judgments between television sets and clothing. But he has no difficulty in making moral judgments between capital gains made in five months and capital gains made in seven months. Apparently, he thinks that the former are wicked, but the latter perfectly legitimate. If the Chancellor of the Exchequer does not think that that is a moral judgment, I wish he would tell us what sort of judgment it is.