In accordance with tradition, I crave the indulgence of the Committee for a maiden speech, especially as I shall be speaking for my party. I have the honour to represent the Bodmin division of Cornwall, a constituency that has been represented in this House by men of great distinction, not the least being the late Mr. Isaac Foot.
Mr. Foot rendered great service to the nation—and, indeed, to my party—and, if I may say so without impudence, he has also rendered great service to Her Majesty's Government, in that two of his sons are members of the Government and another son sits for Ebbw Vale. I am happy to report that yet another of the late Mr. Foot's sons continues to render sterling service to my party in the West Country. It is because of the outstanding record of Parliamentary service rendered by former representatives of the Bodmin division that I approach my duties mindful of a great heritage as well as of the needs of my constituents at present and in the future.
The Bodmin division is an area of high unemployment, and one in which there is serious depopulation. It is an area where there are low wage standards, and where the people do not share the same prosperity enjoyed by others living in the large urban districts. It may, therefore, seem appropriate that I should have chosen to speak in this debate on the supplementary Budget because, whilst the stability and growth of the national economy affect every single person to a greater of lesser degree, areas like Cornwall are infinitely more susceptible in times of financial crisis than, for example, the over-populated, over-employed areas of the South-East.
We Liberals recognise that Her Majesty's Government are rather in the position of expectant relatives who, arriving for the reading of the will, discover that they have inherited a series of Income Tax demands and a request for payment of the mortgage. We, like the Government, vigorously opposed the policies of the late Government which have resulted in this situation, and I believe that if many of the constructive proposals that I know have emanated from this bench during the last 13 years had been adopted by the late Government, not only could this crisis—if that is the correct term—have been avoided but the Conservative Party might be occupying the Government benches at this time.
It was, therefore, with some relief that many people were reading in the national Press, about three weeks ago, of the sweeping changes taking place in Whitehall; of civil servants working 80 hours a week to fulfil the demands of the new Ministers. Much of the Gracious Speech appeared to us to be in keeping with the demands of a modern Britain. The climax of this period of high expectations came at 3.30 yesterday afternoon, in this Chamber. We had arrived at the moment of truth; the moment when the Chancellor of the Exchequer would unfold the dynamic economic policies that would galvanise British industry into new life, would encourage our exporters to redouble their efforts, and would provide the incentive to bring together the two sides of industry in a revolutionary spirit of co-operation.
It is true to say that every nation judges its Government by that Government's economic policies. I need not remind the Committee that yesterday this Chamber was packed, the atmosphere tense. The —hancellor took his place at the Dispatch Box and we waited—and waited —and waited. When, an hour later, the right hon. Gentleman resumed his seat, we on this bench at least were bewildered to discover that apart from a few long overdue reforms, to which I shall refer in a moment, it was the mixture as before. In fact, it would not be unjust to describe the Chancellor as a sort of semi-detached Tory.
Where is the dynamic policy of expansion? What promise does the Budget contain of measures which, for example, will bring new opportunities of employment in Cornwall? I readily admit that I have been rather more encouraged by the utterances of the President of the Board of Trade just now, but where are the policies that will raise the standard of living of people who have struggled too long against adversity in the Highlands of Scotland, in Northern Ireland and in parts of rural Wales? Where are the policies that will restore Britain's falling prestige in Europe—or, even more important, in the great family of nations, the British Commonwealth?
Perhaps nothing illustrates my point better than the imposition of the 15 per cent. import levy. I do not for a moment dispute the gravity of our balance of payments position, but need Her Majesty's Government have acted with what seems to some of us to be indecent haste? A month would have made little difference to the ultimate position, and during that time proper consultations could have taken place between the E.F.T.A. countries and, more important, with the Commonwealth countries. It has been suggested that such discussions might have led to a further drain on our sterling resources, but I reject that argument because it reflects upon the honour and integrity of our friends and allies without justification. If America could be trusted—and she was—why not the British Commonwealth?
Her Majesty's Government, when in opposition, condemned the late Government during the Common Market negotiations for their failure to consult E.F.T.A. and the Commonwealth—and I believe that that condemnation was justified. This further breach of faith between friends and family can only do further harm to the prestige of our nation. Within days of taking office, the present Government are doing precisely the same thing as the late Government did at the time of the Common Market negotiations.
While we reluctantly accept that the surcharge may be necessary as a matter of expediency, and acknowledging with relief the Chancellor's statement yesterday, reiterated by the President of the Board of Trade this afternoon, that this measure will only be temporary, there is one other aspect of the matter that is causing concern to many people. It is extremely unfair that the surcharge should have been applied to goods already in the docks and awaiting Customs clearance, and to any goods for which bills of lading had been despatched from foreign countries before the announcement of the surcharge was made. Provided that those bills of lading name British ports of entry, those goods should be exempt. As it is, many small importers—and some larger ones, too—are faced with having to accept deliveries at costs far higher than those on which they budgeted. That will cause real and quite needless hardship. This is a serious matter, and I urgently beg the Government to reconsider the unfortunate plight of these firms and individuals.
Hon. and right hon. Gentlemen on both sides of the Committee will welcome the pensions proposals—for many of us, they went some way towards redressing the balance yesterday afternoon. We in the Liberal Party still maintain that by introducing a social security tax to replace the present National Health Insurance scheme it would have been possible, without straining the economy, to have provided still higher old-age, Service and widows pensions. Nevertheless, it is a step in the right direction, and we welcome the proposals.
There are, however, some other matters that concern us and, once again, I trust that the Chancellor will give consideration to our plea. Now that the iniquitous earnings rule is at last to be abolished for widows, why not abolish it also for old-age pensioners, whose need is just as great? Next, will the Chancellor reconsider the position of public service pensioners, many of whose pensions were granted some years ago and who see pensioners who recently came on to the retirement list getting pensions far greater than those which their unfortunate fellows receive? Also, the Chancellor omitted to mention the rate of increase in National Insurance contributions for self-employed persons. I trust that he will bear in mind that any drastic increase would cause real hardship to many people in a small way of business.
A curious feature of the Budget proposals is the fact that the Chancellor has announced measures which will form part of the annual Budget proposals next April. He has given advance notice of a capital gains tax and a corporation tax which, in principle, we welcome—which will give the tax avoidance experts another field day, or should I say another hundred and fifty field days, in which to devise fresh tricks to ensure that those who do the least work but have the sharpest wits will make the smallest contribution to the National Exchequer while those who toil honestly will continue to foot the lion's share of the bill.
That is the very opposite of the intentions so forcefully expressed by the right hon. Gentleman yesterday. A capital gains tax is long overdue, but there is a need for other reforms at the same time. For example, a quid pro quo is needed in respect of capital depreciation allowances on new buildings if investment of the right kind is to be maintained and the modernisation of our larger cities is to continue.
There are two fundamental issues I should like to touch upon. The greatest disappointment of this Budget is the fact that Her Majesty's Government are still apparently wedded to the nineteenth century notion that Britain can continue to support indefinitely the sterling currency of the world under the present system. Even if this is true —and I do not accept that it is—and if we are to be at the mercy of other countries calling upon our slender resources at times when their own balance of payments problems become acute, clearly Her Majesty's Government should initiate talks as a matter of extreme urgency with the countries concerned with a view to finding some sensible method of ensuring that our and their economies are not constantly at risk.
In the long term we have to overcome the problem of a nation which is living far too close to the bone. Our sterling reserves for the first quarter of 1964 represented 11·1 per cent. of our total export-import bill. In the United States the reserves were approximately 36 per cent. and in Western Germany they were about 25 per cent. The effect of this is that we are desperately vulnerable to changes in world markets. It has been well said that when Wall Street sneezes we catch pneumonia. A drop in our exports, or comparatively small but sudden demands on our resources, appear to cause panic. This will not do and we believe that it is capable of correction.
We in the Liberal Party supported the Government in the Lobby yesterday on the proposal to increase Income Tax because we recognise that improvements in the social services have to be paid for, but we did this reluctantly. We opposed them on the Resolution to increase the tax on petrol and diesel oil because this will tend to increase the cost of living and because it has long been our policy to seek a reduction in the existing tax which causes very considerable hardship at present.
How much happier we would have been to have voted with Her Majesty's Government on the kind of dynamic economic policies which for a few fleeting days we hoped and believed might be forthcoming—policies which, as I said at the beginning of my speech, would have given incentives to working people to increase production rapidly and which would have encouraged our export manufacturers to far greater efforts, the very things which are so desperately needed if we are to build up our reserves and to restore and stabilise Britain's economy and above all if we are to earn the respect of the free world.
I believe that the right hon. Gentleman the Chancellor of the Exchequer was profoundly right when he affirmed yesterday his confidence in the capacity of the British people to face reality, however unpleasant, and to work with honesty and determination in the interests of the nation as a whole. We on this bench wholeheartedly share that view, as will hon. Members on both sides of the Committee. There is, however, one word of caution to be added. No residue of good will is inexhaustible. If new demands are to be made on the peoples of these islands, they are entitled to a clear-cut programme from Her Majesty's Government, a programme of reform that will give them the inspiration they need for the prodigious efforts they will be called upon to make in the years ahead.
I have crossed Jordan. If I have landed safely on the other side it is only because of the courtesy of hon. and right hon. Members of this Committee. I wish to thank them for their forbearance.