I very warmly congratulate the hon. Member for Stockport, North (Mr. Gregory) on his maiden speech, It was a most interesting address, obviously well informed about the situation in his constituency and, particularly, in the cotton industry. I hope that he enjoyed making it as much as we enjoyed listening to it, and I know that we all greatly look forward to hearing from him again.
Ever since the recent election campaign began, we have heard a great deal about a balance of payments crisis. This, of course, is nothing new. Obviously, my memory cannot go back as far as that of some right hon. and hon. Members on both sides of the Committee, but to anyone who studies economics it early becomes plain that our country, with its responsibilities for sterling, with its proud position in the world to maintain, and with its inevitable difficulties over raw materials, will always have a difficult balance to achieve in the matter of exports and imports.
My complaint about the Budget is that it contains next to nothing to do with this problem. We have the surcharge, which had been already announced, and we have the export incentive proposals, but otherwise this very real problem, the significance of which I feel keenly, has been used as an excuse to raise general taxation in order to find money for social benefits. I regard this as absolutely deplorable, first, because the present Government promised that it was exactly what they would not do when they were bidding for people's votes. They said that their increased social expenditure would be financed out of the growing expansion of British industry. [HON. MEMBERS: "Hear, hear."] Hon. Members may cheer, but it has not happened. The finance has come out of a rise in the general level of taxation.
Secondly, the doctrine that this is the necessary groundwork for an incomes policy seems misleading and dangerous. If the only means by which one can achieve an incomes policy is by raising the level of benefits for those worse off before one starts, it seems to me very likely that many other sections of our national life will try to get in on the act.
Thirdly, the inflationary effect of what we heard yesterday will be out of all proportion to the value of the benefits conferred. Indeed, it seems likely that there will be such a progression upwards of taxes first, then wages, and then costs, that very soon further increases will be required. I wonder whether the present Government will find it so easy to obtain the money then as they seem to think it is today in a country grown prosperous under a Conservative Government.
I go back to the measures to deal with the balance of payments problem. It seems odd to me that, after all the talk, what we get to deal with our balance of payments problem is good old-fashioned protection. There has been much talk of the measures as blunt instruments bluntly produced. I agree with that. I know of firms with a very fine export record which are keen to increase it and to invest to this purpose but on whom the surcharges act in exactly the wrong way, making it difficult, not easier, for them to export because they have to rely on imported materials which are simply not available in this country. I hope the Chancellor will take urgent steps to disentangle exactly where the increased burden that he has laid on our export trade by this measure is to be found and take steps to remove its weight, particularly from our heavy construction and mining industry, as quickly as possible.
I would mention also the export incentives scheme. The Chancellor of the
Exchequer talked about various ways in which the export rebates would help exporters. Then he uttered what I felt to be a very interesting sentence, stating:
The intention will be defeated if firms merely pocket their rebates and make no effort to expand their sales abroad."—[OFFICIAL REPORT, 11th November, 1964 Vol. 701, c. 1029.]
I wonder that any Chancellor has to say anything like that. Is there no way of ensuring that if these firms do not use the rebate for increasing their export trade they shall not get it? It seems a complete waste of money if they do not do so.
What other plans have the Government to deal with the crisis and remedy it? I find it hard to believe, after all the build-up, all the scolding, all the jargon about silence, and so on, that the Government are simply going to meet the problem with increased and temporary protection. Presumably we shall have to work harder to sell more abroad than we did. Is protection an incentive to harder work? I do not think so. I should have thought that absolutely the opposite was necessary. After what we have seen so far, I confess to having little confidence that the Labour Government have any fundamentally new ideas about how to get the country going.