I consider it a privilege to follow the hon. Member for Horsham (Mr. Hordern), and I very sincerely congratulate him on his maiden speech. He started with a very ready sense of the things that please this House: a sense of continuity with predecessors, and of interest in his constituency. The hon. Member went on, somewhat to my surprise, with a speech full of very "hearable" meat, if I may mix metaphors, on the international situation.
I hope that I am not making a wrong comment in saying that had that speech been made from this side it would have been regarded as very controversial, because in its serious, lucid and sensible approach to the problems of this country it was in contrast altogether to the rumbustious harlequinade to which we have been treated by the right hon. Member for Barnet (Mr. Maudling). The hon. Member for Horsham very rightly, carefully and sincerely put together the true facts about this country, namely, that we have chronic difficulties because our position in the world and the inadequacy of liquid resources to finance world trade bears very hardly on sterling, one of the two main currencies.
I did not agree with one or two details of the hon. Member's suggestions for meeting the situation, but I must confess that in his approach I find something very sympathetic to my own ideas. I hope that we shall hear more from the hon. Member. I know that when his name goes up on the "ticker" I shall certainly make haste to hear what he has to say, whether or not he is controversial, according to the circumstances of his speech.
The hon. Gentleman has made me a little ashamed of some of the things I have to say, because I hope that this will be the last debate in this period and situation of considerable economic and financial gravity that we have to score debating points from each other, but some things have to be said after the speech of the right hon. Member for Barnet. I remember vividly when the right hon. Gentleman got his first junior job in the Conservative Government—I was on the other side of the House, and this is many years ago—saying that he had been appointed for his vices rather than for his virtues. Although he has plenty of the latter, he has, apparently, not a few of the former, because, at a time like this, he has sought to persuade the House that the financial crisis now facing the country is largely the making of the present Government.
For example, the right hon. Gentleman says—and, apparently, says it in all seriousness—that the fact that the Government disclosed and discussed the deficit facing the country on payments account this year—a discussion that was accurate, well-informed and necessary on a matter before the House of Commons —is responsible in part for the speculation against sterling. I do not know what he wants the Government to do. Does he want them to keep these figures in the dark, as he did, to some extent, before the election?
The right hon. Gentleman now proceeds to say that the way in which the figures have been presented to the House of Commons and the world gave the impression to the world that we were running a bigger deficit than we are. If that were true, and if this criticism has any sanity in it, the sterling exchange will do very well in the next few days following on the right hon. Gentleman's speech today, because he has explained to the nervous speculators against sterling the true position; namely, that of a deficit of £700 million or £800 million, something like £500 million is due to capital account or once-and-for-all movements of sterling.
The right hon. Gentleman's voice is heard. There are newspapermen who work in this place. Not a few of us knew all of this before the right hon. Gentleman spoke. Therefore, I cannot understand why he should suppose that he uniquely was aware that this £800 million deficit was not all that serious. He was painting a picture of the international holder of sterling as fantastic as some which we get from ill-informed Members on this side of the House.
It is a pure fantasy to suppose that there is a sort of nervous, hard-faced gentleman in Zurich or Basle who hears of debates in the House of Commons and says, "My goodness, £800 million deficit. I must sell my sterling at once," not pausing to inquire what the true extent of the deficit is, how much is due to current account, how much for once-for-all items, for capital and so on. It is absolute piffle and it is disgraceful that the right hon. Gentleman—the Chancellor of the Exchequer until a month ago—should treat the House to bunkum of this kind and suggest that the sterling crisis is due to the presentation of figures perfectly accurately known to him and everyone else concerned in the matter.
It is the same kind of nonsense to suggest that the act of putting on the surcharge on manufactured goods is responsible for our difficulties—not because we did it, but because of the way we did it. [HON. MEMBERS: "Hear, hear."] I hear certain sympathetic murmurs, but that is not my view; it is the view of the right hon. Gentleman. What hurt our E.F.T.A. partners, so it is argued, was not loss of trade caused by the imposition of these duties, but the rudeness or lack of polite anticipation of our intentions, which would have been mitigated by the action of a suave, urbane Conservative Government. They would have put the surcharge on, but they would have done it with that sophisticated charm which would have eased the pain, we are told, to a point where it would have done no harm to our financial position. I suggest to all hon. Members that that is pure bunkum.
What caused the E.F.T.A. protest and protest from our other trading partners was the injury caused to their trade when we reduced the imports and that we reduced them in breach of the letter of our agreement. It is clear to me that the Government tried to honour the spirit of the agreement, although in the circumstances they did not feel permitted to honour the strict letter of the agreement. What hurt and caused difficulty was not lack of politeness on our part or lack of an attempt to negotiate this matter in advance, but that we had to reduce the flow of their trade to this country for the time being without any agreement.
According to the preposterous theory of the right hon. Member for Barnet it was the trifle and not the substance which caused the injury. What would have helped would not be negotiation beforehand, but some proper projection of our position immediately after. I wonder whether the Treasury does all that can be done to propagate the British point of view through our embassies, the commercial and financial attaches everywhere in Europe, to ensure that people affected by these decisions understand the motives for them. I should like to see more done to explain Britain's position.
If people in other countries will listen to the illiterate arguments I have been demolishing they may not understand that the difficulties of this country's trade position in Europe. The people of Europe should understand that we did what we did with a heavy heart and that there is no party in this State willing voluntarily to disrupt the pattern of trade arrangements which has been so carefully and painfully built up in the post-war years. We were very sad to do it and I am sure that the Chancellor in particular did it with a heavy heart. I do not have to appeal to him because I know that, without an appeal, he will reduce and abolish these duties at the earliest possible moment. I am sure that as soon as our position permits he will reduce and abolish them.
It is not helpful to hear talk from the lunatic fringe, on either side of the House, about committees of watchdogs set up to consider our affairs. There are no committees of watchdogs except the Government and Parliament of this country. If we reach honourable deals and arrangements and attempt to remove friction in future, only harm can result if people say that the committees are in the nature of watchdog committees. This is absolute nonsense.
I very much welcomed the statement of the Chancellor, as far as it went, to deal with the problems of the City in relation to the new taxes which are to come in the spring Budget. Anyone who understands the difficulties of tax legislation will realise that the Inland Revenue has probably bitten off about as much as it can chew in undertaking to produce a corporation tax by the time of the next Budget. It is doubtful whether it could produce one to be imposed by the next Budget and to come into effect immediately. It has taken on a considerable task by undertaking to provide for the House a well worked out tax.
It is rather too much to ask the Chancellor to disclose the details, but there are some very good reasons why he anticipated the general principles of his Budget and foreshadowed the proposals. One reason is that which was mentioned by the hon. Member for Horsham, in his very well-informed speech, that some indication of these proposals would be helpful in pursuing an incomes policy and coming to an accommodation with the trade union movement on wages. questions.
For example, it was important that the trade union movement should know that the Labour Party intended to implement its Capital Gains Tax proposals. It was important that the trade union movement should know that the Labour Party intended to honour its pledges that corporation incomes would make their contribution to an incomes policy, as pledged in our policy statement before the election. These tokens of our intention had to be given.
There was a second reason why this should be done. It is that this is a very complex tax which affects many interests, and some may be affected very gravely- It was, therefore, important before the tax was put before the House of Commons, still more important before it was enacted, that those who will be affected should have an opportunity of making detailed representation. When we deal with a thing like Corporation Tax, it is not like dealing, with say, a 15 per cent. duty on lead pencils. It is an exceedingly complex matter and representations cannot be made in a day or a week.
The Chancellor rightly saw that if they were to be effective and useful they had to be made with ample time for both parties to study the proposals, counterproposals and all possibilities. So the Chancellor, when he announced these things in advance, did so not out of a desire to make the City's flesh creep, but in large part to allow it to put forward constructive proposals which would enable time to achieve his objectives from a fiscal point of view while inflicting the minimum of discomfort and dislocation on the City from its point of view.
I have not the least doubt that the City will respond in traditional manner and make full use of the opportunities which the Chancellor has given. I dare-say that people are not stumping on soap boxes, but are preparing, very properly and with great care and study, their ideas to put before the Chancellor to explain to him how his objectives can be achieved without necessarily dislocating City procedures.
I pause to say this. The Chancellor's statement today was good so far as it went. It is not easy to get the Revenue to divulge anything at all in advance of its intentions, and I understand that, but I think that my right hon. Friend must go as far as he can to let the City know in what way he is thinking in principle, without committing himself to details. I am sure that my right hon. Friend will understand that there is considerable uncertainty in the City and some—from the point of view of members of this party who know something about the City—unbelievable fears. I will deal with one point, to give an illustration.
Investment trusts, and those who manage them, are alarmed that if a corporation tax is put on, and there is no provision to prevent double or treble taxation, the whole investment trust organisation will be put out of business, and that is a real danger unless it is guarded against. I have no authority to speak on behalf of the Chancellor, or the Government. I speak from personal knowledge of my own party and of the Government, and I say that it is preposterous to suppose that the Labour Party has any intention of applying a Corporation Tax in such a way as unnecessarily to put out of business the investment trust movement of this country. In my opinion, it is out of the question that the Labour Party will do anything of the kind.
I hope that at some point, when he has had his discussion and moves on, the Chancellor of the Exchequer will be able to reassure the investment trust movement that it does not have to believe the bogey-man view of the Labour Government Front Bench put up, very illadvisedly, by the Opposition Front Bench. The businessmen in the City will learn that in the long run the Labour Party and the Government are something not inimical to their long-term interests. [HON. MEMBERS: "Oh."] Let me say straight away that I do not expect a Labour Government to cause enthusiasm in the City. If the hon. Member wishes to intervene, I will give way to him.