Amendment of the Law

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1966.

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Photo of Mr Edward Heath Mr Edward Heath , Bexley 12:00 am, 3rd May 1966

With respect, the Prime Minister has now announced that he intends to do a crusade. It has gone from the First Secretary's circus to the Prime Minister's crusade. This means that the Prime Minister will give it that particular spiritual quality which is so characteristic of him. The family doctor leads a crusade—a political crusade with our backs to the wall, in the Dunkirk spirit.

The Government must show that the action which the Prime Minister is now taking through his speeches in the country can produce a major weapon in the prices and incomes policy, but all one can say on the figures at the moment is that though more successful with prices than with incomes, it cannot be said to be working successfully with incomes, and this is going the way of producing additional problems for the Chancellor. As prices have been held down but wages have not, demand itself is far greater than the Chancellor wants to see. He said himself that it has been an acute problem for him, and I believe that it is likely to remain so.

Those are the important points on the Chancellor's statement which I make at this stage. How can one sum this Budget up? One can say that the balance of trade situation appears to be less favourable in the first quarter of this year than in the first quarter of last year and, therefore, the Chancellor's problems have now become greater. He is proposing to put very heavy taxation on to industry and services, almost the whole of our economic life, in fact. They will be very great burdens indeed. The additional rate of Corporation Tax and the Selective Employment Tax ensure this.

The Chancellor is not putting the burden directly on the consumer, and I cannot help feeling that it was his own speech before the election and the attitude taken by the Government during the election campaign which led to this point of view. The Government did not want to be accused of having taken a line which would lead the electors, the consumers, then to say, "This was not what you said at the election". By putting the burden on industry, in its widest form, the Government hope that the electors, the consumers, will not notice it. But, of course, they will notice it indirectly, and very quickly after these taxes come into operation.

Once again, there are minor incentives to savings, but there are no real incentives to industry or to individuals to produce the enterprise which can really deal with our problems. The Chancellor is quite right when he says that the Budget is only one part of the economic approach. We expressed our view on these matters during the debate on the Address. We believe that the Government are lacking here. We do not believe that the Budget statement today will produce that enterprise and incentive which can meet our problems by expansion rather than by withdrawal overseas, and those will be our criticisms of the Budget statement which the right hon. Gentleman has addressed to us today.