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 Ken Lomas Mr Ken Lomas , Huddersfield West 12:00 am, 3rd May 1966

We have been in only for 18 months. If we start from a base figure and remember that we inherited a terrible mess, we realise that it is not possible to get into top gear immediately. But by the time the next election comes along in 1970 we shall find not only that we have obtained an increase of 3·8 per cent. in our production per year but have exceeded the 4 per cent. figure. It will move slowly to begin with but will accelerate and pass the target in the last two years of the National Plan.

Hon. Members on both sides of the Committee will accept many of the minor proposals in the Budget. They will welcome the very small but necessary amendment which will allow a shopkeeper to sell stamps without having to obtain a licence. This is a long overdue reform, and I see no real reason why it should not be possible for the Chancellor to examine the great bundle of possible reforms which are so overdue in taxation, and which he might have included in the Budget.

I congratulate the Chancellor. In spite of all the fears of the newspapers and of people both inside and outside the House that there would be an increase in the Purchase Tax on cars, and that the price of beer, tobacco and petrol were all going to rise, there was almost an outburst of indigation among hon. Members opposite when it was announced that that was not to happen. Hon. Members opposite were surprised, because they expected that this was the way that the situation would be dealt with. They were surprised that Income Tax was not increased. This is an indication of the fact that the Budget was conceived bearing in mind the National Plan and the objectives which have been stated time and again by the Government, of getting the country moving forward in a stabilised way, not only in respect of incomes of all kinds but of prices. That is what the Budget has sought to do. We should be very grateful not only for the small mercies but for the larger ones.

As for the Selective Employment Tax, which will occupy the House in Committee for many hours in the weeks and months ahead, there are certain dangers which I accept, and which must be studied very closely. We talk a lot about modernising industry and of re-equipping it and revitalising it. This needs to be done. We talk about the need to encourage the mobility of labour, which must be done if the National Plan means anything. But I am worried that this tax may persuade employers to hoard labour. It may mean that they will keep more than they should, and that even those that do not now do so may be persuaded not to introduce new measures that they should be introducing, because they have the labour to get by using their old methods and techniques. This has to be watched very carefully indeed. I welcome the tax in itself because it is a new form of tax, a wider form of taxation. It will bring in £240 million. We must nevertheless watch any effect it may have on prices, although the Chancellor said that it would have an effect of no more than 1 per cent. If that is so, I think it can be absorbed by increased efficiency in industry. It can be absorbed in so many different forms.

The hon. Member for Chelmsford did not think the Government had really done anything to help in terms of exports or to restrict our imports. We have been doing this all the time in the 18 months we were in Government and we have now gone further along the road. The Chancellor this afternoon quite rightly gave an indication that the import surcharge would be coming off towards the end of the year. This, surely, is a good thing. It certainly will be welcomed in my own constituency, which has felt the effect of the surcharge on some of the goods it has to import.

It was also said this afternoon that there would be an increase in the facilities being given to exporters. This again is right. There are many industries in this country that are grateful to the Government for the Export Credit Guarantee Scheme. If this can be increased and enlarged, so much the better. When people criticise the import surcharge they should realise that it was essential because of the legacy we found when we became the Government. The Export Credit Guarantee Scheme was necessary in order to stimulate our exports and to sell our goods overseas.

There is positive proof in the Budget that the Chancellor has drawn it up with the national problems in mind. We must get out of this vicious circle of periodic crises where we have a balance of payments problem recurring every three or four years which in the past has been solved only be creating something like 800,000 people unemployed. We want to avoid that and we have been fighting against it. This is what this Budget is designed to do—to maintain that low figures of 1·2 per cent. or 1·3 per cent. unemployment. That is what we are after when we speak of maintaining full employment.

We want at the same time to maintain a steady—not a galloping and then a full-stop and reverse—type of growth. We want a steady and sustained rate of growth in the whole of industry. This I think we have done. It is so easy to solve any balance of payment crisis or economic problems merely by applying the screw and forcing people out of work. We can reduce the purchasing power of the people quite easily in that way. We can make conditions such that they have not the money to buy goods and so cut back on demand. But that would stunt and cripple the economy and retard growth. We decided to set our face against this.

It is also the duty of the Budget and of the Labour Government to make sure that not only do we have the full employment we seek but that we increase the whole wealth of the country. We cannot do that unless we are prepared to face the fact that if we are to go on shouldering burdens which our economy cannot carry the net result will be economic bankruptcy. That is why in the Budget Statement this afternoon I was pleased to hear the Chancellor's comments on the question of our troops in Germany and that we should be relieved of some of the payments for keeping them there. I hope we shall go further in this respect. Although there has been a review of defence costs, I hope there will be a further review to see how it is possible to make certain that defence expenditure bears a realistic relation to our economy. Otherwise we shall be in trouble. There is no point in being, or attempting to be, one of the greatest military Powers in the world if the net result turns out to be economic bankruptcy.

Mention has been made by hon. Members opposite that the Budget makes no reference to the over-riding need for growth in industry. This is done in many ways, by encouraging investment, and helping to stimulate industry where we can. There has to be an acceptance of change on the part of the manufacturer as to what he makes and where he sells it, and an acceptance of change on the part of the worker in what he produces and where. There has to be an acceptance of change on the part of the nation. There has to be a realisation that unless we change our ways we shall be stuck in the mud for ever. We on this side of the Committee recognise that without change there can be no progress.