I am sorry to inflict yet another maiden speech on the Committee, but in a sense I am happy to be able to make mine when the benches are so empty because this gives me perhaps a little false courage. I represent Stoke-on-Trent, Central and already the House has heard the maiden speech from my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), who gave a vivid word portrait of this city which produces so much of the world's most famous pottery. Names like Wedgwood, Minton and Doulton are known internationally. I will not add to that description.
I have the very great honour of following Sir Barnett Stross and I think that both sides of the House would agree that he established himself in the hearts of everybody and made a tremendous contribution to the work of the House in the many years he was a Member. I assure hon. Members that he did this equally in Stoke-on-Trent where he not only became the medical man to a large number of lay people but the medical adviser to the pottery and mining industries and became very intimately associated with them. Therefore, in a sense I have the great advantage of basking in a little of reflected glory from Sir Barnett Stross, but at the same time I am very conscious of the very high standards which he set me, and I can only hope that I can in some measure live up to them.
My own rather esoteric profession, I may say in the context of this debate, is that of monetary economics, and it is in this that I hope while a Member of the Committee to make some sort of contribution. I should like to distinguish, in case the distinction is not already clear, between the financial economist and the monetary economist. I gather that the financial economist is one who engages in the field of income and capital appreciation, and is usually a fairly wealthy man, whereas the monetary economist is a man who knows rather more about money than the people who actually possess it.
I would add, in case there are too many misgivings, that I received my basic training in this very important subject of economics at a time when, on the whole, economics was still written in the Queen's English—more often by Scotsmen—and when perhaps we were in a period of transition when it was coming to be written by Hungarians in algebra. I am not referring to the two distinguished gentlemen whose names appear in the newspapers from time to time. I am referring, of course, to their predecessors, people like Hayek, Kalecki, and others. They have subsequently emigrated, and I do not know whether that will happen again.
What I should like to do in the few minutes remaining to me is not to talk specifically about the provisions of the Budget, because I think it would be a bit presumptous of me to do that, but just to take up two points which I should like to emphasise, two points which I think are extremely controversial and non-controversial at the same time.
The first is one made by an hon. Member opposite earlier today, that we as a nation are rapidly coming to the point where we are suffering from a sort of economic hypochondria. We have got ourselves into a situation where we become so mesmerised by this sort of average balance of payments deficit of £300 million that we do not get this into the correct perspective. I should like to correct a figure given by the hon. Member opposite. The gross national product is something like £33,000 million. I think that when the history of this post-war period is written, from whichever political point of view, this will be seen as some- thing of a malaise, because we surely should be able so to arrange our affairs that we can do something about this when our annual production of goods and services is so very large.
That is point number one. The second point is a bit more controversial. I suffer a little bit here from an anti-climax, because the Chancellor is obviously moving in this direction, but I am glad we are coming to the point of view that fiscal policy is a relatively unimportant thing. We have had Mr. Gladstone mentioned today, and we recollect his Budget of £63 million, I think it was, about a century ago—a somewhat different order of things from that today.
Following the work of that great Liberal, Lord Keynes, we entered a period in which everybody came to believe that fiscal policy was a really decisive instrument of economic matters. I think that this is completely incorrect. I do not want to be accused of too much heresy, but if we study Budgets from 1951 to 1965, and if we look at the sort of what some people irreverently call ritual surplus which the Chancellor estimates he will get, and his actual outturn, we see that in respect of each year there is an almost perfect negative correlation. In other words, if the Chancellor said, "I am going to get a big surplus", he got a small one, and if he said, "I am going to get a small one", he got a big one. One cannot regard as being scientific anything that behaves in that sort of peculiar fashion.
The other point is simply that we must surely have been forced into the belief that fiscal policy just does not work. I think that there is an enormous amount of evidence that even though the Chancellor may think, "I am going to cut aggregate demand within the community by a certain order", and even if he manages this, it has very little effect at all. If we were to ask for an estimate of the cut in aggregate demand imposed by the present Chancellor since October, 1964, we would find that it is without precedent in our financial history, and I think that the result of this in terms of cuts in demand on the economy is that there has been no result at all.
I cannot pursue this, but we have now reached a point with fiscal policy where we have to accept that there are so many factors in the situation outside the Budget which can supplement particularly consumer demand that the Chancellor's efforts are often without avail, just as we have come to see in monetary policy that there are so many sources of credit from financial intermediaries that increasing the Bank Rate and putting the screw on bank advances renders even monetary policy almost impotent.
If we look at this tremendous work by Mr. Dow on "The Management of the Economy", we find that he argues—I shall not quote at this stage because my time has run out—not only that the fiscal policy has not been a contributory factor to economic stability, but argues forcefully that it has created instability, and I am glad that the Chancellor today attempted to put fiscal policy in something of its true perspective.
My other point which makes its contribution to this sense of anticlimax which I feel is that when I asked myself, "What should a Budget do?" my note on this piece of paper was quite simply that I should recommend to the Chancellor—very presumptuously at this stage of my Parliamentary career—that he should use the Budget as a sort of selective financial mechanism, and my only recommendation was that he should impose a payroll tax.
I thank the Committee for listening to my maiden speech. I hope that in the years to come I can make some sort of contribution which will commend itself to the House, and that my general conduct in the House will lead me to earn something of the respect which my predecessor, Sir Barnet Stross, obviously enjoyed.