I was not in the House at that time, so I do not feel qualified to talk about that. I assume that was an expression used by the then Mr. Butler. I cannot argue further on that. I feel that the hon. Gentleman under-estimates the qualities of politicians on all sides of the House when he suggests that the Conservative Party will not have grounds to criticise this Budget. I would like to refer to two particular aspects.
The Chancellor brought out three points which he said the Budget was designed to meet. They were, firstly, a strong £, secondly, full employment and, thirdly, a growing economy. I believe that there is a fourth, and I do not know whether this will also be a stern warning. It is not intended to be. This fourth point should not necessarily be the last, and it is the repayment of the debt of £900 million which remains to be paid over the next three years starting next year. It is a horrible debt. We must not forget also the great sum outstanding to the United States and Canada, borrowed in 1947 over which we defaulted in November, 1964, and again in November, 1965. It was a legitimate default; it was allowed for in the agreement. But we did not pay the capital and interest. These great debts are perhaps the first priority which we have to meet if this country is to continue successfully on its way.
The Chancellor said that he would repay those debts, that he was making preparations to do it now. I ask the Treasury Bench how will he do it. I read in the newspapers today or yesterday that we have just liquefied over 1 million shares in an American oil company which realised 83 million dollars to go to our reserves. Will that be used to pay back our debts? It may be a legitimate way to do it, but it seems very illogical to liquefy our overseas investments for this purpose, while at the same time attacking overseas investment which is going on today. In any case, it is the wrong way. I believe that it is eating the seed corn.
If it was necessary to raise money from these investments, could not they have been used as a security and allowed to go on growing as they have grown since the last war when we possessed them? The Prime Minister, in his famous New York speech, rightly boasted of our overseas assets but, with his Government, he is doing precious little to preserve them or build them up.
The Chancellor of the Exchequer said at the end of his speech, almost in passing, that he hoped that the balance of payments would be right in five years. Until then, we had always believed that we would be in balance by the end of this year. If we are not to be in balance for five years, how will we pay our debts except through realising our overseas investment? This is a further example of the Rake's Progress.
I believe that my hon. Friend the Member for Louth was right when he said that this Budget under-estimates the seriousness of our economic position; and I am sorry that it does. The first theme of the Budget—it may not have been intentional—is that instead of balancing our accounts by the end of this year it will take another five years.
The second theme of the Budget—and it is depressing repetition of the last Socialist Budget—is increased taxation. In making his proposals to increase taxation, the Chancellor referred to them as if they were harmless—absolutely nothing. The hon. Member for Yarmouth (Dr. Gray), who is not in his place—[HON. MEMBERS: "Yes, he is."] I apologise to the hon. Gentleman; I did not see him. He said that it was a Socialist Budget. As I say, the Chancellor referred to these increases as though they were nothing, and yet they amount, as he said, to £387 million. That is to be added to the cost of Socialist rule of £600 million over the past 18 months, making a total of nearly £1,000 million. I do not know whether the hon. Gentleman is proud of that. Will he go back to his constituency and boast about it?
The purpose of the increased taxation in the last Budget in 1965 was to control demand. It failed to do it and subsequently further impositions by the Chancellor also failed to curb demand.
We reached a rather absurd position during the General Election campaign when the Chancellor boasted of his failure. We had over-full employment and this was to the credit of the Socialist Party, in spite of all the Chancellor's previous measures to curb demand. Of course, that was rubbish. In his speech today, the Chancellor said clearly and rightly that demand was too high, and his solution again is to increase taxation, by £387 million. He will fail again because this will raise prices. As my right hon. Friend the Leader of the Opposition said, speaking immediately after the Chancellor, the right hon. Gentleman's service tax will act directly on articles of everyday use, including clothing. It will operate on food and on all types of goods, and it will raise prices.
There is no doubt that as the result of this Budget, prices will go up. That is all very well for the great big pressure groups. It is all very well for the individual who has a big pressure group behind him like a trade union, enabling him not only to keep abreast of rising prices, but to keep ahead of them. The weight of this Budget will fall upon the pensioner, those living on fixed incomes, and those living on their invested savings. They are the ones who will pay for this Budget, but they are not the people who are putting pressure on demand. It is those who are currently earning, with the big pressure groups behind them, but these people will escape because they can apply economic pressure to keep up their earnings.