With a great deal of what the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) said I found myself in agreement, particularly with his strictures on the Selective Employment Tax. It would be churlish not to say a few congratulatory words, at least initially, about my right hon. Friend's Budget. When at the beginning of the Budget statement my right hon. Friend twitted an interrupter and suggested that he come back at 5 o'clock if he could not bear listening to my right hon. Friend, I thought that the Chancellor was doing himself an injustice, because he delivered a massive speech with his usual engaging charm, and he made it lucid and compelled my attention throughout.
I should also like to be able to say a few words of congratulation about at least some of my right hon. Friend's proposals. That about the widows' allowance was fully in accordance with the best traditions of the Labour Party. It is the kind of compassionate and humane measure which we expect a Labour Government to introduce, and the same must be said about the proposals for allowances for women with dependent relatives. There are one or two other things which merit a word of praise. The concession about stamp duty for house purchase, which has hardly been mentioned, is also a socially desirable measure, albeit minor.
However, I am afraid that, welcome though the inadequate concession about the payment of Selective Employment Tax in respect of part-time employees is, those are about the only positive words of praise which I can say about the Budget. If I had had the Budget in my hands, I would have introduced a larger earned income allowance. There has been a lot of log-rolling on that subject, and in a debate on a Private Member's Motion some weeks ago, hon. Members opposite spoke of the "grinding taxation" which was "stifling the initiative of so many people". All that really amounted to was special pleading in favour of the higher income groups.
To assist people and to staunch the brain drain and to affect the maximum number of people, the right thing to do is not to reduce the standard rate of Income Tax and still less to reduce Surtax rates; it is to increase the earned income allowance. I am sorry that the Chancellor did not feel able to do something in that direction. The crucial income groups in this country for the economy are those earning between £1,000 and £2,500 a year. They are the beginners in the managerial and professional occupations and the persons in middle management. They, apart from the poor to whom I shall refer later, ought to be helped for economic as well as social reasons.
I am sorry that the Budget contained nothing about family allowances. There has been much talk, rightly so, and much publicity at the behest of the Child Poverty Action Group in recent months which has brought home to those who did not realise it before that in the groups of people with large families the most acute forms of poverty now generally lie.
Those are the concessions which I would have liked to have made. I shall probably be the first hon. Member to take part in the debate who will regret the absence of an increase in taxation, in at any rate one respect. Last January, the Financial Secretary had to listen to my strictures on the subject of a capital levy. I shall reiterate my plea for such a levy, although it is of no use in this Budget, at any rate for future reference for the benefit of the Chief Secretary. Until and unless the Government realise how great is the inequality of capital wealth, in spite of the Corporation Tax, Capital Gains Tax, Estate Duty and even the new Development Levy, they will find it very difficult to enlist the wholehearted support of trade unionists for an incomes policy.
One of the most extraordinary things about the Budget speech, which was delivered so competently, pleasantly and lucidly, was the almost complete absence of any reference to what must be, whichever way one looks at it, the most difficult problem facing the Chancellor. It is what he is to do about the incomes policy next July. I am one of those who voted for the Third Reading of the Prices and Incomes Bill last August with extreme reluctance. I am bound to say that unless I hear more about the redistribution of capital wealth, I shall not bring myself to vote for the extension of any form of statutory control over incomes, even in a much modified form which, I imagine, is all that any hon. Member on this side of the House would regard as being tolerable.
It is surprising that there has not been something said on the subject of the failure of the incomes policy to be applicable over the whole range of incomes. We have heard nothing in this debate, and nothing in other economic debates recently, about the fact that the incomes policy is totally ineffective for many self-employed people, many exempt private companies and salary incremental scales and that no attempt has been made to apply the incomes freeze or incomes restraint to salary increments, on the somewhat disingenuous ground that this was a pre-arranged contractual situation.
Unfortunately, the incomes policy has involved the violation of a number of contractual situations. I do not regard that of itself as being wholly wrong. At least, it would not be wholly wrong if the incomes policy were applied right across the board and if from the beginning it had been coupled with tackling the whole subject of the maldistribution of wealth.
I realise that the Chancellor still has these things in mind. We have not heard very much from him in recent years about the wealth tax which he talked about some while back, but at least he has given us the promise—at least, this is how I interpret his words about tax avoidance—that there will be some tough legislation next year. Do I understand that to mean that if necessary that legislation will be retrospective to cover some of the more ingenious and socially undesirable tax avoidance devices which come to light in the course of investigation? If that is so, I welcome that legislation. I am squeamish—perhaps most lawyers are—about retrospective legislation. Some of us felt a bit squeamish about the retrospective legislation on the Burmah Oil Company in the last Parliament. But here the need and social justifications are so great that one can stretch a point and say that it is reasonable if that is what is in mind.
The Government deserve, and the President of the Board of Trade in particular deserves, a great deal of praise for the quite remarkable success of the export drive in the last two years. When one is the general of a successful army, one is entitled to praise, just as conversely the general of an unsuccessful army must take the rap. The President of the Board of Trade has been in charge of Our trade affairs since the Government took office. He has been uniformly successful and he deserves very warm praise, particularly for the remarkable success achieved in the United States.
The Chancellor of the Exchequer too can take credit for the improved balance of payments situation. But here I enter a caveat. Have not we been through this situation before of a quite dramatic reversal of fortunes after a crisis only for it to be followed by an equally dramatic and sudden counter-reversal? I do not say this by way of criticism of the Chancellor of the Exchequer, but he did not put nearly enough emphasis on the fact that a sudden loss of confidence in sterling could plunge us back into a situation similar to that which confronted us last July.
There is a large number of other measures which should have been considered and which should be considered in the lull which has followed last year's crisis and finally to dispel the possibility of yet more sterling crises arising. Apart from anything else, I should have thought that the Government would regard it as electorally highly undesirable if we were to find ourselves in another financial crisis about 1968 or 1969.
The Chief Secretary will remember that he answered a Question of mine a few days ago about the value of the United Kingdom private portfolio investments. His reply was that the market value of these was £3,600 million, of which £2,200 million was in the non-sterling area and about £1,400 million in the overseas sterling area. That was the position at the end of 1965. My right hon. Friend went on to say that a comparable estimate was not available for 1966, but I believe that there is not much reason to believe that the situation has changed very much since then.