Economic Affairs

Part of the debate – in the House of Commons at 12:00 am on 24th July 1967.

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Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West 12:00 am, 24th July 1967

I have not timed it, but I answered that question about four minutes ago. I showed that the rate of those public expenditures went up in real terms by 39 per cent. in our 13 years and that it was possible, at the same time, to make a number of important reductions in taxation.

I ask the Chancellor of the Exchequer to pick up this point of public expenditure and the 4¼ per cent., telling us how he relates it to the new 3 per cent. targets when the older targets of 3·8 per cent are impossible of fulfilment.

Our general approach to economic affairs was given by my right hon. Friend the Leader of the Opposition recently at Carshalton. I take this comment on that diagnosis from the Sunday Times of 9th July: Few people, apart from the obvious vested interests, would quarrel with the value of most of the things he advocates: cutting the tax disincentives; getting some legal force behind productivity and industrial bargains; sharply stepping up the tempo of retraining; taking a cost-effectiveness scythe to the mounting total of Governmental and local authority spending; getting some sense into the way we pay for our social services; generally getting rid of the restrictions and interference which stand in the way of initiative and enterprise in Britain. These are all things which lots of people, including Business News, have frequently pressed for". That may be true, but, with the single exception of the policy of stepping up retraining, on which, no doubt, there is agreement between the two sides of the House, each and every one of those proposals would be fiercely opposed from the Government side. They are in every case distinctive proposals. They may be accepted by people now, but they are the right proposals and the ones which the Tory Party has been putting forward both in the House and in the country.

It is then commented that one does not answer the short-term question of what one would do immediately in the Government's situation if one does not accept the Amendment standing in the name of hon. Gentlemen below the Gangway. But, surely, the point is this. In the early days of resumed growth, a deficit must either be financed or eliminated. The alternative ways of eliminating it are deflation, devaluation or controls, each of which, for different reasons, we would wish to reject, and each of which, I fancy, though for different reasons, perhaps, the Treasury Bench would wish to reject as well.

Thus, one is trying to do something which all Governments, not only in this country, have found very difficult—to achieve growth without inflation, growth without tears. But one may well come to the conclusion in the end that, to use the corniest of all metaphors, one needs both the brake and the accelerator in the car. We have before us all the examples of countries which have looked as though they had solved the problem for a bit and then, apparently, failed. We have had Germany thrown at us so often, where the terrible overheating in 1965 was followed by an over-correction in 1966, and now the economy is laboriously swinging back again. It may well be that one does need both the accelerator and the brake, and one simply needs more skill in driving the car.