Budget Resolutions and Economic Situation

Part of Orders of the Day — Ways and Means – in the House of Commons at 12:00 am on 25 March 1968.

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Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford 12:00, 25 March 1968

During our four-day Budget debate, we have had 27 speeches from the benches opposite and an almost exactly equal number from the Government side of the House. Except for a few which, unfortunately, I missed today, I have carefully read all those which I did not hear. Some, either because they were peculiarly constructive or peculiarly unconstructive, I both heard and read.

Three main lines of criticism stand out from the Opposition speeches. First, there has been the attack on our prices and incomes policy, echoed by some of my hon. Friends. Second, there has been the line that public expenditure is the root of all evil and that I should have dealt with the whole problem by making cuts here. Third, there has been the criticism of the Budget as such that I should have depended more upon savings, that I have done nothing for incentives because I have not cut direct taxation, and that I have been too hard on the motorist. All these lines were faithfully echoed by the right hon. Member for Barnet (Mr. Maudling) in his perfectly agreeable but slightly platitudinous speech this evening.

In addition, there have been a number of detailed points. The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) asked me a number of them this afternoon. I can tell him straight away that some at least of his fears are misplaced, but they will all be dealt with in the Finance Bill, as the right hon. Gentleman indicated.

However, there is one general point which the right hon. Member for Enfield, West (Mr. I ain Macleod) put on Wednesday and put again this afternoon and to which he is entitled to an answer. He asked me about the level of unemployment. Even after the Budget, I expect it to be a falling level, but exactly by how much it falls must depend on how well we do with exports.

I shall endeavour to deal with each of the three main criticisms in turn and, first, with prices and incomes policy. I agree that the House is entitled to a good deal more detail on it. However, winding up speeches at 9.30 in the evening are not a good vehicle for detail, and we shall provide it in a White Paper which will be published in the course of a few days.

In the meantime, I reiterate my view that a firm prices and incomes policy is an essential supplement to the Budget. If we were to allow wage increases to go ahead far faster than productivity, we would partly undermine the demand management effect of the Budget, but still more damaging and important would be the effect on our costs. We would simply fritter away the competitive advantages of devaluation. All the evidence, unfortunately, is that, without a firmer policy, this would be only too likely to happen. We simply cannot afford another year like last, with a substantial increase in real wages accompanied by a balance of payments deficit.

I have tried hard, but so far unsuccessfully, to disentangle the attitude of the Opposition on this. The most detailed, and in many ways, the clearest speech came from the right hon. Member for Mitcham (Mr. R. Carr), but even he left several large holes in the middle of the Opposition's case. I take it that at least half of them want an effective incomes policy. Certainly the right hon. Member for Barnet half indicated that this even- ing, and when he occupied my position and was presenting Budgets he laid very great stress upon it.

But the Opposition claim that they would do so without statutory powers. In present circumstances, how? As the right hon. Member for Barnet told us, the right hon. Member for Bexley (Mr. Heath) is not here this evening. He sent me a note at 6.30 saying that this was so. This is a fairly surprising occasion for the Leader of the Opposition, when a Budget has been announced two months in advance, not to be present for the winding up speech.