When, last week, we debated the Ways and Means Resolution governing the Bill I suggested that what was needed was not so much an explanation as an apology from the Minister. It is true to say that in his opening remarks the Minister got as near to an apology for the Bill as we are likely to get. As for the explanation, I must say that I find it a trifle odd. On the one hand, he was saying that he was very optimistic about the general economic position, that there was nothing to worry about, and, on the other hand, he was a little pessimistic and did not think the Government could do other than introduce the Bill.
That takes me to the core of the whole point I want to make and on which I shall concentrate. It is right and proper to stress how much more cautious the Minister is being this year than last. As he points out, when what is now the Act was introduced last year, the temporary nature of its proposals was stressed time and time again. On 22nd November, the Chancellor of the Exchequer said:
The scheme is not one which can or should be kept in being for more than a limited period, but it will have a powerful effect over the next few months … "— [OFFICIAL REPORT, 22nd November. 1968; Vol. 773, c. 1796.]
Again, the Financial Secretary himself, speaking last year as Minister of State, on the Second Reading of this Bill's predecessor, said:
It was made abundantly clear that the Government view this as a temporary Measure, as a Measure which is necessary in present circumstances to have an immediate impact on balance of payments … It is with reluctance that one introduces a Measure of this kind, but its aim is to have an immediate effect …"—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 865.]
One can get further quotations from the then Financial Secretary throughout the Committee stage. On 3rd December, quoting the words of the subsection under discussion, he said that the duty
'shall cease to be in force at the expiration of a period of one year beginning with the date on which this Act is passed, or at such earlier time as the Treasury may by order …'".—[OFFICIAL REPORT, 3rd December, 1968; Vol. 777; c. 1484.]determine.
It is, therefore, quite extraordinary that we should now be asked to consider a
Bill precisely similar to its predecessor except that the rate is reduced from 50 to 40 per cent. We should go into it in some detail since the previous Measure was introduced in very much an atmosphere of crisis. It was first mentioned by the Chancellor of the Exchequer on a Friday afternoon, when he pointed out that the international monetary situation was very dangerous, and that this was an emergency measure which he needed to introduce.
Since then, we have had a quite different approach by the Government, and a number of things have happened internationally. We have had a devaluation of the French franc and an up-valuation of the German mark, and we hope that there is now greater stability in the world currency markets than there was then. Nevertheless, the Government propose to continue a measure which they themselves made abundantly clear was temporary. So we should examine their arguments. The essential point that we need to make is that in our view the Government are right to be cautious about the present economic situation, but that it would quite wrong to rely on the Bill and to perpetuate the scheme, because it has very adverse effects to which I shall refer in a moment.
The fact is that if it were true, as the Prime Minister, for example, is constantly assuring the House, that there had been a fundamental change in our economic structure, the Bill would not be necesasry, because all it would be doing would be increasing the improvement and bringing it forward a very short period of time. It may be that if the Bill had not been introduced a number of imports which had been delayed because of anticipation of the ending of the scheme would have taken place. The Government do not think that the amount is very large. The National Institute for Economic Affairs thinks that perhaps it would be between £10 and £20 million. But now that the scheme is to be continued, some of the delay will come about. The effect is small one way and another; none the less, if there really were a continuing long-term improvement in the balance of payments, and the Government were confident, they would not need to resort to the Bill.
One of the worrying things was pointed out by my right hon. Friend the Member for Barnet (Mr. Maudling) on 21st October, when he suggested that the Government were really quite wrong if they thought that the introduction of this Bill would not itself have some effect on confidence. It is not sufficient for the Prime Minister to go round saying that all our economic problems are over and then for the Government to introduce a Bill like this which shows just how very worried they are about the actual situation. We must, therefore, examine why it is that the Government are so nervous and why they feel that even this scheme should be continued despite its disadvantages.
Two main points are clear. The first is that the Government are now worried about the situation brought about by their own weakness over wages and prices in the public sector and that as this is in danger of undermining the Chancellor of the Exchequer's entire strategy they do not think that they can allow even this moderate amount of relaxation and yet avoid the disadvantages.
The second is that the Government realise, although they will not admit it, that any Government can achieve a balance of payments surplus if they are prepared to sacrifice all their other aims as well. This is the difficulty that any Government face. The crucial question we have to ask is: what happens to the balance of payments when the brakes are taken off again? It is an indication of the Government's hesitancy and lack of confidence that they feel the need for the Bill.
Before dealing with those points, there are two other things that perhaps I should say in parenthesis. I make it very clear that we on this side welcome as strongly as anyone the improvement in balance of payments that has taken place, but it is the duty of the Opposition to appraise the situation as they see it and to put forward arguments for their view.
I hope that we shall not have more speeches by the present Home Secretary about an £800 million deficit in 1964 as, apparently, we had again last weekend. Time and time again we have explained why this is so. It cannot be reconciled by the kind of "Sunny Jim" speech that he was making in his own period of office, because we have had many troubles since, although he said then that the deficit problem had been overcome, and so on.
We need to get the actual figure in perspective. All of us have problems when we come to look at figures on the balance of payments with overseas debts of £3,000 million. If we knock off the noughts from the end and treat them in simpler terms, we have run up overseas debts, looked at from the point of view of an ordinary banker with an ordinary customer, of about £3,000. If we look at the amount being made on a current account basis, the Government have had surpluses, on the most optimistic basis, over the months of £40, £22 and £3, giving a total of £65. On the whole, if a person goes to his bank and says, "I am sorry, I have run up £3,000 in debts over five years, but I have £65 on current account," I do not think that this would be justification for people saying that his economic problems were over. It is true that there has been an improvement in our invisible earnings. The Government have done everything by way of S.E.T., and so on, to frustrate these rather than encourage them.