Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 20th April 1970.

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Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester 12:00 am, 20th April 1970

My task this year is much lighter than it is normally. There is usually some difficulty in persuading the House, or, at all events, the Opposition, to accept our point of view. There are some taxes or reforms which have been misunderstood and there are some points to make clear. There is a good deal on one's plate.

This year, the situation is very different, as those who have attended our debates will know. Broadly, the Budget judgment, and the monetary and fiscal proposals in the Budget, have been accepted both here and elsewhere. The Opposition have been good enough, and have consulted the convenience of the House sufficiently, to say that they do not propose to divide the House this evening. The Press has accepted the Budget proposals. I am particularly pleased to say that world opinion has been welcoming in a very serious way.

I do not think that it is always realised that in the atmosphere of this debating Chamber those who look somewhat more objectively at our affairs from outside draw conclusions from the facts and figures rather than from the content of the debate. I quote only two recent references. One is what Mr. Schweitzer had to say as recently as 11th April—that is, before the Budget. In referring to it, theFinancial Timessaid: A remarkably glowing tribute to the U.K. s economic progress was paid last night by M. Pierre-Paul Schweitzer, Managing Director of the International Monetary Fund. I would merely add that Mr. Schweitzer should be aware of all the facts.

I was also glad to notice what Dr. Paul McCracken had to say as reported inThe Times Business Newsof only two days ago: He "— that is, Dr. McCracken— had been ' reading statistics on Britain's balance of payments and had come over to find out how it was done, perhaps to find some pointers for the United States from the people who have shown the way ' ". That is not as lighthearted as it may seem. My experience was the same when I was privileged to be at the International Monetary Fund meeting last autumn when I met the Finance Ministers of nearly 100 countries, particularly of America, which were undergoing problems similar in nature to those which we had undergone. They were anxious to compare notes and to discover whether the proposals which we had put forward and which seemed to be working so well would have application to their affairs.

I turn to the taxes which normally we have to explain or to defend in some way. I cannot think of a period when they were all working so well. Capital gains tax, which started rather slowly, is now doing its socially just task of filling a gap with effect and economy. This year, it is raising approximately £150 million from individuals and a like or even greater sum from companies. The working of the tax is getting easier as we move further from the starting date.

Similarly, corporation tax—which I promised originally would be seen to be a simpler tax than the tax it replaced once we had got over the transitional period and transitional arrangements made to cover it—is fulfilling its expectation. It is of more than passing interest to the House, and particularly to myself to note, that the European Economic Community, in its concern for the harmonisation of taxes within the Community, recently commissioned a study by a distinguished international tax expert, Professor Tempel, to consider which form of company taxation would be most appropriate for adoption by the whole of the Community to serve that purpose.

The House, and particularly the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin), who made an interesting speech on this topic three days ago, will be pleased to note that the report, which has just come out, says that the British form of corporation tax would be the ideal tax for that purpose.

I wish to make it absolutely clear that, important though that opinion is, it is the opinion of one person making a report to the Community. What view the Community will take nobody knows. If it takes the view that the report is well founded and that the British form of corporation tax is the most suitable form of company taxation for harmonising taxes in the Community, there would be no problem for Great Britain about that aspect of taxation.

I do not have to make my usual speech in support of selective employment tax this year, because Professor Reddaway has done that task for me with much greater authority and in much greater depth and has, fortunately, come to precisely the same conclusion. I note with interest that he is strongly of the opinion that the order of the objectives of the tax should have been expressed in the way in which my right hon. Friend the present Home Secretary and myself repeatedly expressed it and not in the way in which it was picked up and continually repeated by the Press. I am sure that Professor Reddaway is right.

A mass of information, statistics and tables have been published for the convenience of hon. Members of a degree never achieved before. My right hon. Friend the Chancellor, has published, as he did last year, an economic forecast in considerable detail in the Red Book. I thought that it was of convenience to the House that the estimates should be published at the same time, so that estimates and taxation could be considered in relation to one another and the two could be considered in context.

I was sorry that the right hon. Gentleman the Leader of the Liberal Party thought that I was seeking to evade publicity by publishing these documents on the same day.