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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 Douglas Houghton Mr Douglas Houghton , Sowerby 12:00 am, 20th April 1970

No, I must get on. I have given way a number of times.

The main complaint seems to be that my right hon. Friend has been unduly cautious, but I do not think that there is any justification for releasing more spending power merely for the sake of it, because the combination of social policy and economic aims is the only sound budgetary policy when we are just emerging from a long period of deficit and when it is most important to avoid any recession. I have every confidence in my right hon. Friend's judgment. I think that he has been proved right in what he has done since he became Chancellor. I believe that he is now seen to have been right in his judgment over the last two years.

What I now want to do is to relieve him at once of a suggestion that has been made in several quarters that in making his income tax and surtax proposals he has been guided by the state of work in the Inland Revenue. On the day after the BudgetThe Guardiansaid: But the biggest cheer may come from the Inland Revenue department itself which has been relieved of much irksome and uneconomic paper work by the changes in surtax rates and the elimination of workers from income tax liability. The New Statesman had two references to this on Friday. In its leading article it said: Indeed, taking direct tax changes as a whole the chief beneficiaries are the supposedly overworked tax inspectors. Sir John Whalley, former Deputy Secretary of the Ministry of Social Security, had a letter inThe Guardianthis morning in which he said: The most charitable reason I can think of "— for the tax concessions being what they are— is that they have been made for the convenience of the Inland Revenue department. This is quite untrue, and arises from a mistaken impression of what happens when people are taken out of paying tax under Pay-As-You-Earn. There is no saving in work for the Inland Revenue as a result of the changes. There might be a little in the surtax branch, but certainly not overall. Two million people are to be lifted out of paying tax, but they are not lifted out of the complex apparatus of Pay-As-You-Earn. Exempt persons must be coded just as liable persons must; coding notices must be sent out for everyone. It is only by use of the tax tables and reference to the code number and earnings of the individual that exemption or otherwise is determined.

The work now being started in the Inland Revenue on this year's Budget proposals will cost initially well over one million hours of overtime. The staff will have to work long hours at the end of a long, rather hard winter, with the light evenings coming on and the warm weather. They will be fully occupied on overtime until the beginning of July. This happens every year, and in the short term there is a great deal of extra work in this kind of exercise.