Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 7th March 1973.

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Photo of Mr Peter Walker Mr Peter Walker , Worcester 12:00 am, 7th March 1973

I suppose that as that was the first speech of the right hon. Member for Leeds, East (Mr. Healey) following a Budget, in the same way as he congratulated the Chancellor I should congratulate the right hon. Gentleman. There were moments when I thought that he was going to speak for rather longer than the Chancellor did yesterday.

The general tone of the right hon. Gentleman's remarks are a change from his pre-election utterances. For example, in one of those lively articles in Socialist Commentary before the last election he said: When I go into these Labour clubs in my constituency on Saturday night, four out of five complaints are that income tax is too high and that we should not pay out so much in family allowances. The right hon. Gentleman will have a pretty rough night this Saturday after his speech today.

It was rather remarkable that the right hon. Gentleman said that having studied the manner in which Shadow Chancellors had tackled this task in the past, and having found that normally they listed the inaccurate calculations of the Chancellor's previous Budget, he had decided not to do that on this occasion. I do not blame him, because many of the major calculations of the Chancellor were correct on this occasion.

I can understand the right hon. Gentleman's being hesitant about having an exchange on the predictions of the last Budget, because he took a hand in and made some predictions about how the last Budget would work out. The right hon. Gentleman said: we cannot look forward to any significant fall in unemployment over the coming year. That was his first prediction, and he was massively wrong, as he kindly conceded.

The right hon. Gentleman went on to say: There is no sign whatever of that sustained and faster growth which he confidently predicted as a result of his three previous Budgets. Why should there be any confidence in his prediction that we shall get faster growth as a result of this Budget? We were delighted to hear again his confession that there had been a faster growth.

The right hon. Gentleman then said that for large sections of the working class there must have been a fall…in living standards."—[OFFICIAL REPORT, 20th April 1972; Vol. 835, c. 797–800.] As we know, in real personal terms of disposable income there has been a bigger improvement in the standard of living in the last 12 months than in any year since the war.

As for the predictions and the accuracy of the forecasting of the Shadow Chancellor—of course, most people do not take much notice of the forecasts of Shadow Chancellors—he then started on a remarkable record of inaccurate forecasting of the effects of Budgets. One has some sympathy with the dilemma of the Shadow Chancellor and the Leader of the Opposition in tackling a Budget such as this. When the right hon. Gentleman started talking about an autumn Budget—a later Budget was also mentioned by the Leader of the Opposition yesterday—one or two former Chancellors present were seen to twitch and look slightly guilty as to their record in this pastime.

When they are representing a party that, in its six years, had 10 Budgets, in eight of which they raised taxation, one can understand their difficulty. To the right hon. Gentleman, this is not a real Budget, because the only real Budget that a Socialist Government understand is one that increases taxation. This one is certainly typical of Conservative Budgets in not doing that. Here we see an Opposition that in six years of office raised taxation by £3,000 million trying to oppose a Government who, in their three years, have reduced taxation by £3,000 million. We have an Opposition during whose period of office the rate of growth fell from 5·6 per cent. to 1·9 per cent. trying to oppose a Government who, in their period of office, have increased the rate from 1·9 per cent. to 5 per cent.

There are difficulties. The whole tenor of the Opposition's case, both yesterday and today, is roughly this, "We do not like growth, because that might adversely affect the balance of payments. We do not like savings because that might help to reduce taxation." One almost expected to hear them say, "We do not like these enormous increases which you have made in the old age pensions, because that is an increase in public expenditure." They did not do that.

As for the percentage earnings argument on old-age pensions, I expect the right hon. Gentleman felt a little twitch of guilt about that ridiculously selected statistics about some date in 1967. If, after six years of a Labour Government in which they raised pensions by £2·65, compared with three years of Tory Government in which we have raised them by £4·40, the real condemnation of us is that the percentage of earnings has varied, then in six years of Labour Government earnings must have had a pretty bad time if that is all they could do for the pensioner. It is interesting that they showed no regret for the remarkably bad record that they had towards the pensioners in six years.

As for the general forecasts of the coming year, the right hon. Gentleman—I thought surprisingly—went out of his way to give the gloomiest picture he could of our export prospects. It was remarkable that the Leader of the Opposition referred yesterday to the Chancellor's predictions of exports as being unusually complacent. The statistics that the Shadow Chancellor tried to use on exports, giving the impression that the forecast of 1972 had not been met, failed to convey to the House something which, presumably, as Shadow Chancellor he must know—the remarkable growth which has taken place in past months and is now taking place in exports.

In ridiculing the Chancellor's forecasts—I believe that there was an 0·7 per cent. growth in exports over the past year, instead of the 4 per cent. expected growth—the right hon. Gentleman did not tell the House that in the last quarter of 1972 exports—in volume, not price—were 12 per cent. higher than in the last quarter of 1971—a very real increase of substantial proportions. The figures since then are improving still faster. The January figures were about 22 per cent. up, in value, on the previoius year, and we expect the March figures to show a substantial improvement upon the same quarter of last year.

Turning to the position of world trade, the United States is certainly going in for a period of substantial growth during this coming year, which will present considerable benefits to our exporters. Last year our exports to America were 11 per cent. up. Our exports to Europe are rising faster, and last year were 15 per cent. up on the previous year. There is Ito doubt that there is an immense amount of activity by British business throughout the European market, which will result in substantial increases in exports there.

We are achieving considerable growth in a number of Far Eastern markets. I predict that the markets in the Far East and those in Africa and South America will be rising far faster in terms of export trade than anything that has been contemplated in the past. And Britain is taking an active part in these spheres. Later this month Britain is to put on probably the biggest outside trade fair which has ever taken place in Communist China. The activity of British businessmen throughout the Far East is accelerating our exports there. The same is true of Eastern Europe.

There are other factors which are important for our export prospects. First. we are achieving a substantial improvement in our services to exporters. The British Overseas Trade Board is far more active in promoting export trade than anything which has been seen in the past. Our commercial counsellors there are constantly being strengthened and they are far more active. The link-up with manufacturers is doing a great deal, too.

When one adds to this the fact that, in this country, with the Export Credits Guarantee Department, we have probably the best export credit services in the world, plus the positive incentive to exports of VAT and the fact that in phase 2 there is a considerable advantage to the exporter in the application of that policy, there is no doubt that the prospects for exports in the coming year are very good.

That is not just a view of the Department, or the Chancellor, or myself. For every businessman who expects a decline in his export orders during 1973 there are six who expect an increase. The latest survey shows that, for everyone who expects export orders in the coming four months to go down, 14 expect them to rise. In a range of commodities—farm equipment, aerospace products and wool textiles—our exports are expanding remarkably.

We should add to this the exciting way in which a number of our major retailing organisations are setting up retail organisations in Europe and the United States, taking with them large volumes of British goods. This all adds to the confidence that we have in the progress of exports during the coming year.

But that, of course, is only part of the picture. I want now to turn to the other pessimistic picture of Britain that the right hon. Gentleman tried to provide when he spoke of the depressing position of industrial investment and current industrial conditions. Let us examine what has happened. The Opposition do no good at all by trying to give the impression that the British economy is doing far worse than it is. They do positive harm both to business confidence and to our prospects abroad. Let us have a look at the current state of the service industries—