Budget Resolutions and Economic Situation

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

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Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford 12:00 am, 12th March 1973

I am coming to the point that my hon. Friend is about to make. I think that he was going to ask what I did. It would have been far better to have increased family allowances with claw-back, which is precisely what we did even at the time of the extremely difficult Budget in 1968. I also think that to persist with the non-aggregation of children's income in present circumstances, while nothing is done about family allowances, is a grave misdirection of effort. In particular, I believe that the Chancellor will regret his decision to make this frivolous concession on potato crisps and ice cream. I believe that he will also regret persisting in giving away £300 million angled very much towards unearned income.

The Budget is already almost a nonevent. In itself, I make no complaint about that. Dramatic Budgets are not necessarily a sign of the health of the economy, but the economy is not healthy, and the Budget has done nothing to give us confidence for the future. The Government clearly bear an appalling responsibility for the mess. For two years they flexed their provocative muscles. During the same period they committed gross mismanagement, even on their own assumptions. Then they decided that their flexed muscles were not strong enough and, half repentant, half truculent, they have sought some kind of accommodation, but the Chancellor's policies continue, in the same way as his tax policies, like something left over on the morning after an ill-fated party.

But I do not think that we can just rest on the passing of blame. It is too easy for the nation to decline in an atmosphere of mutual recrimination. The controlling of inflation will not be easy or painless. I think that we need to strike a new social balance. I agree with some part, though not all, of what my right hon. Friend the Member for Bristol, South-East (Mr. Benn) said. I think that we need a jerk towards equality. Our economic distribution has got out of line with the social system and I think that the friction there is one of the great causes of the difficulty that we are experiencing.

It is also essential to fill in the hole in the middle of the prices policy and control basic food prices. Unless that is done, the policy will look hollow. I do not agree with my right hon. Friend that we cannot deal with inflation so long as some people are significantly better off than others, or that those who are better off cannot contribute anything to this problem, because the whole of the House of Commons, in varying degrees, is better off than the average of the population, and that should still many voices, including that of my right hon. Friend, my own and nearly everybody that one can see. It may be a good thing, but it is an unorthodox doctrine.

We shall argue for a long time about what balance we want in this country. While we do that, I do not think that we can be in the position of saying that every price increase or every wage increase, however inflationary it may be, is justified. Until that ultimate social argument is settled we must continue to try to deal with the problem. We cannot wait for the argument to be fought out before inflation is brought under control.

I believe in a prices and incomes policy. I believed in one in Government, and I believe in one in Opposition. It must apply effectively both to prices and to incomes, but we should not be so obsessed by it that every debate is turned into a prices and incomes debate. We should not take the view that a prices and incomes policy is the only thing that matters in the economic field and that when this is right everything else is right.

There is a good deal more to answer for, and I believe that in a Budget debate it is particularly appropriate that we should apply ourselves to some of the issues of economic management with which the Government have failed signally to deal during the last 24 years. This is a transitional Budget for the Chancellor.

So far the Chancellor has been able to be a sort of Lady Bountiful giving away tax concessions—concessions which have been welcome to some people at least—in a happy afternoon atmosphere of a garden fete. The present Budget marks a sort of twilight. It is not yet dark but the shades of evening are falling and the cheers are becoming a little thinner. But in future it will get darker for the right hon. Gentleman. He will have more difficult Budgets to present, and I hope that he will face up to the next one, from the point of view both of economic management and of social justice, better than he has faced up to this one.