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 William Clark Mr William Clark , East Surrey 12:00 am, 12th March 1973

We have listened to two remarkable speeches from the Labour benches. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in a thoughtful speech gave us a good deal of information about what happened in the 1970 Budget and told us what foresight—or perhaps it should be hindsight—might have achieved in terms of that Budget. However, the one fact omitted by the right hon. Gentleman was that at the time of the 1970 Budget the then Labour Government did nothing at all to stop the wage explosion that was beginning at that time. It is from that event that most of our economic troubles have stemmed.

The right hon. Member for Bristol, South-East (Mr. Benn) in a rumbustious speech—the contrast between his speech and that of his right hon. Friend was so marked that I wondered whether I was listening to members of the same party—sought to make an electioneering address which had little to do with the Budget. Indeed he ended up by contradicting himself, and the right hon. Member for Stechford was courageous enough to say that he did not agree with his right hon. Friend.

There are certain aspects of the Budget which must be welcomed by everybody, whether old-age pensioners or those affected by the charity proposals, estate duty alterations or whatever it might be. The underlying thesis of the Budget is the concept of a 5 per cent. growth. My right hon. Friend has taken a calculated risk. If his Budget is to succeed, we must reach this target of a 5 per cent. growth and we must maintain it. Its success depends on whether phase 2 works. Phase 2 depends on the reasonableness of the trade union movement and on whether the trade unions will see the folly of inflationary wage claims, which are pricing us out of world markets and increasing our cost of living. In this respect the Government must do something to deal with the subject of strike pay.

Many of my hon. Friends have drawn attention to the worrying question of the money supply. This subject has been well aired in this debate and I do not intend to add to it, except to remark that I was delighted to hear my right hon. Friend the Chancellor of the Exchequer say that he was paying strict attention to the money supply. There is no point in allowing money supply to increase, because this would only suck in imports and act to the detriment of our exports.

We have heard a lot of Labour dogma about the surtax payers, and Labour Members constantly harp on the £300 million which has been given to the rich. What the Labour Party never admits is that some of those taxpayers are paying 75, 80, 85 or even 90 per cent. rates of tax. Surtax over the past 20 or 30 years has acted as a deterrent, and I am delighted that my right hon. Friend stuck to his guns and went in for a reduction. The tax reductions overall have been of the order of £3,000 million and 10 per cent. of that sum has gone to the top management strata, which is surely not wrong of itself.

Many of my hon. Friends have said that it is wrong to say that the surtax payer next year will be paying less tax. I am sure that the hon. Member for Heywood and Royton (Mr. Joel Barnett) will agree that the tax liability of any person depends on his tax liability in the fiscal year—