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 John Pardoe Mr John Pardoe , North Cornwall 12:00 am, 12th March 1973

I remind the hon. Gentleman that it is not for the benefit of the Liberal Party only. The hon. Gentleman would do well to examine his own party's accounts. It is very sad that both major parties are running into substantial deficits. Indeed, in the year to 31st March 1972 the Tory Party's expenditure of £1,250,000 exceeded income by £319,000. In 1971 the Labour Party's expenditure of £672,000 exceeded its income by £101,000. These are substantial annual deficits.

It is entirely wrong that political parties should run into this sort of financial embarrassment, because if they do they become dependent on raising cash from not particularly suitable sources—[Interruption.]—I say to the hon. Member for Bolsover (Mr. Skinner) that I did not say that in any sense as an allegation. "Unsuitable sources" can mean anything under the sun. I am making no allegations.

The Government will want to be judged by whether the Budget is fair. It is certainly the way in which most people throughout the country will wish to judge the Budget. If the Government are to be believed, that is how they would like to be judged.

I have nothing in principle against the unification of income tax and surtax. Indeed, it has been the policy of my party since 1961. However, it is extraordinary to introduce lower rates of taxes for surtax payers in a year when one is struggling to introduce a prices and incomes policy. Admittedly the Chancellor announced the scheme a year ago. That does not make it any more welcome this year, the year of the Counter-Inflation Bill.

I do not think that in any other respect the Government can be said to have introduced a very fair Budget. They have done nothing to increase family allowances, which could have done more at a stroke than any other measure to attack poverty. Long before we get around to tax credits they could have amalgamated family allowances and the child tax allowances. There are enormous amounts of money involved in the child tax allowances, which could have been made available for higher grants through the Post Office in family allowances. Indeed, I would have extended it to the first child, as is common practice throughout Europe.

On pensions the Government made the announcement. Some people have no doubt been led to believe that this is fairy godmother giving out money yet again. In fact, it is all part of the annual review. They have brought it forward by one month, but there is no reason to thank them for that.

Unfortunately the increase in pensions is not even as rapid as the increase in average industrial earnings. Admittedly it will safeguard the pensioner for a short time against the increase in the cost of living, but it will do nothing to ensure him a share in the country's rising prosperity. Nor have the Government done anything to show that they intend to introduce a minimum earnings guarantee, which would be a major weapon in attacking the problem of poverty.

On the regional front the Government are pouring almost unlimited sums into investment incentives, money which runs directly counter to promises given in the Conservative Party's manifesto, which specifically said that money given to the regions would be linked to employment prospects. Now the Government are issuing money all over the place, irrespective of how many jobs it creates.

The only way in which the Government can solve the problem is to introduce a replacement for the regional employment premium. The best replacement of all, linked closely to the actual performance —I would put penalties on this—in creating new jobs, would be a regionally varied payroll tax. When the new pension scheme comes in the Chancellor will have this to hand, because the new scheme virtually goes over to a percentage contribution. It will be relatively easy then to do it. It would, even now, be relatively easy to have differential national insurance contributions in the regions. It is that kind of direct labour and employment linked subsidy which alone can solve the problem of unemployment and low incomes in the regions.

This Budget will, in a year's time—if we get that far without another Budget intervening or, indeed, two Budgets—be seen to have followed the wrong strategy, to have gone too slowly and to have been a failure. It is for that reason that I am deeply disappointed by the strategy which is enshrined in the Chancellor's speech.