It is indeed a privilege and a pleasure to be able to congratulate the hon. Member for Chester-le-Street (Mr. Radice) on his maiden speech. I think that many of us found it hard to believe that it was a maiden speech. I say that because of the remarkable fluency and clarity with which he presented his arguments.
I believe that the hon. Gentleman and I happened to share, in the rather more distant past so far as I am concerned, a common educational experience. There are one or two others of his hon. Friends who share that common educational experience, and I sometimes wonder whether the influence of that educational institution was entirely desirable as demonstrated by the activities of the Labour Party. However, I am quite sure, having heard the hon. Gentleman's maiden speech this afternoon, that in his case there will be a substantial contribution to come, and we shall look forward to hearing from him on many occasions in the future when he can speak again to us, as he did today, with great sincerity and obviously considerable knowledge already about the constituency which he has been called to represent.
The hon. Gentleman made two observations with which I have some sympathy. He referred to the REP, and I have some sympathy with his doubts about the wisdom of withdrawing it. He also referred to what he regards as the need for food subsidies. I do not altogether share his view about the wisdom of that course of action but it is not impossible that before many months are out his expectation in that respect will be fulfilled.
You have urged, Mr. Deputy Speaker, that we should limit our eloquence and I shall do my best to follow that advice. But I must briefly comment first on the speech of my hon. Friend the Chief Secretary as I think I am the first member of the Expenditure Committee General Sub-Committee called to speak in this debate. I would not claim to answer the strictures that my hon. Friend passed on our report, but perhaps I could comment upon them. He made two points with which I was not entirely happy. He argued that nobody would dispute the realism of the growth forecasts contained in Table 1.2 of the Public Expenditure White Paper. I would comment only that at no time in our history have we achieved a rate of growth of 3½ per cent. over a consistent five-year period, let alone a rate of growth of 5 per cent. I do not know whether these forecasts are realistic but they are not based on past experience.
The Chief Secretary seemed to be deeply hurt by our dubiety about the effects of growth on public expenditure of resources for the next two years. It seemed to me that his argument was like that of a gentleman caught in an act of adultery who says, "I dare you to accuse me of adultery. I have made it clear that I am not saying whether I have been committing adultery or not and in these circumstances it is improper for you to make the accusation against me." I do not think a court of law would normally regard that as a convincing defence. Therefore I am prepared to stand by the report we made and I do not think that my hon. Friend entirely disposed of it this afternoon.
Briefly I should like to express the hope that my right hon. Friend the Chancellor will have something to say in summing up about the outcome of the latest denouement in that "mousetrap" of the economic stage, an international financial crisis. My hon. Friend the Member for Kingston-upon-Thames (Mr. Norman Lamont) expressed a fashionable view about the undesirability of our participation in a joint float. I hope my right hon. Friend, in his summing up tonight, will be able to dispel my suspicion or anxiety that we were unable or unwilling to participate in a joint float basically because we were, in the interests of appeasement, prepared to look forward to rates of domestic inflation in the months ahead which our partners within the Community regarded as socially wholly irresponsible. I hope we shall have that anxiety cleared up.
There were many aspects of the Budget which I liked. I was particularly delighted that my right hon. Friend resisted the urgings of the Labour Party to ensure that land and house prices were increased by the reimposition of the betterment levy, and he was also very wise to look carefully at the advice of the Public Accounts Committee on the subject of taxation and North Sea oil. That Committee seems to have shown precious little consideration for the external implications of taxing North Sea oil, bearing in mind that we shall continue to require to draw 50 per cent. of our oil in the future from the Middle East.
I confess that I am a little less happy about the decision to hand out £110 million to the teenagers through the sweets and candy-floss concession. If that money is available for distribution this year I would have thought that it would be better employed in the form of the concession which my right hon. Friend had let us to hope he would be able to grant to the large unquoted companies which will be very hard hit by the new system of imputation tax.
My right hon. Friend told us that in his judgment the Budget was neutral. That depends on one's calculation of neutrality. I would say that to distribute the proceeds of fiscal drag to the teenagers and the pensioners—and both are likely to spend it—when part at least of that taxation drawn in by fiscal drag must have come from income which would otherwise have been saved, hardly suggests a neutral overall result.
I do not think that this is a Budget which the Treasury establishment would have chosen this year. As my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out, the natural courses, given the present condition of the economy, were ruled out by the prices and incomes policy. The real spiritual guides of this year's Budget were those two vestal virgins at the shrine of the prices and incomes policy, Mr. William Armstrong and Lord Rothschild.
Occasionally Treasury touches peeped through. My right hon. Friend's speech was all the more welcome for that. I interrupted the hon. Member for Cornwall. North (Mr. Pardoe) when he suggested that my right hon. Friend had committed himself to a 5 per cent. rate of growth. In fact the Chancellor was careful not to commit himself to any specific figure and I welcome that fact very much. I hope that he is not in any sense countermanded by the answer given by my hon. Friend the Minister of State to the hon. Member for Lanarkshire. North (Mr. John Smith) last Thursday in a Written Answer when he described the Government's objective as a 5 per cent. growth rate in the 18 months to the summer of 1974. The caution of the Chancellor was perhaps to be preferred in this respect.
I was also delighted to see my right hon. Friend say in col. 250 on 6th March that preparations were in hand for future reductions in public expenditure, as I have a feeling that they may be needed. We are still left, as several of my hon. Friends have pointed out, with the daunting problem of an enormous and quite unprecedented Budget deficit for the year ahead. I hope that my right hon. Friend is successful in mopping up some of this extra liquidity which will be collected with his extremely ingenious savings schemes, although I cannot help feeling that perhaps the Inland Revenue deposits scheme might be designed rather to diverting liquidity from the M3 statistics than to getting rid of the liquidity, just as the United Nations seeks not to divert trade from Rhodesia but to divert the statistics of trade with Rhodesia from published sources.
It seems that the prospect for the year ahead is of something approaching an interest rates war, and I hope very much that under the pressure of that situation we do not revert to the abandonment of "Competition and Credit Control." I must admit that I would not take many bets on that, notwithstanding the brave statement of the Chief Secretary last week.
I hope that, in summing up, the Chancellor will feel able to say a little more about precisely what are his objectives for monetary policy in the year ahead. Apart from the statement that
the objective must be to prevent this large borrowing requirement from leading to too rapid a growth of money supply.
and the statement that
It would be quite unacceptable to rely to any substantial extent on borrowing from the banking sector."—[OFKIAL REPORT, 6th March 1973; Vol. 852, c. 252 and 254.]
my right hon. Friend did not say anything specific about the objective of monetary policy. I hope that he will be able to enlighten us further tonight.
My hon. Friend the Member for Cirencester and Tewksbury suggested that maybe we would hear from the Chancellor again before the summer is out, and I confess that I would not rule out that possibility. I hope that if we are to hear from my right hon. Friend again we shall not, in a panic over the rate of growth in the money supply and the development of inflation, which may be quite horrific by the summer, try to revert to the sort of course pursued by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in 1969–70, when he ratcheted the rate of growth in the money supply back to less than the growth of productive potential, and thereby plunged us into the unemployment crisis that we had in 1971. That was entirely the reason. We must learn to stop trying to treat the economy as if it were a yo-yo on the end of a string to be jerked in one direction and then in the other. I hope that we shall accept that very high rates of inflation cannot be cured very rapidly, although the sooner we can make a start the better.
The hope must be that Sir William Armstrong, Lord Rothschild and their friends are correct and that it is possible, in defiance of experience and logic, to control inflation exclusively by passing laws against it. I hope and pray that they are right. If they are not, we may be in for rather awkward times ahead.