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 Hamling Mr William Hamling , Woolwich West 12:00 am, 12th March 1973

I wish that the hon. Gentleman could persuade his right hon. Friends of that. If so, we could get away from the confrontation policies adopted by the Treasury Bench.

I want to return to some of the general economic policies which are at the back of this debate on the Budget. We have repeatedly said that Government policy must be considered as a whole. In recent speeches I have talked about the contributions that the Government have made to our monetary inflation. Nobody can controvert, and nobody in the debate has controverted, that the major factors in our inflation are the economic and monetary policies being pursued by the Government—their taxation policy, their rent policy, their policy of local government finance and revaluation, and their failure—indeed, their refusal—to control prices. Everyone has noted that after less than three years in office the country faces the danger of a major currency crisis and a major crisis in our balance of payments.

I do not want to weary the House with figures but it has been forecast that this year there will be a deficit of about £800 million in our current balance. I wonder whether those who have made that estimate have taken into account the full impact of the Government's Common Market policy on our balance of payments. I rather doubt it. Indeed, I feel that by accepting the Common Market policies the Government have made the possibility of a balance of payments crisis in the autumn even more likely than otherwise might be the case, and a further devalution of our currency not only possible but probable.

Already the Government have devalued once, or at least have allowed the pound to float downwards. Who knows how far the currency will be further devalued if the Government's present policies are pursued. Does anyone suggest that the present rate can be maintained if the supply of money progresses as at present, or if inflation continues at its present rate? This inflation is largely Government induced because of their acceptance of entry into the Common Market on the terms which they were offered.

One of the notable features of the debate is that leading speakers on both sides of the House have failed to take note of the impact of our entry into Europe on the present level of inflation and on the future possibility for our balance of payments. One notable exception was my right hon. Friend the Member for Battersea, North (Mr. Jay). How can we discuss the Budget without referring to the many disadvantages that we have incurred in our world trading situation through accepting the Tory terms for entry into the Common Market? For a long time it has been said that entry into Europe is the cornerstone of the Government's economic policy, yet Government speakers have been notable for refraining from mentioning that during these debates.

Certainly the steep increases in prices are due directly to the acceptance of the Common Market terms. That is especially true of the price of food.