I congratulate my hon. Friend the Member for Wirral (Mr. Hunt) on his outstanding speech. I hope I will not embarrass him by saying that we have been friends for many years. Despite the pressures on him during the recent by-election he was due to speak in my constituency and kept his commitment. This is a tribute to the character of a man who will play a notable part in our proceedings in the future.
I take a rather different tone in looking at this Budget from that of some of my hon. Friends. This is the first time I have spoken in a Budget debate. I thank the Chancellor for listening to the representations he received from a number of MPs about the effect of that 25 per cent. rate of VAT on a number of industries and particularly on employment. In my constituency many jobs were lost in the boat-building industry, and I am very grateful to the Government for listening to the pleas showered upon them. Even in the last few days some of the boatbuilding companies in my constituency have told me of a marked upsurge of business interest, and the companies which were laying off people hope to reverse that trend shortly.
When my right hon. Friend the Leader of the Opposition opened the debate she said the Budget might possibly cure the nation's influenza, but would no nothing to cure the cancer. It is reasonable to hope that the cure my right hon. Friend discerned in the Budget might possibly prolong the life of the patient until new ideas or a new Government come along to tackle the cancer before it is too late.
As my right hon. Friend the Member for Worcester (Mr. Walker) said, the last two years have seen a 54 per cent. increase in earnings and a 4 per cent. decline in production. This cannot go on. The problem of an ever-accumulating international debt cannot continue and the drastic decline in the value of sterling must alarm us all.
I wish to examine what my hon. Friend the Member for Blaby (Mr. Lawson) called the Chancellor's deal with the trade unions, because in the last few days, since I first heard it, my instinctive reaction, which was the same as that of my right hon. Friend the Leader of the Opposition, has been modified by talking to people who, like myself, are not blessed with the wisdom and understanding of all the economists who surround us in the House. Nevertheless, I offer the Minister a warning which I hope he will take in the spirit intended. Millions of our people are affronted, offended and confused by the way in which the Chancellor has presented his proposed package of tax cuts, subject as they are to agreement with the TUC. A constituent wrote to me saying:
I've no wish to be a member of any union, and completely fail to see what right a union, or Healey for that matter, has to decide the level of income tax I will have to pay.
The Chancellor must explain in more detail, therefore, the proposals he is presenting, because not everybody understands them.
I have the temerity to believe it is as a result of the way in which the nation voted in February and October 1974 that we now find ourselves in the position where the Government are unable to introduce the Budget they think is right without the acquiescence of an outside body.
In another letter I received today from Leamington Spa, the writer confirms my views by saying that
we have got used to putting comfort before principles".
If that is true, it is sad. It is also an acknowledgment that in the 1974 elections the people of this country voted to
allow the trade unions partly to dictate this country's economic policy. That is not the best way to run a democracy, but it is a fact of life.
I accept and appreciate the arguments about constitutional monstrosities: but there are two ways of looking at the proposition—the Oxford Union attitude and the bus-queue attitude. In the bus-queue attitude I discern rather less hostility to the Chancellor's proposals than has been shown by a number of hon. Members.
If an incomes policy helps to control inflation, it is not a weapon we should toss aside. I am not fanatically pro or anti an incomes policy, but inflation is the most serious problem and if the Chancellor's propsals can help to control it I wish them good luck.
Our inflation is being escalated very badly by the depreciation of our currency. The remarks by the Leader of the House this afternoon about the depreciation of sterling being an inheritance from the last Conservative Government are untrue and do not bear any relation to the statistical facts. The hon. Member for Cornwall, North (Mr. Pardoe) produced another of his historical statistical inaccuracies. He said, at column 689 of the Official Report on 8th April, that when the Conservative Government came to power in 1970 the pound stood at $2·80. In fact, the pound stood at $2·39 at the time of the change of Government from Labour to Conservative in 1970. The pound was $2·39 in June 1970. It climbed to $2·61 by May 1972. We then had the oil crisis, but in spite of the oil crisis and the three-day working week, the pound was at $2·22 when the Conservative Government left office, and when that Government left office that was the pound's lowest point during the Government's lifetime. In other words, the £ fell when it seemed that the Conservative Government might leave office.
The fact is that Stafford Cripps devalued the pound from $4 to $2·80, the present Prime Minister, when he was Chancellor, devalued the pound from $2·80 to $2·40, and the pound fluctuated and floated during the period of the Conservative Government but it declined only marginally as compared with the situation under previous Labour Governments and it was certainly a long way from the way in which the pound has since been devalued from $2·22 to $1·85 under the stewardship of the present Chancellor.
The Labour Party is the party of devaluation. It is quite unable to escape that title. It seems to indicate that if that $2·22 was the lowest point at which the currency stood, at the end of the Conservative Government's time in office, as a result of the three-day working week, the implication is that the National Union of Mineworkers, Mr. Scargill and Mr. McGahey were those who knocked the value of the pound down to its lowest point under that Government.
As my right hon. Friend the Leader of the Opposition said in her reaction to the Chancellor's speech, the world assesses and decides what the level of our currency should be. My right hon. Friend said:
That is the best barometer of the world's confidence in the right hon. Gentleman's stewardship."—[Official Report, 6th April 1976; Vol. 909, c. 284.]
The world has indeed assessed the value of the currency under the present Budget. For the present Chancellor of the Exchequer, Mr. 8·4 per cent., now to tell us that he is curing inflation is rather like a man who has gone around the countryside for 18 months behaving like an arsonist suddenly trying to behave like a fireman. Notwithstanding his previous behaviour, if he is now behaving like a fireman he needs some support.
If, as a result of his Budget, he is successful in what he is seeking to do, namely, to ensure that the unions add to their power the responsibility which many of us feel they have never been willing to take on their own shoulders, he will be doing a service to this country and he will be helping, perhaps slowly, to change the rôle of the trade unions in our society. That is why I suspect that many Members of the Tribune Group are so totally opposed to the Government's proposals.
I should like to ask the Minister whether or not he thinks this is feasible: could he find some way of encouraging rank and file trade unionists actively to participate in reaching a decision. Perhaps he could provide a State-funded postal ballot for trade union members so that they could tell their union leaders what their views were on the acceptability or otherwise of the Government's proposal. It could well be that the Government find themselves pleasantly surprised at the degree of support which this proposal commands on the shop floor. The fact that the Chancellor's proposal is contrary to the wishes of the Left-wing extremists of the Labour Party will surprise no one who is a student of the current British political scene.
I conclude by repeating the words of the hon. Member for Luton, West (Mr. Sedgemore). He described this Budget as "a bungled piece of mismanaged capitalism". In the parlance of today's politics, capitalism, for the left wing of the Labour Party, means the mixed economy—because what they are really after is total Marxism. I am sure that the hon. Gentleman is right and that there is much to commend him for saying that. I leave it to those more eloquent and versed in economics than myself to dissect the Budget for its economic content.
However, a Budget that proposes to cut direct taxation, to reduce value-added tax on non-essential items and to raise the level at which cash gifts become taxable may not be the worst thing that has happened to this country since the present Government took office. I understand why the hon. Member for Bedwellty (Mr. Kinnock) came out so strongly against the Chancellor's proposals. It would not be the first time that I have said that what is good for the hon. Gentleman is not too bad for the rest of us.
Without any control of inflation the pound will fall further. As my right hon. Friend the Member for Farnham (Mr. Macmillan) said, we must face the impending disaster of a collapsed currency. I fear that the near future could indeed bring us face to face with a disaster, where the pound fell to such a level that our overseas suppliers of food would say "Enough is enough. We refuse to be paid in pounds." The end of that story would be trouble in the streets, and that, surely, none of us could remotely want.
Therefore, in spite of all the criticisms that I have of the Budget's underlying failure to tackle our economic problems, particularly the point about cutting public expenditure, which my hon. Friend the Member for Blaby put so eloquently, I believe that the Chancellor has shown a glimmer of understanding of what he has to do to try to control inflation, and I wish this particular aspect of it well.