Income Tax (Personal Allowances)

Part of the debate – in the House of Commons at 12:00 am on 10th November 1977.

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Photo of Mr Nigel Lawson Mr Nigel Lawson , Blaby 12:00 am, 10th November 1977

—than France or Germany. The Chancellor says "Over the years ", but I must make this historic point: our performance over a really long period has not been markedly worse than that of our competitors.

What has happened is that in times of tranquillity we have fallen behind and in times of trouble we have caught up. If the Chancellor looks at the 1930s, he will see that the British economy recovered from the slump of the 1930s faster than the economies of our competitors. This is the first time that there has been a world recession in which we have done worse than our competitors. In the past when the going has been rough this country has done better and caught up.

There are behind all this two genuine world problems—the steadily rising structural unemployment problem which is not susceptible to simple demand management and the equally steady decline in the return on capital. Given these two trends the one thing that the Chancellor should have done was to do everything possible to improve the workings of the labour and capital markets. But everything this Government have done—every measure taken—has worked in the opposite direction.

We have high taxation with ludicrously high rates of income tax especially at the top marginal rates. We have a most rigid form of incomes policy and a mass of over-detailed legislation, such as the Employment Protection Act, bearing especially hard on small businesses. We have fierce price control which cuts profit margins and subsidisation of those parts of industry where the return on capital is lowest or even negative. We have all that within a political climate of hostility towards enterprise and its rewards. That is why the Chancellor cannot expect to see this country's economy recovering from the oil crisis in the way that others have done.

The political context is crucial. This minority Government are something of an interregnum. Before the end of the day there will be either a majority Conservative Government or a majority Labour Government. That is the choice before the nation and we all know what sort of a Government a majority Labour Government would be.

The hon. Member for Liverpool, Walton (Mr. Heller) said that he wanted to see "thorough-going Socialism". The speeches of Mr. Alex Kitson are acceptable, because he approves of the Soviet economy, and that has enabled him to remain on the National Executive Committee of the Labour Party. On the other hand the Chancellor of the Exchequer gets chucked off the National Executive because he does not follow Soviet economic policies.

I have here a little red booklet entitled "Labour's Programme, 1976 ". This is a programme for massive increases in Government spending, massive increases in taxation, massive further nationalisation and a massive increase in statutory controls over what remains of the private sector. I should like to read two extracts from what is said in this book. [Interruption.] I know hon. Members opposite do not like it, but this is their policy. This is the sort of thing which the private sector will have to face. The Labour Government will provide: A systematic basis for making large companies accountable for their behaviour— [Interruption.] Hon. Members opposite applaud and cheer. The quote goes on: and for bringing into line those who refuse to co-operate. It continues: We must take powers: to issue, in the national interest, directives to companies on a wide range of individual matters; to put in an Official Trustee to assume temporary control of any company which fails to meet its responsibilities to its workers, or to the community as a whole. This neo-Marxism is the policy of the Labour Party, the party of which the Prime Minister is leader. This is the policy that is being offered to the country. I and my hon. Friends shall go on quoting from this policy as being the policy of a majority Labour Government, unless and until the Chancellor and the Prime Minister are prepared to repudiate it and say that they would rather resign than introduce it. When that happens that will be the end of our quoting from this little red book.

Unless and until they do that it must be accepted that that is the policy of the Labour Party. It is a warning of what the country will face if it is unwise enough to be gulled by the benignity of the Chancellor and the smoothness of the Prime Minister into thinking that what we see now has any relevance to what we would see if by any mischance they were to be returned.