Mr Iain Macleod: I must ask the hon. Gentleman to wait for an announcement in due course.
Mr Iain Macleod: If I might try to help the hon. Gentleman on that matter, the announcement in relation to the spring Budget is always made about five or six weeks in advance, as the House knows. If the hon. Gentleman is referring to what is called an autumn Budget, I have no intention of having an autumn Budget in the sense of a Budget Statement and a Finance Bill but, naturally, demand management is...
Mr Iain Macleod: The Government's pledge to abolish S.E.T. is firm and and arrangements to implement it will be laid before the House in due course. As regards direct taxation, I shall announce my detailed proposals at the appropriate time.
Mr Iain Macleod: There is no precise equation. There is a relationship between public expenditure and taxation proposals, as my right hon. Friend the Prime Minister made quite clear in his speech.
Mr Iain Macleod: That is a fair point. The only thing I can say in favour of S.E.T. is that it is relatively a cheap tax to collect.
Mr Iain Macleod: Yes, that is exactly right, but, with respect to my hon. and gallant Friend, I would not limit it only to growth. I think it is of first importance to encourage savings as well.
Mr Iain Macleod: No. We have Questions later in relation to value-added tax. What we have said is that in any event the selective employment tax will go, but, in the words of the manifesto, it may be as part of a wide-ranging review of indirect taxation.
Mr Iain Macleod: Yes, indeed, and that is a factor in the examinations which we are carrying out.
Mr Iain Macleod: Not now, Sir.
Mr Iain Macleod: It is certainly true that the value-added tax is part of the taxation arrangements of the Common Market, but in the study I have been giving to it I have looked at it irrespective of the question of the Common Market. After all, nine different countries have introduced it. It is a tax of some complexity but of very great attractions indeed.
Mr Iain Macleod: We made that point entirely clear. Perhaps I could go over it for the hon. Member. The pledge to abolish S.E.T. is firm. We have said that we are also carrying out a review of taxation, and, although there are a number of possibilities, the one to which we have given most attention is the value-added tax. If we introduce a value-added tax, purchase tax will go, too.
Mr Iain Macleod: The forecasts published by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) at the time of his Budget in April pointed to an increase in gross domestic product between the first halves of 1970 and 1971 of about 3½ per cent. Progress has on the whole been disappointing, but I am not prepared to give a revised forecast at this stage.
Mr Iain Macleod: I understand and do not particularly dissent from that point; but, although at the moment we are not running up to the growth forecast of my predecessor, I think that it is too soon to conclude that output is stagnating. There are one or two more encouraging signs, and I do not think it right to take action yet to stimulate the economy.
Mr Iain Macleod: It is a separate matter from the Budget. As I said in answer to the hon. Member for Huddersfield, West (Mr. Lomas), demand management, as no one knows better than the hon. Gentleman, is a matter not for one day in the year but for every day in the year. When I believe it right to give a stimulus to the economy, I will certainly do so.
Mr Iain Macleod: I said earlier—obviously I will expand on this, Mr. Speaker, if I succeed in catching your eye in this afternoon's debate—that there are some factors more encouraging than the growth factor taken in isolation. The growth factor taken in isolation does not at the moment live up to my predecessor's expectations at the time of the Budget. However, the Budget is only two or three months...
Mr Iain Macleod: There is a serious wage-cost inflation which is pushing up the cost of living and threatening our competitiveness. Many price increases will flow from the substantial wage increases already secured. Our methods of reducing Government expenditure, reducing the burden of taxation, encouraging savings and increasing competition are set out in our manifesto and in the Gracious Speech.
Mr Iain Macleod: I will say something about that, if I may, in my speech later. On the general subject, it is a fact that during our years in office we had a vastly superior record on prices to that of hon. Members opposite, and we expect to do so again.
Mr Iain Macleod: It is, I think, the wish of the House that we should today debate economic problems. I am very glad of the opportunity to open the debate. Perhaps the House will forgive me if, before I turn to a new series of economic debates, I spend about 30 seconds in salute to people who are not with us today. Naturally, all politicians are delighted about every win for their party, and I was delighted...
Mr Iain Macleod: I am well aware of the anxiety in that regard, which is why I phrased my remarks in the way that I did. I said earlier that demand management, which includes the management of monetary policy, is not a matter for one day in a year but for continuous operation. The House will want to know the present prospects for public expenditure and my broad strategy for managing that expenditure.
Mr Iain Macleod: Devaluation under Prime Ministers of the Socialist Party is a matter of fact. [HON. MEMBERS: "Answer."] It has happened every time, and a distinguished former Minister of the right hon. Gentleman's party was the first to raise this point. For this year and next year, 1971–72, the latest estimates show public expenditure running rather below the levels planned by the previous...