§ Having thus, as it were, both guarded my flank upon the credit front and set in hand a study of our future strategy in these matters, I can turn from monetary 987 policy to fiscal considerations and consider to what extent and in what directions I can properly reduce taxation, having regard to the state of the economy as a whole. The Committee will remember that I estimated that on the basis of existing taxation I should have a surplus above the line of £560 million, against an actual surplus last year of £290 million. The fact that our economic prospects cannot be assessed in advance with precision does not lessen my responsibility for exercising the best judgment I can in the light of the information and forecasts available to me.
§ In this part of my task, at least, I have not been lacking in advice. Words of caution from some and of encouragement—perhaps even more than encouragement—from others have been falling on my ears for weeks past. Let me say at once that I reject the extremes of both opinions which have been urged upon me. I reject unequivocally the view that the sole duty of a Chancellor is to remove txation at whatever risk to the economy and without regard to the consequent inflation that would certainly result.
§ That advice is the language of irresponsibility. Actions of that character might conceivably buy from the undiscerning a momentary popularity. It would be short lived. It would, indeed, be the easiest possible task for any Chancellor to boost home consumption and investment at the cost of lower exports, of higher imports and a thumping external deficit. It is, however, a policy in which I should be prepared myself to play no part whatever.
§ Nevertheless, I must fairly say that the other extreme of opinion contains elements of almost equal folly. I personally do not share the view of those who appear to consider that high rates of taxation will of themselves provide a sovereign remedy to all our ills. They are rather a reflection of an overstretched economy. The answer to an overstretched economy is not to tax it, but to relax it.
§ A satisfactory feature of the present Budget figures is the very great improvement in the overall Budget position compared with the out-turn for the past year. With a great deal of effort, and through restraint of expenditure, we have eased the problem of financing the public outlay. We have thus carved out some kind 988 of an opportunity now—not next year, but now—to make at least a modest start towards a reduction in the burden of taxation which presses so heavily upon the people of this country.
§ I cannot do much more today than to chart a pattern of progress, to place some directing arrows upon it, and to take one or two firm steps along their paths. These arrows point to what I believe to be our necessary and desirable goals. First, greater industrial efficiency and competitiveness. Our industries must be given greater opportunities to compete more successfully in world markets. Secondly, the provision of better incentives and opportunities for initiative and effort. Thirdly, the easing of the pressure of the tax system where this bears most hardly on individuals and families. In sum, I seek to create conditions in which our economic future, collective and personal, is seen by all to be worth striving for and worth saving.
§ I must emphasise once more that the general pattern of my Budget must be dictated by the need to place and keep our external position on a really sound footing. Therefore, the room for manoeuvre is limited. But, still, there is some room for manoeuvre, and we must try to use it wisely. I judge that, against the background of a Budget so nearly balanced overall, I can properly reduce the burden of taxation by a figure of about £100 million. This will leave us with a much bigger surplus than that realised last year, and an overall deficit that can be covered by real savings.