HC Deb 03 April 1963 vol 675 cc472-3

I have weighed up very carefully the various factors. On the one hand, we have spare capacity and present trends of demand do not seem strong enough to ensure of themselves a full enough employment of our resources in the coming year. Our capacity to produce would be rising about as fast as demand.

On the other hand, there is the great uncertainty in any forecast of the main components of demand. And it is likely that action, taken now will produce much of its effect after a lapse of time during which conditions, particularly external conditions, may change quite considerably. Changes in the spending or borrowing habits of the public, for example, can make a big difference to our forecasts. If the public vary by as little as 1 per cent. the proportion of their income they save, the amount involved is £200 million. And in many of the other factors I have mentioned the margin of error in the most careful calculations is large.

It is, therefore, the inevitable conclusion that in trying to reach a decision about the amount of additional demand that can safely be released, we must regard all calculations to which I have referred as no more than pointers; the final decision must be an act of judgment. The conclusion I have reached is that tax concessions in the current year of the order of about £250 million are required to stimulate the economy if we are to realise our target of vigorous expansion without a return to inflation. But it is not simply a matter of deciding on a sum of money and then devising ways of spending it. The measures themselves are as important as the total. I have, therefore, worked out on this basis a series of measures which are together designed to promote our target of growth without inflation.