HC Deb 19 March 1968 vol 761 cc303-22

Motion made, and Question proposed, That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance, so, however, that, without prejudice to any authorisation by virtue of any Resolution relating to purchase tax or selective employment tax, this Resolution does not extend to the making of amendments of the enactments relating to either of those taxes so as to give relief from tax.—[Mr. Roy Jenkins.]

6.3 p.m.

Mr. Edward Heath (Bexley)

The House has listened this afternoon with the utmost attention to a hard, cold, Budget, without one glimmer of warmth, for even the Chancellor's concession about family allowances he said, if I understood him correctly, will be paid by the sick. The House has listened to and admires the lucidity with which the Chancellor has presented what he himself described as a massive Budget. We offer our sincere congratulations to him upon this. We admire the stamina which he has shown in a speech lasting almost two and a quarter hours, and I think that we may also congratulate the House upon the endurance which it has shown in listening to these proposals.

This is a hard, cold, Budget, which has increased the burdens upon the British people by £923 million—more than two and a half times the maximum which any Chancellor of the Exchequer has ever imposed in one Budget before, and this from a leading member of a Government whose Prime Minister and whose present Home Secretary promised the country in March, 1966 that there would be no general increase in taxation—[HON. MEMBERS: "Resign."] Since the Labour Government came to power 3½ years ago, they have imposed £2,260 million-worth of extra taxation on the British people—[HON. MEMBERS: "Disgraceful."] That is the cost to them of 3½ years of Labour Government. Now, we are seeing the culmination of 3½ years of disastrous rule.

It has been a hard Budget and a much harder Budget than if the Labour Government had not been forced into devaluation by their own failures of policy. It has been a much harder Budget than if the Chancellor, as he said, had not had the biggest current trade deficit last year since 1951—£552 million. It was a hard Budget, and much harder than if the Government had not allowed Government expenditure to rise wildly out of control last year as they did. It was a hard Budget, and a much harder Budget than if the present Home Secretary and the present Chancellor of the Exchequer had taken the measures which they needed to take immediately after devaluation. It has been a harder Budget than was necessary because the Government are struggling for their life to try to restore some semblance of confidence in themselves and in the £ sterling. That is the truth.

They are imposing these burdens on the British people because of their own disastrous incompetence. What the Chancellor has been struggling to do for 2½ hours is to restore some sort of confidence in the Government to industry at home and people abroad—

Mr. William Hamilton (Fife, West)

And he has done it.

Mr. Heath

The hon. Gentleman says that he has done it—and what a price the country is paying for it.

Let us take the criteria by which the Budget should be judged. First, what incentives to enterprise, either for individuals or for corporate bodies, has the Chancellor provided? Second, what impact will this Budget have on industrial costs and, therefore, on our exports? Third, what real encouragement is there to savings by the people as an alternative to heavier taxation? Fourth, to what extent has the right hon. Gentleman controlled the borrowing not only of central Government but of local government and nationalised industries? Fifth, what further attempts is he making to get Government expenditure under control? Sixth, what direct help is he giving to the balance of payments or to import substitution by this Budget? Let us look at each of those criteria.

First of all, incentives. There are none whatever in this Budget. There are none of a personal kind and none of a corporate kind. The Chancellor was very forthcoming in his condemnation of his right hon. Friend the present Home Secretary for all his mistakes in his taxation policy and legislation while he was Chancellor. He has been at pains to learn, and he has not raised additional burdens on earned income, but he has done nothing whatever to give any sort of hope to the British people for the future or to give them incentives.

Second, on industrial costs, the fuel duties will fall on industry, the heavy goods vehicle duties will fall on industry. The Chancellor boasted that he had dished the Minister of Transport and abolished the wear and tear charge, but there will still be an additional burden on industrial costs because of this additional taxation.

Selective Employment Tax is also an additional burden on service industries, many of which are concerned with exporting. While it is useful to have this burden lowered in Scotland, the West Country and the development areas, it still remains on the tourist industry and many other import-substituting or export-earning industries.

Third, savings. There is no savings policy in this Budget. We do not accept the Chancellor's statement that he could not get around the difficulties of giving people a real incentive to savings. There are schemes which would encourage the middle salary and wage earning worker to contribute heavily to savings without the possibility of changing alternative savings into the new scheme. The Chancellor has shown a conspicuous lack of imagination and has given way to orthodoxy in this matter.

Fourth, on borrowing, he has, of course, complied with the Letter of Intent—he had no alternative—but of the rest of the borrowing, by nationalised industries and local government, we heard nothing.

The fifth is Government expenditure. No further actions are being taken to reduce Government expenditure and we can have no real confidence that the Chancellor will keep it down in the way in which he blandly promised. The sixth is direct or indirect help for exports. There is nothing whatever in the Budget. There is no direct help and no indirect help and, as for import saving, the Chancellor could have moved in agriculture and saved great imports of foodstuffs, but he has done nothing whatever about this. Looking at the Budget by its criteria, what can the Chancellor show, either by way of giving incentives and encouragement to help industry or to lift the burdens to help encourage exports or import saving? He can show nothing whatever in this Budget.

The right hon. Gentleman said that the object is to make devaluation work. This is, in fact, only part of the object. The real object is to cover up the Government's failures in the past—[Interruption.]—to cover up the fact that they are not prepared to make a free enterprise economy work effectively and, in particular, that they are not prepared to have a free enterprise economy in which wages and salaries can be fixed freely and effectively without statutory interference by the Government.

It is a cover for the fact that the Government's creditors insist on a stiff, tough statutory policy for wages. No doubt this is a condition of the additional standby. The Government have put Britain in pawn, and the Government must stomach it. I for one, and many others in this country, bitterly resent it[Interruption.]—I bitterly resent the fact that countries which are running a private enterprise system—like the United States, the Federal Republic of Germany, Italy, Benelux and Sweden—would never dream of instituting statutory wage or price control. Their Governments would never dare to put to their people the sort of project which the Chancellor has put this afternoon for statutory control, but nevertheless they have told Her Majesty's Government that this is what they have to impose on the British people.

Mr. Andrew Faulds (Smethwick)


Hon. Members

Sit down.

Mr. Heath

I will not give way.

Mr. Faulds


Hon. Members

Name him.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order. The hon. Gentleman must resume his seat if the right hon. Gentleman who is speaking does not give way.

Mr. Heath

—and even more I despise the men on the Front Bench opposite who have brought us to this humiliation. [Interruption.]

Several Hon. Members


Mr. Heath

The Government are now, for the third time, demanding greater statutory powers over wages and prices. The details remain to be given to us by the Secretary of State on Thursday, but the policy has been clearly stated by the Chancellor. In 1966 my hon. Friends opposed the Prices and Incomes Act. We voted against Parts 2 and 4 and we have voted against the Orders which have been made under that legislation. All the figures show, as my right hon. Friend the Member for Mitcham (Mr. R. Carr) will detail in the debate on Thursday, that these powers have failed in the last two years.

Mr. Woodrow Wyatt (Bosworth)


Mr. Heath

The hon. Gentleman will no doubt have a chance to speak during the debate, which will go on until next Monday. He may even write about it in a particular periodical, which will no doubt support him.

The Government have consistently said that they wanted only limited powers for a short period. In March, 1966, the Prime Minister said that it would be monstrous ever to think of having such powers at all. The First Secretary as he then was, now the Foreign Secretary, said that it was in the hope and expectation that these were only to be temporary powers that they were being taken. That was the second time round. Every time we have constantly doubted the Government's word—and on each occasion we have been proved absolutely right. The powers have been renewed for longer periods, and this is to happen again. More powers of compulsion have been taken on each occasion, and now these powers are becoming a permanent feature of the Socialist Government in Britain.

We have been consistent throughout in opposing this policy of reliance on statutory controls. We are convinced that it is wrong in principle—that the Government are wrong in using such compulsion—and we now see its failure in practice. We have no confidence whatever in the undertakings which the Government give about the use of these powers and we will continue to oppose them, and to oppose the Government's demands. [Interruption.] I tell the Chancellor that.

I am quite prepared for a tough incomes policy—[Interruption.]—to ensure that costs do not outrun productivity, but it must be achieved by using all the aspects of economic policy in a complete economic context.

Mr. Michael McGuire (Ince)

What are they?

Mr. Heath

I will come to them.

The Government really want these powers because they cannot or will not control Government expenditure; because they cannot or will not tackle the monopolistic powers of certain trade unions which they use in free bargaining; because they will not take the action which is necessary to produce a competitive, dynamic economy; and because they have become obsessed with using the legal powers of compulsion instead of using the real powers which they should have to deal with the obstacles to growth which exist in the economy. That is why the Government, unprepared to take these actions, are seeking additional compulsory powers.

The Government should cut back Government expenditure, reform trade union law, reduce individual tariffs, deal with monopoly situations—that is what the President of the Board of Trade should be doing—provide individual incentives, get rid of restrictive practices and wipe out overmanning in the public sector. Above all, the Government have the responsibility to ensure that the vast public sector which is now under their control does not grant wages which are more than productivity will justify. It is for the Government to stand up on this matter and take the action which is necessary in their own sector. The new powers which they are taking will have only the same impact as the preceding powers and—

Mr. Stan Newens (Epping)


Mr. Heath

As I was saying—

Mr. Newens

What powers would the right hon. Gentleman take?

Several Hon. Members


Mr. Speaker

Order. Hon. Members must control themselves.

Mr. Newens


Hon. Members

Sit down.

Mr. Speaker

Order. The right hon. Gentleman is obviously not going to give way. The hon. Gentleman must, therefore, resume his seat.

Mr. Heath

As hon. Gentlemen opposite below the Gangway know full well, in the process of operating this policy the friction created in industrial relations will be immense and the control of the trade unions will pass to the militants rather than to those who can help the economy.

If this Government are allowed to survive long enough to bring Britain to the brink—[Interruption.] Any Government must take the utmost powers in time of war, but the job of the Government today is to mobilise the effort of a free people, to rouse them and give them hope, and to show them how enterprise, risk-taking and hard work can bring their just reward—that cannot be done by a national lottery—and to show how lethargy, obstruction and failure pay the penalties.

The last Chancellor of the Exchequer concluded his Budget statement with the stirring call to the ship of State, "Steady as she goes". He ended in devaluation. His successor has chosen, not inappropriately for the presentation of his Budget, Lifeboat Day. Lifeboat Day for the hard Labour Budget. One right hon. Gentleman has already abandoned the sinking ship. It is not a lifeboat which this country needs, it is control at the helm and new men to man the ship. That is the only way in which this country will be brought safely into port.

6.22 p.m.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

We meet at a time of crisis and in a time of crisis the people of this country expect from the Government of the day action that will tend to solve that crisis. I wish to congratulate the Chancellor of the Exchequer today on rising to the occasion. If he had presented a Budget today which did not deal with the situation of recurring balance of payments difficulties the Government would have stood condemned. The Chancellor has brought forward a Budget which at least will satisfy the people that an attempt is being made to bring to an end this balance of payments problem which has been occurring year after year.

I listened with interest to the Leader of the Opposition. I am sorry that he is not now present. The one thing which surprised me about his speech was that he did not get round to fastening responsibility for all the taxes and everything on the Prime Minister. He burns midnight oil when each crisis takes place and produces one explanation for the difficulties which the world and the country are in—the Prime Minister. He did not do that today. He must have forgotten his usual cure for all evils.

The Chancellor in producing this Budget, I think, has satisfied the public that the sacrifices which have to be made to meet the problems are being spread equitably and reasonably over the whole population. The public expect to make sacrifices, but they want them to be fair and reasonable and fair between person and person.

The Chancellor has asked those who have most to make a very considerable sacrifice in this present year. I think that will be welcomed by the great majority of the population. He also asked those who have luxury spending to make a very considerable sacrifice. All of us must recognise that the first thing to do when being fair is to try not to impose sacrifices on those with least ability to bear them. The Chancellor is asking those who have least to give to make their sacrifice in some other direction.

We are promised in this Budget that there will be restraint on incomes and prices in the next spate of legislation. Undoubtedly restraint on incomes is a vital part of this policy. It is quite obvious to every housewife that one cannot spend 23s. out of 20s. income. This country has been doing that for some years, with the result that we have got into more and more difficulty. When this Government took office they inherited a balance of payments—or rather, an imbalance of payments—to the extent of about £800 million. By 1966 we had almost got to the extent of bringing that down to about £33 million. Then we were struck by several international events over which we had no control, such as the Israeli-Arab war. We also inherited the Rhodesian problem. Both of these have cost us a very great deal in foreign exchange.

In addition, unfortunately, just at the time when we were reaching the point of solvency we were struck by two great industrial disputes in this country one after the other, the seamen's strike and the dockers' strike. They threw us back in exports to a very great extent and made a considerable contribution to the growing disquiet abroad in regard to the possibility of maintaining the value of the £.

While I sympathise with people who want their grievances remedied—and this applies to everyone—we must recognise that we do not remedy a grievance by bringing ruin on the country. The disaster brought upon us in the last few years can never be made up for by any improvement people gain by these methods. If we were to indulge in any more industrial disputes this country would probably not survive economically. The result would be a far greater disaster than any sacrifice anyone in this country will be asked to make in the next few years.

I hope, therefore, that when legislation on restraint of incomes is introduced it will be accepted in good will and good reason based on intentions by the trade union movement and the workers of the country. The workers with whom I come into contact recognise that this is necessary. They recognise that we must get out of this difficulty and they recognise that we cannot increase wages unless production is increased. This legislation will tie increases in wages to increases in productivity so that we shall be producing more with less labour. Then the chances are that we shall make greater progress.

My experience over many years has been that we could get co-operation of the workers and employers, if we could get rid of antagonism between workers and employers. If we could get co-operation of the workers in increasing productivity we could solve a great many of these problems without many of the sacrifices which are being asked. The difficulty in a class society is when we have rivalry of income between dividend earners and wage workers. The workers fear that they will be worsened by sacrifices and that makes co-operation exceedingly difficult. Nevertheless, I commend to the Secretary of State for Economic Affairs that if this climate of co-operation could be introduced many of the problems would disappear overnight.

I do not want to prolong this discussion—many hon. Members want to speak—but I wished to congratulate the Chan cellor on having tackled this matter. If he had not done so the Government would not have been forgiven. If he had done only half the job, we would find ourselves back in the same position next year. I hope that he has tackled it sufficiently to ensure that the difficulty will be overcome and that this country will move into a situation where there will be a great increase in our well-being without increasing our liabilities at home and abroad.

Productivity is a great outlet for this, but it takes time. We are going into the scientific age and there must be great inconvenience to people who are having their normal way of life disrupted by having to learn new occupations. But, after all, change is a necessity of progress and there can be no change in such an enormous industrial and technical revolution without inconvenience to a great many people.

This Government have done great things to minimise that inconvenience by wage-related benefits, redundancy payments and by shading off change so that new industries can replace older ones which are declining. This cannot be done perfectly, but the Government are to be congratulated on their success so far. The right hon. Gentleman the Leader of the Opposition rather sneered at the former Chancellor of the Exchequer for having said, "Steady as we go". I believe that this is a valuable motto, because if we can proceed steadily on this course instead of by jumps and starts, people will fall in with the necessary momentum and we may be able to march forward instead of jumping backwards and forwards. Too many steps forward and back, too savage pressure on the accelerator and then a stamping on the brake, causing violent stops and starts, dislocate for everybody the possibility of planning. Therefore, the more soundly all this can be done the better. I believe that this Budget, though it may appear to be savage in total amount has been wise in spreading the burden so skilfully over so many sections of the population so that no one will feel unfairly dealt with. Everyone knows that if he is bearing a sacrifice others are doing the same; and I am sure that people will readily accept these sacrifices if they know that this will solve our problems.

6.32 p.m.

Mr. Henry Clark (Antrim, North)

We have now had this Budget about which we have heard so much in past months, and a dull and dreary one it was. The question the House will continue to ask during the next three days of debate is: how far does the Budget we have heard today actually go to the root of our economic debility and how far is it simply a palliative to the economic disease and its symptoms? Does it really put a knife to the economic cancer which the country suffers? Frankly, I do not believe it does. The basic and supreme problem of this country and of most other countries in the world is a crisis of over-consumption, a continuing and snowballing crisis of over-consumption; and the Government are the greediest of all consumers.

The crisis of over-consumption is simply the rational outcome of the policies applied in the 1930s to solve the problem of those days, which was the problem of under-consumption. Through welfare benefits the State has insulated a large section of the community from the ebb and flow of the business cycle so that spending continues, as was intended when the Welfare State was introduced, in good times and in bad. But this in itself tends to create over-consumption. Equally, if we are to talk of cost-effectiveness there can be no doubt in anyone's mind that blanket social benefits are about the least cost-effective way of solving the wants of man.

The right hon. Gentleman the Prime Minister spoke the other day of the rising social wage and holding back personal cash wages. I believe he would have satisfied the demands of the country very much more if he had held back the social wage for a time and allowed people to earn a little more cash wages, at the same time making quite certain that the really needy people got the aid they so badly needed, rather than strewing money about, in many cases among people who do not make the best use of it and do not have the greatest need for it.

The problem of over-consumption, the problem of this and almost every other country in the world, has been added to immensely in the private sector by the growth of the whole system of marketing. Advertising and sales today are so large and so pervasive to every aspect of daily life that they dwarf every effort made in sales and marketing in the pre-war period. Added to this, credit is not now the privilege of the upper income group. Credit, in one form or another, is available to every adult in the country and to a great extent also to teen-agers. With the blandishments of marketing and salesmanship and the availability of credit, far too many people in this country live year after year beyond their income.

It is only too easy for any family to have a slightly larger hire-purchase account outstanding at the end of the year, to have a slightly larger total of tradesmen's bills at the end of each year or to have a slightly larger overdraft. More and more people do that every year and I believe a very considerable percentage of the people of this country never save money but, in fact, dis-save it year by year, relying on rising inflation to keep their heads above water.

Certainly, in the last 10 years the best thing one could possess were debts, because the bigger they were at the beginning the smaller they were at the end as inflation cut away their value. I do not believe that the right hon. Gentleman the Chancellor of the Exchequer in his Budget has tackled any of these serious aspects of over-consumption which is the basic problem of the country today.

Mr. Alfred Morris (Manchester, Wythenshawe)

I understand that the hon. Gentleman is arguing that the main problem is over-consumption. Is he aware that it could be argued that there are very heavy taxes on consumption in this Budget? I am not quite certain whether he is arguing for even greater taxes on consumption.

Mr. Clark

I am grateful to the hon. Gentleman for letting me know his doubts, but if he will allow me to develop my argument I believe he will see the point I am trying to make. I fully accept that the Chancellor of the Exchequer has taxed consumption very heavily; but it has always been taxed heavily. But one of the factors on which he must calculate is how far those taxes on consumption are going to reduce the amount saved out of private income by the population. It is noticeable that since 1964, as taxes have risen so the percentage of personal income saved has gone steadily down. We have now reached the frightening position where this country has a lower rate of personal savings than almost any of our great contemporaries in the world. The calculation is that we are now saving about 5 per cent. of personal incomes; and as a result of the Draconian taxes brought in by the Chancellor of the Exchequer today we could well see that figure going down to 4 per cent. while countries like Japan, the United States of America and Western Germany have rates of personal saving in the region of 8, 10 and even 12 per cent.

I do not believe that this Budget will do anything to help to increase personal savings, apart from the few words which successive Chancellors of the Exchequer always say about the National Savings Movement and a slight increase in sales of National Savings Certificates, which are always much more useful to those who pay heavy rates of tax than to the ordinary working class who buy them and who would be better off putting their money elsewhere. Again, the Chancellor of the Exchequer in his Budget has increased the odium of unearned income. I should like to see in the Budget some provisions making unearned income, in reasonably small quantities something at which every family should aim. I should have liked the Chancellor of the Exchequer to have said that the first £100 of unearned income for everyone over the age of 60 should be tax free. That would be a target for which every family in the country would be prepared to save.

Mr. Ted Leadbitter (The Hartlepools)

Would the hon. Gentleman tell us how he thinks every family in this country could save out of unearned income?

Mr. Clark

I am delighted that the hon. Gentleman raises that point. If a reasonable system of tax-free saving is developed there is no reason why any family should not, in the course of the working life, or in fact in far less time, put by £2,000. That sum will produce unearned income of rather more than £100, and I should like to think that people who have worked and saved through life to build up capital should enjoy that money tax free. To carry the point further, as well as giving incentives on £100 of unearned Income Tax free or income from savings tax free for everybody over 60 at a cost of £25 million a year, why should we not accept a much more positive incentive to save, as positive an incentive as there is in West Germany and America?

Why not have full tax rebate on all savings, or, at least, savings up to 10 per cent. of income? There is a different principle, I know, but why cannot the Government follow the pattern which there is for covenanted subscriptions to charity? If one gives a £57 subscription to a charity, the charity gets the rebate of tax, and one gets the credit for £100. I believe that if one could make a covenant with one's bank manager—or to a unit trust—so that he could claim back the full amount of tax, it would be a far more positive incentive, than one's tax bill being reduced at some future date. I believe that there are many people who would make covenants to save £50 or £100 each year for seven years and who would hold their money for those seven years if they could claim and take up the full tax rebate. This might put savings back into fashion again.

The Chancellor mentioned that if every working man in Britain saved I s. a day there would be £400 million not being spent; there would be £400 million additional savings. I believe very sincerely indeed that if the right and positive incentives were given it would not be necessary for the Chancellor to take £600 million or more out of the economy by taxation. If he were to give the right incentive, and gave the National Savings Movement something worth while selling, I believe we could raise our rate of personal savings and reduce the necessity of Budget surpluses year after year, and we could raise our savings to the kind of level of savings which Germany and America have achieved. There is no reason why we should limit our aim only to the level achieved in Germany and America. I believe we should well aim at a rate of personal saving of 14 per cent. Without going into great detail now, I believe that if the incentives to saving were designed carefully, they could be adjusted upwards and downwards just as the regulations governing hire purchase are adjusted. Applied to savings, that would be an extraordinarily valuable regulator of the economy year by year.

The Chancellor has missed a very great opportunity, not only to give incentives to make people save an extra £400 million or £500 million this year, but also to restore to the British people the idea that hard work and thrift are the way to future wealth. If we could restore that idea we would be beginning to get the right moral and right psychological background needed to make this a wealthy, prosperous nation.

I have only one other point which I must make. The Chancellor is putting a tax motoring as though the motor car were the emblem of the affluent society, but this tax will hit very hard indeed workers who, in my constituency, motor 30 or 40 miles to and from their work and who can only just afford their cars.

Mr. Arthur Lewis (West Ham, North)

The best way out of the difficulty is not to pay it. That is what thousands are now doing.

Mr. Clark

I do not know what tax avoidance system the hon. Member is suggesting, but certainly the £25 vehicle licence and 4d. on petrol is a very severe burden to the man who drives, winter and summer alike, early and late, to and from his work in some obscure part of the country—the only way to get employment for many in Northern Ireland.

Mr. Arthur Lewis

There are thousands upon thousands of motorists who are not paying the tax, and this Government have refused and are refusing to do anything about it. I was suggesting that if everyone were to refuse to pay the tax, then this Government might do something about it.

Mr. Clark

The hon. Member is making his own point, but I hope he is not suggesting that thousands and thousands of my constituents are so dishonest as not to pay the tax they should.

However, the Chancellor certainly will be remembered as the man who made the motor car not a pleasure but a very considerable burden.

6.45 p.m.

Mr. Ted Leadbitter (The Hartlepools)

During the day there must have passed through the minds of many Members of this House the need to take great care, because not only are the people of this country watching us but, because of the incidents of the last weekend, people in many parts of the world are also watching the happenings here today. Therefore, it is very important that contributions to this debate shall seem to be constructive ones which reflect stability of mind and careful scrutiny of the Chancellor's statement, so that we do not fall away from the important lesson that we should not make statements which do not reflect well upon this House and the country.

It appears, however, that a mistake has already been made. I was rather appalled that the right hon. Gentleman the Leader of the Opposition spent most of the valuable time afforded to him in the special, privileged position which he has, in possibly persuading some elements outside this House—certainly none on this side of the House—that there was a kind of by-election on: and, therefore, he was deliberately avoiding the main issues to which the Chancellor directed himself over a period of two hours. It seemed to me that the mistake which the Leader of the Opposition made was that he was trying to play to some kind of gallery and not addressing himself in a responsible manner to what was the most important Budget speech since the war. We back-benchers have a major responsibility to avoid that bad example by the Leader of the Opposition.

At the same time, I think that we on this side of the House must state quite clearly and honestly that we are aware that this Labour Government have made mistakes. It would be a very sad thing in a democracy if we had a Labour Government so arrogant, as it has ofttimes been suggested that they are, as to assume to themselves perfection against the background of economic difficulties, which they inherited. It would not be proper for me now to rehash the arguments about the circumstances which persisted before 1964. Repetition only bores the House. I think it sufficient to say that we, Members of Parliament, privileged to come here to serve in this House, must accept that we in this country have unique problems, problems which confound the best kind of brains; not because they are insoluble but because they are problems arising out of our democratic insistence of preserving wherever we possibly can areas of liberties and freedom which have been sought and preserved through instruments such as this House and other political institutions and organisations. Yet they themselves contribute, by their insistence on liberty, to the kind of economic problems which we have.

The will to do what one likes is inherent in the British character. We fight against such things as taxation, rules and regulations. They are an anathema to us, in terms of the freedom that we have always fought for. Nevertheless, they are part of the problem, and because the problem exists we must say quite clearly that we are satisfied that whereas the Labour Government have made mistakes they have tried to attack these problems in a more militant and active manner than have any Government since the war.

In so doing, we have had to face great difficulties. No one can claim that the consequence of the seamen's strike was a matter of small account; it was a major problem that we had to face. In the exercise of the freedom and liberty to which I have referred a long time had to pass before the strike came to an end. It cost us a great deal of money.

The second most important event that militated against the efforts of the Labour Government was the dock strike. Strange to say, in a climate where the Labour Government had produced legislation getting rid of the worst aspects of dock employment we had to wait a long time—again addressing ourselves to the principles of freedom and liberty—for time and discussion to bring about a useful end. Again, it cost us a great deal of money; indeed, it cost us far more than we have been able to evaluate even to this day.

The third most important event was the Middle East war. We were not responsible for that, but again, in the interests of freedom and liberty, and to try to introduce a degree of sanity into this highly inflammable part of the world, Great Britain had to take the lead in discussions and in making representations to the United Nations. Even to this day it is costing us money. I calculate that the closure of the Suez Canal is costing us about £1 million every day, and that in total, since June of last year, it has cost us £150 million or more.

It is against that background and the background of the happenings of the past two or three days, in respect of the world monetary crisis, that the Chancellor of the Exchequer has produced a Budget of major importance. I should have thought that in that context the Leader of the Opposition might have changed his tactics and indicated the support of his party, in the interests of the nation. It may be of interest for hon. Members on both sides of the House to reflect on what the Conservatives will do when we vote on the Budget. Then we will see how their actions support the speech that we have had from the Leader of the Opposition.

Many hon. Members will welcome the fact that the Chancellor has found it in his heart not to increase the duty on beer. Hon. Members on this side of the House also welcome the fact that there is no change in the standard rate of Income Tax. In the present circumstances of the country many people will say that in these two matters the Chancellor has acted wisely. For a great section of our community—the old-age pensioners—the raising of the age exemption from £401 to £415 for single persons and £643 to £665 for married couples will be very welcome. Those of us who are more fortunate were glad to hear the Chancellor's announcement.

We are pleased that the principle of the family allowance has been settled, namely, that the net payment will go to those families in greatest need through the instrument of drawback on the Income Tax allowance. Nevertheless, bearing in mind that many young people want to set up home and need to spend considerable amounts of money on clothing and furniture, I am disappointed that the Chancellor felt that he ought to raise Purchase Tax from 11 per cent. to 12½ per cent. This seems of small account, but the need to find small amounts of money can create great difficulties for those in the lower income groups, and even those outside those groups who are facing the great expense of setting up home.

As a Member of the Standing Committee considering the Transport Bill, I am of the opinion that, that Committee having spent many nights—about 92 hours in dealing with 40 Clauses—

Mr. Speaker

Order. This is a wide debate, but not so wide as to include the Transport Bill.

Mr. Leadbitter

With great respect, Mr. Speaker, I was looking for some personal relief. The Chancellor has in-cheated that the introduction of his new measure means that some provisions of the Transport Bill are being withdrawn.

My right hon. Friend was rather hard on the motorists. They have been punished for a long time. Not only the Minister of Transport has been after them; everybody seems to be trying to get the most out of them. I should have thought that the Chancellor could have arrived at a compromise in respect of the vehicle excise licence and raised it to £20 instead of to £25.

There are two other matters which the House might dwell upon. First, we should consider the advisability of the 50 per cent. increase in Selective Employment Tax. Although it is a fact now, since the Chancellor has made his statement, we must take great care to see what the incidence of the tax is on the distributive trades. I hope that the Minister can assure the country that there will be a continuing examination of the incidence of this tax, so that we can use it to the best advantage.

I am pleased that my right hon. Friend has decided to impose a one-year annual wealth tax. This balances things up for us. On that joyous note, I hope that the Minister will take into account the fact that although at this stage we cannot assess what the Chancellor's statement means, it is necessary to watch with the greatest care what its incidence will be on the lower-paid worker. If we cannot have a £15 low-paid margin, let us see what happens to those who are earning less because of this Budget.

6.59 p.m.

Mr. John Lee (Reading)

One of the advantages of a very long Budget speech is that it empties the Chamber so thoroughly at the end of the day that back-benchers like myself who want to speak before the experts, the big guns, go to work the following day have a chance to do so.

A number of proposals in the Budget will command a wide measure of respect on this side of the House. I think that all of us welcome the family allowance proposals. On balance, although there will be individual items that can be criticised, the Purhase Tax changes—

It being Seven o'clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS, under Standing Order No. 7 (Time for taking Private Business), further Proceeding stood postponed.