HC Deb 19 March 1968 vol 761 cc251-3
The Chancellor of the Exchequer (Mr. Roy Jenkins)

This Budget is remarkable in only too many respects. It is my first, which in any circumstances would make it a memorable and intimidating occasion for the Chancellor of the Exchequer—even if for no one else. It would in any event have been a major Budget, neces sary to deal with the massive consequences of devaluation. And it is now being presented in the wake of a weekend of world monetary upheaval, which necessarily affects the framework even if not the substance of the proposals.

On top of all that, it is the first occasion that you, Mr. Speaker, or any of your predecessors, has been present at an annual Budget statement. It is indeed, I believe, the first occasion that taxation proposals have been initiated in the whole House since 7th May, 1641. One of my few pleasant duties this afternoon, Mr. Speaker, is to welcome you to our proceedings.

The other major change in procedure this year is that we shall be taking the Committee stage of the Finance Bill upstairs rather than on the Floor of the House. I do not expect that this will mean any reduction in the time which the Bill is in Committee or in the thoroughness with which its provisions are discussed. But taking the main Committee stage upstairs will enable us to get through without submerging the other business of the House during the late spring.

Traditionally the Budget speech provides the Chancellor with an opportunity to review the economic situation over recent months, to discuss the prospects for the coming months, and so to set his main proposals in their broad economic context. The Budget this year is dominated not only by the decision to devalue last November, but also by the events of the last few days, the weekend conference of central bankers in Washington, and the strains in the world monetary system which reached a climax at the end of last week.

I reported to the House yesterday on the outcome of the talks in Washington, and I shall be saying something later in this speech about the present international monetary situation. But I want to make one initial point to the House. Although the position which developed at the end of last week was menacing, it was not basically a crisis arising from the position of sterling. It was much wider than that: a crisis of the international monetary system, which had to be dealt with—as it was—by co-ordinated international action, not by savage cuts in the living standards of our people—or indeed of the people of any other country —going beyond anything that the underlying situation requires.

This Budget is concerned with the structural changes in the pattern of economic demand and activity that are required to enable us to take full advantage of devaluation and establish a substantial and continuing balance of payments surplus. The measures which I am announcing are those which I should have been announcing in any case, as being necessary—and sufficient—for this purpose. If they are, as I believe, necessary for re-establishing our prosperity at home and our viability in the world, they are also an important and necessary contribution—the best contribution we can make at this time—to the stabilisation of the international monetary situation.

These measures are in themselves severe. In the short term, as I told the House on 17th January, we must have a stiff Budget followed by two years of hard slog. I believe the British people understand this analysis, and that they are ready to make the necessary sacrifices so long as they are told the facts about our economic situation and are provided with the opportunities which will enable us to achieve a securely based prosperity. The purpose of this Budget is to present the facts, to impose the sacrifices, and to provide the opportunities. Later in this speech I shall describe the way in which I have approached this task and the strategy which has shaped the selection of measures which I shall be asking the House to endorse. But first I must set out the facts which determine our economic condition. At present the balance of payments and our external position continue to be our major preoccupation, and it is with this subject that I start my economic survey.