Level of Demand (Hansard, 15 June 1971)

§ 19. Mr. Strang
asked the Chancellor of the Exchequer to what extent the estimates of the level of demand in the economy this winter which he used when framing his Budget have had to be revised in the light of subsequent information on the state of the economy.

§ Mr. Barber
The partial information which has come in since the Budget suggests that the level of demand in the early months of this year may have been somewhat lower than the out-turn which was expected at the time of framing the Budget forecasts, However, no full assessment will be possible until the information is more complete.

§ Mr. Strang
Is the present level of unemployment in line with what the Chancellor envisaged for the economy when he made his Budget Statement?

§ Mr. Barber
As I said at the time, I thought it was possible that the level of unemployment would increase somewhat for a time, but that the objective of the Budget was to ensure that it then levelled out.

§ Mr. Roy Jenkins
Is the right hon. Gentleman aware that his hon. Friend the Minister of State, whose views on this matter we all respect, has been rather more forthcoming on this matter? I do not ask the Chancellor to predict the future, since he cannot do that, but will he say whether at the present moment, on 15th June, he regards the position on investment, employment and the rate of growth as satisfactory in relation to his Budget judgment?

§ Mr. Barber
I have already at an earlier stage, in answer to another Question, dealt with the principal Budget forecast for the gross domestic product. Obviously, I do not consider that the level of unemployment or the prospects for investment are in any way satisfactory, but I believe, as I have said previously—and the right hon. Gentleman took the same view when he was Chancellor of the Exchequer—that one cannot chop and change from month to month. I have always taken the view that if it should be desirable—this is the only sensible view for any Chancellor to take—that there should be changes during the course of the year, they should be made. This 222 is not an admission of weakness but a sensible view to take depending on circumstances. At this stage I do not propose to say any more, for the simple reason that I believe it is right that if and when changes are to be made they should be announced at the time.

§ Mr. Roy Jenkins
I am sorry to come back to this matter again, but it is of central importance. I accept that the Chancellor of the Exchequer must maintain his freedom of judgment for the rest of the year, but in present circumstances the House is entitled to know from him whether as of this day he still regards his Budget judgment as right.

§ Mr. Barber
I have already said what I have to say on that central forecast of the Budget Statement. The right hon. Gentleman referred to what my hon. Friend the Minister of State said in answer to an earlier Question. What he pointed out, which is highly relevant, is that already at this particular time the halving of S.E.T. has not yet taken place but will take place as from 5th July and involves some £300 million; that the improvement in child allowances, amounting to some £200 million, also will not become fully effective in pay packets until July, and that in September there will be an increase in retirement pensions and associated benefits.