HC Deb 21 March 1972 vol 833 cc1343-5

3.30 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

The Budget which I introduced last year was the first of the new Parliament, and in it I outlined a programme of taxation reform which I shall be developing further today, but this Budget also is a first—from a different point of view. It is the first Budget since Parliament took the historic decision that we should join the European Economic Communities.

In January we shall become part of a new market of 300 million people. This enlarged outlet for our goods and services together with the present scope for expansion provide our country with an unparalleled opportunity over the coming years. The various proposals which I shall put to the House today are designed to help British industry to modernise, to re-equip and to reorganise to meet the challenge of greater international competition. And they are designed to ensure that we take full advantage of this unique set of circumstances to build a more prosperous Britain.

But if, because of the opportunity which is opening up, we are right to set our sights high and to look with confidence beyond the immediate future, we are right also to regard with profound concern the immediate problem of a level of unemployment which has persisted despite the unprecedented action to counter it which has been taken over the past year.

So these are my aims in presenting this Budget.

First, that, as we set out on our European venture, British industry should have every encouragement to be efficient and forward-looking.

Second, that the British economy should grow at a sustained and faster rate, and so bring a permanent improvement in both employment and living standards.

Third, that we should make further progress with taxation reform, so as to evolve a system which is more just, and a system which over the years and decades ahead will help to create a greater national wealth.

No taxation policy can of itself guarantee prosperity, but, as we have learned to our cost in recent years, it can most certainly hinder it. This is why taxation reform is an essential element of our strategy for increasing our rate of economic growth, and it is economic growth that we need to bring down the deplorably high level of unemployment and to increase the real wealth of our country.

There are some who have recently been doubting the whole idea of economic growth, because they fear that what is at present regarded as progress may, in fact, be causing, or be about to cause, irreparable damage to our environment. They are rightly concerned about the quality of life in this country and across the world.

I believe that most hon. Members, while recognising this concern, will still take the view that the main threat to the quality of life in this country has come from the inadequacy of real incomes, from social problems such as unemployment, and from those consequences of slow growth such as the persistence of bad schools, of old hospitals, of slums and urban squalor. The fact is that both the cause and the solution of all these problems lies in our economic performance.

I must warn the House that my statement today will be long. The House will recall that last year I announced plans for the radical reform of company taxation, of indirect taxation and of personal taxation. All these three reforms will become operative a year hence, in April, 1973. Because of the needs of business planning, including computer programming, it is now more than ever desirable that people should know as far ahead as possible what are our present intentions about future tax measures. I shall, therefore, not only set out the structure and main details of the changes, but I have decided that it is right to take the unusual step of giving today my present ideas about the new rates for next year, even though the House and the country will recognise that these may have to be changed if circumstances alter. In doing this, I am following the principle of more "open government" in matters of taxation wherever I can, as, indeed, I did last year.

Also, I shall put forward further proposals for the reform of our taxation system, and, in particular, for the longer term, a scheme, which I shall in due course ask the House to consider, for a fundamental simplification and bringing together of our systems of Pay-as-you-earn and social security.