HC Deb 29 January 1981 vol 997 cc1063-5
6. Mr. Canavan

asked the Chancellor of the, Exchequer when he expects to make his Budget Statement.

12. Mr. Dobson

asked the Chancellor of the Exchequer when he intends to make his Budget Statement.

Sir Geoffrey Howe

I refer the hon. Gentlemen to the announcement made by my right hon. Friend the Leader of the House on 15 January.

Mr. Canavan

In view of the appalling level of unemployment that was announced this week, in his Budget Statement will the Chancellor announce more public investment to provide more jobs? Is he aware that it is the economics of the madhouse that it is costing the Treasury over £12 billion to keep nearly 2½ million people on the dole? Is the Chancellor of the Exchequer so thick-skinned that he is unaware of the growing public opinion that we shall never get rid of rising unemployment until we get rid of this Tory Government, when I hope the Prime Minister and some of her Cabinet colleagues will take the place of the million people on the dole queue?

Sir Geoffrey Howe

The hon. Gentleman's question is still founded on a fundamental misunderstanding of the problem. There is no prospect whatever of our being able, by increased Government expenditure, whether in public investment or anything else, to generate additional jobs that will survive in the long term. It is crucial to concentrate on the reduction of inflation and, as part of that, to concentrate on reducing unjustified borrowing and spending. All our experience shows that unemployment is likely to rise if we follow the course advocated by the hon. Gentleman.

Mr. Dobson

When he is considering his Budget Statement, will the Chancellor of the Exchequer consider the four reasons that he gave in his Budget Statement of 1980 for continuing to raise personal tax allowances in line with inflation? Will he stick to those reasons, particularly the one that shows that the heaviest burden from failing to raise the allowance would fall on the poorest in the community? Will he stick to that, or has that expired with his credibility?

Sir Geoffrey Howe

The factors to which I drew attention in my Budget Statement last year are factors to which I shall have to pay attention in my Budget Statement this year. However, it is still right to remember that the percentage of taxes being raised by taxation on personal income is at a lower level than it was when this Government took office.

Mr. Garel-Jones

Will my right hon. and learned Friend confirm that there are sectors of the nationalised industries that have perfectly viable investments that they wish to make but that they are inhibited from doing so by the impact that that will have on the public sector borrowing requirement? Will my right hon. and learned Friend tell the House what thought he has given to ways of relieving these potentially profitable sectors of the nationalised industries from that inhibition, and thus injecting much needed demand into the economy without affecting the public sector borrowing requirement?

Sir Geoffrey Howe

It would not be right to regard any step in that direction as a method to be justified for the sake of injecting more demand into the economy for its own sake. It is right that we should look for ways to enable industries that are still in public ownership to raise capital under their own steam for specific purposes. It is our judgment so far that the best way to enable them to do that is to identify sections of nationalised industries that can be truly privatised, so that there is a direct link between the profits that they earn and the discipline imposed upon them, and the money raised.

Mr. Joel Barnett

Given that we are now seeing the moderate pay settlements for which the Chancellor has asked, why does he think his policies are still creating higher and higher unemployment, which is likely to reach 3 million next year? Is he prepared to deny that, given those settlements, there will not be 3 million unemployed next year?

Sir Geoffrey Howe

I am no more disposed than the right hon. Gentleman was to make or embark upon forecasts of unemployment. Nevertheless, it is true that the declining level of pay settlements, with probably the majority in the private sector well into single figures in recent months, is helping to fend off the continuing rise in unemployment. It is crucial that the declining level in pay settlements that is being achieved in the private sector, where fewer people are unemployed, should be matched by corresponding self-discipline and reductions in pay settlements in the public sector. It must always be remembered that pay settlements in the public sector are paid out of the rates and taxes that are provided by the private sector.

Mr. Sims

When my right hon. and learned Friend considers his Budget, will he resist pressures to increase the already disproportionately high duty on spirits? Will he take into account not only the fact that that duty has reached the point of diminishing returns but that there is ample evidence that an increase in the ultimate retail price will not deter the committed alcoholic but only penalise 99 per cent. of the consumers of alcohol who do not abuse the product?

Sir Geoffrey Howe

Far be it from me to comment on what may or may not deter the committed alcoholic. I note my hon. Friend's observations. They are to be placed alongside observations to precisely the opposite effect coming almost at the same time from other parts of the House.

Mr. Cook

As the right hon. and learned Gentleman's leader has already made her own "Budget Statement" to the Lobby, may we tempt him to follow suit? In particular, will he give the House the assurance that now that the right hon. Lady has told him that he cannot increase tax rates he will not seek to increase revenue by the back door, by failing to uprate fully personal allowances, or does he intend to compound his previous performances, which have not only—as the Financial Secretary generously admitted in Zurich—increased the total tax rate, but—which he did not admit—have increased the tax burden most of all on the low-paid, who are least able to pay?

Sir Geoffrey Howe

That is not the conclusion to be arrived at by the present shape of the tax system. I repeat the point that I made. The proportion of taxes now being levied on the personal income is lower that it was when we took office. Beyond that, I assure the hon. Gentleman that no decisions have been taken about the forthcoming Budget. There is therefore no question of leaks. I shall not anticipate my Budget Statement.