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Sir David Knox: The hon. Gentleman pretends that the use of the level of demand in dealing with inflation has happened only during the past 16 years under a Conservative Government. I take him back to a previous Labour Government and the policies pursued by Denis Healey--they were exactly the same. In fact, the great break with the post-war consensus was in the mid-1970s, not at the end of the 1970s.
Mr. Rowlands: I would love to go back to the unemployment levels of 1978-79. If we had those levels of unemployment in my community, many of the social problems that I have described would not have become so significant. We have never supported--I hope that the hon. Gentleman would never support--the view expressed by the Bank of England in "Bank Briefing":
- "Unemployment probably remains above its natural rate."
When the Chancellor meets the lugubrious Mr. George at his monthly meetings, as well as talking about the fine tuning of interest rates do they sit at the table and talk about the natural rate of unemployment? If so, what is it?
We have never been told. I find the whole concept offensive, just as I found offensive the statement of a previous Chancellor that unemployment was a price worth paying. The concept of using unemployment in the way that it has been used over the past 15 years is offensive.
Employment and jobs should be put back at the centre of Budget judgments--and with that must come proper training. One of the real tragedies of the past 15 to 20 years has been the destruction of training opportunities. Measures to promote skills and work have been like a patchwork quilt. If we are to create a new skilled work force, skills training and jobs must be the centrepiece of our economic and social policy. If that is not done, the social trends that I have described will continue to undermine the stability and the social fabric of our communities.
Sir Anthony Grant (South-West Cambridgeshire):
I am glad to follow the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). I think that I have been in the House a tiny bit longer than he has, but we have the same memories. I appreciate very much his concern about the unemployment problem, which his constituency has, perhaps, tragically experienced more than many others. I also share the views on unemployment expressed by my hon. Friend the Member for Staffordshire, Moorlands (Sir D. Knox), who has always given a very sincere view on that issue.
I do not share, however, the pessimistic view taken by the hon. Member for Merthyr Tydfil and Rhymney. I was glad that he referred to 1973, because I recall the occasion when unemployment hit the 1 million mark. We were in government. The hon. Member for Bolsover (Mr. Skinner) came across the Chamber and thumped the Dispatch Box in front of the then Prime Minister. There was a great hullabaloo. I had some responsibility at that time--I do not claim I was solely responsible--for regional development policy, and, before we were unceremoniously thrown out of office, unemployment had come down to 700,000, which was gratifying.
Mr. Michael Foot said that that level of unemployment was disgracefully high, and that it would not be tolerated. No sooner did Mr. Michael Foot take charge, however, then unemployment went up again, this time to 1.5 million--and it continued to rise.
Therefore, I do not think that the problem of unemployment can be solely attributed to one party or the other. Indeed, if I think back further, I think that I am right in saying that no Labour Government in this country have left office with unemployment lower than when they took office; it has been higher every time. Let us not have too much humbug on that issue.
I must declare all my interests, which are in the Register, but I shall certainly not be advocating them in any way, whatever that means. I am sure that, if I step out of order, you, Mr. Deputy Speaker, will immediately bring me to order at once.
Mr. Deputy Speaker:
Order. Just for clarification, the hon. Gentleman must remember that it is for him to declare any interests that he has. It is not for the occupant of the Chair to decide the matter.
Sir Anthony Grant:
I shall certainly not be advocating anything in any way, except the general interest of the public as a whole.
I have spoken in debates on many Budgets and Finance Bills during my 30 years in the House, and I have had the experience of no fewer than 10 different Chancellors of the Exchequer. This may be the very last occasion that I am able to speak in a Budget debate.
I have always believed that it is important to lower taxation so far as possible. I said that in the 1988 Budget debate and in the 1989 Budget debate. I said that I could
never see any morality or merit in the authorities collecting vast sums of money from a vast range of people, sloshing and churning it around in a vast and expensive bureaucracy, and then doling it out to those who create the loudest clamour for more money. I do not believe that there is any morality or merit in that whatsoever.
Many years ago, long before the Conservatives came into office, I said that there was a need to shift the burden of taxation from direct taxation, or tax on work, to indirect taxation, which is tax on spending. I think that that has happened, and rightly so. I am glad that the Chancellor referred to that this afternoon.
I also believe, however, in a low interest rate policy. I think that the folly of the rollercoaster years that occurred under my Government in the 1980s, when low interest rates rocketed, came home to roost with a vengeance in the disastrous effect that they had on the housing market and, in particular, on small firms. Those are two causes-- the spread of ownership, either through shares or house ownership, and the interests of small firms--which I have espoused in the 30 years that I have been in the House.
I therefore congratulate the Chancellor and the Government on the way that, in recent years, they have restored low interest rate stability, while at the same time containing inflation. I believe that that is the achievement of the present Chancellor and of the Government, despite the circumstances that they inherited.
I think that there has been far too much hype in the House and in the press on the reduction of taxation, although, as I say, I welcome it and I want it. There was far too much talk of pennies here and pennies there; talk of 3p or 5p off the standard rate raised expectations unnecessarily. I am a great believer in Chancellors going into purdah and not saying anything until they come to the House to present the Budget.
No good can come from lowering taxation if it revives inflationary fears which result ultimately in higher interest rates, because of a belief in the markets that inflation will take off again. In a sense, therefore, I believe that the Chancellor was right to be modest. The Budget was reasonably modest in the face of some people's high expectations of tax reductions. It could be described as a responsible financial policy, or what he would call a prudent one.
The Chancellor has avoided the peril of high interest rates, but, having said that, I hope that my hon. Friend the Paymaster General will pass on to the Chancellor my sincere hope that it will be possible to reduce interest rates further when the time is right. That more than anything else would encourage the two sectors that have suffered so much and which to a large extent reflect the feel-bad factor--the housing market and small firms, especially people starting up small firms. I leave it to the Chancellor to decide when the time is right--I accept that it may not be now--but I hope that interest rates will come down steadily. That, I understand, is the wish of industry and business generally.
I should have liked one further tax reduction. I have long advocated the complete removal of stamp duty on property transactions. I know that it would cost
£700 million, but it is a ludicrous tax. Speaking in a Budget debate some years ago, I said that I could not
understand how it had ever arisen. Now I know. It arose in the reign of William and Mary when, because of transport problems, it was very difficult to collect income tax or anything of that nature. It was easier to levy tax on property. However, those days are gone, and the sooner we see the back of stamp duty on property transactions, the better. Its removal would encourage movement in the housing market, which we all want.
Although the Chancellor said, I think, that mortgage interest relief at source was not going to be changed--at least not adversely--in the next two or three years, I hope that he will be flexible. If he wants to boost the housing market, it may be necessary to alter MIRAS. More important, however, is the need to keep interest rates stable, and preferably low. That, I hope, is the theme of the Budget, which I warmly commend.
The press and many Opposition Members said that the Budget would be one of bribes for the electorate, but I did not believe that. Every political party, of whatever political complexion, has since the dawn of mankind sought to bribe the electorate one way or another. However, the electorate are like the great Sir Francis Bacon who, when challenged, said:
The reality is best expressed in these words, which I have cited in previous speeches:
Those are very wise words. They were uttered on 14 March 1978, in an address to the Labour national executive committee, by no less a person than Lord Callaghan.
I agree with him, he is absolutely right, and I am glad to say that we are following precisely his precept. When people urge greater public expenditure and say that they are prepared to accept higher taxes to facilitate it, I find that they invariably mean that other people's taxes should be higher, not their own.
The Budget could be considered in the context of an election--undoubtedly the press and everybody else is considering it in that context. But in considering the Budget's effect, the electorate will also consider the alternative to it. As I said, I go back 30 years, in which there have been three Labour Chancellors. What is absolutely clear at the moment is that the electorate have not the faintest idea about the Opposition's policy on interest rates, inflation, borrowing, or how the Opposition's taxes relate to their spending. None of those policies has been revealed.
I am reminded of the late, great Aneurin Bevan, who used to say, "Why gaze into the crystal ball when you can read the book?" We can read the book. After 30 years and three Labour Chancellors, I can read the book. I remember very well that Lord Callaghan introduced corporation tax--adverse to business--capital transfer tax, selective employment tax and purchase tax increases. Then multi-rate VAT was introduced. Then Lord Jenkins, no longer a member of the Labour party, raised taxes more than any other Chancellor since the war. Then, of course,
Lord Healey--amazing how all these peers seem to be involved--made such a hash of matters that we had to call in brokers from the International Monetary Fund.
The book of what the Opposition have done is available for all to see. The trouble is that, at the moment, it is wrapped in a plain cover, rather like those smutty books that used to circulate. Undoubtedly, the book will have to be opened at some time in the future, and when it is, the electorate will get a nasty shock, and will regard today's Budget as a winner.
The Budget passes the test that I always apply of whether it helps or harms small firms, wider share ownership and ownership generally. I return to employment, with which I began. We will increase employment only through the encouragement and development of small firms. Such an increase is not going to come from great big organisations--that has passed. The development and taking on of one, two, three or more people in a vast number of small firms will diminish the hideous curse of unemployment, in Wales and elsewhere.
"Certainly I take bribes--but I never allow it to affect my judgment!"
I think that the British electorate are just as sophisticated.
"If you want to retain power you have got to listen to what people . . . say and what they want. If you talk to people in the factories and in the clubs, they all want to pay less tax. They are more interested in that than the Government giving money away in other directions."
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