5.48 p.m.
Mrs. Margaret Thatcher (Finchley)
It is the privilege of the Leader of the Opposition to congratulate Denis Healeythe Chancellor of the day on the manner and conduct of his delivery. It is a great strain for anyone to speak for two and a quarter hours. That is the time during which the Chancellor has been at us on his Budget. I note that while the Chancellor has been doing that, he has contributed to the revenue of the country. Indeed it is the strongest brew which I have seen a Chancellor take, and in view of the contents of the Budget, perhaps that is not surprising. He must be the last person to have taken a last sip at the old price.
I have read the speeches of some of those who have held this position. I noticed that the earliest time at which a previous Leader of the Opposition rose after a Budget speech was at four minutes past five o'clock. But those were in the good old Tory days when we actually reduced taxation in Budgets. In all my experience, I have never listened to a Budget which put so much additional tax on the British people at one go. It is a typical Socialist Budget: equal shares of misery for all.
We are in some difficulty knowing how to adjudge what the Chancellor of the Exchequer says. In his speech last year he made a very vigorous comment about the borrowing requirement. He said that he intended to be really tough and that he would reduce it to some £2,700 million. In fact, he intended just about to halve it. However, when he says that he intends to halve it, in practice he just about doubles it. After all the steps that he has taken this year, we now have a public sector borrowing requirement of some £9 billion. In other words, if we adjudge him by doubling everything that he says he will halve, it becomes extremely difficult to know what effect he will have. He seems to talk tough, but he delays some of his tough measures until next year, although he has put a fair share of tough measures on to this year. [column 324]
It is clear to us all that the right hon. Gentleman has three main problems: public expenditure, inflation and borrowing. But the key to them is the first two. I take public expenditure first.
The right hon. Gentleman inherited from us some public expenditure reductions. He frittered those away deliberately by putting up public expenditure by 10 per cent. in real terms over this last year. That is the reason why he is in such difficulty now. His problems lie not in his predecessor's action but in his own. If he had not put up public expenditure as much, Britain would not have such a high rate of expenditure now and he would not have to take such severe steps to deal with it.
Most of the increases came in subsidies. I think that it is time that the Government said to the British people, “We shall give you a choice. We shall stop saying that you must pay additional tax because we have decided on additional public expenditure” . That is what this Government are saying. Because they have put up public expenditure and because they cannot borrow any more money from capitalist countries without strings attached to it, they must put up the level of taxation.
There are many people who would prefer a lower level of taxation and a lower level of public expenditure. However, they have no choice in the matter. The Chancellor of the Exchequer is saying, in different words, what George Bernard Shaw once said, “Under Socialism, you will not get what you like, so you will have to like what you get” . There will be no choice at all.
As for inflation, our record is much worse than that of other countries because they took steps to deal with it before. We did not. The Chancellor of the Exchequer has taken virtually no steps to deal with inflation and still has no strategy to deal with it. He is relying on a social contract which in almost every other sentence in his speech he pointed out was neither contractual nor social. It has borne very heavily on those who do not get the large increases in wages and salaries but who nevertheless will have to pay the increased prices and bear the increased burden.
When we come to borrowing, the Chancellor of the Exchequer has nearly run out of the good will of his overseas [column 325]lenders. The essence of his speech was, “They have seen me through up till now, but in future they will put strings on any substantial additional borrowings we make.”
I come to some of the right hon. Gentleman's taxation measures. In the company sector, we agree about the need to get more investment. However, we are not likely to get more investment by small measures. It will come only by a change of attitude towards profitability and investment itself. We should have a programme of investing in success and saying to people, “If you invest, you will not only retain the value of your money but might get some interest from it.” People would then invest. If we have a prices programme which stops companies from recouping all their costs and from getting a decent level of profitability, and if we have a dividend limitation programme well below the level of inflation, we shall not persuade people or institutions to invest if by doing so they take a certain way of losing money. There is money available to invest for a Government who believe in investment and who believe that the people who invest should have some reasonable return on their investment.
As for the right hon. Gentleman's stock appreciation measures, all that he has done is again to defer the tax to next year. He has not eliminated the tax burden on stock appreciations.
With regard to VAT, I believe that we had the best method in the world, having the single rate with the zero rate. There is no doubt that what the right hon. Gentleman proposes will represent a considerable additional burden on the shopkeeper and an additional administrative burden on Customs and Excise and will add to the costs of bureaucracy.
As for some of the right hon. Gentleman's other measures, one of the most severe is putting up income tax. Anyone shearing sheep stops when he comes to the skin. This is a lesson that the right hon. Gentleman has not yet learned. He is fleecing people practically down to the skin. I believe that people have virtually come to the end in terms of the additional taxation that they are prepared to yield to the Government. Although the right hon. Gentleman intends to keep down the rate support grant settlement, the rates may go up unless he has a better mechan[column 326]ism of control on local government expenditure. He spoke of controlling programmes by their cost levels rather than by the policy level of programmes, and most of us would be glad to see that.
The tax reliefs announced by the Chancellor of the Exchequer do not take account of inflation to anything like the full extent. He has given reliefs of £50 on the single allowance and of £90 on the married allowance. In our view it should have been £117 on the single allowance and £163 on the married allowance to take inflation fully into account.
Naturally, my right hon. and learned Friend the Member for Surrey, East (Sir G . Howe) will be opening the Budget debate tomorrow on behalf of the Opposition. I hope that he will be a good deal more cheerful than the Chancellor of the Exchequer has been today. Someone has to have a little hope for the future—[Interruption.] James CallaghanThe Foreign and Commonwealth Secretary is muttering away. I remember him making a Budget speech in which he summed up his Budget as, “Steady as she goes.” The present Chancellor of the Exchequer seemed to be saying that this one was, “Steady as she sinks.”