Speeches, etc.

Margaret Thatcher

HC I [Budget Resolutions and Economic Situation]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [638/1232-38]
Editorial comments: MT intervened at c1236, between 1831 and 1850 (J.Idwal Jones speaking).
Importance ranking: Minor
Word count: 1974
[column 1232]

Mr. J. Idwal Jones (Wrexham)

I listened with interest to the speech of the hon. Lady the Member for Finchley (Mrs. Thatcher), which was very well informed, but I hope that she will pardon me if I do not follow her arguments. I want to describe to the Committee the impressions left on me when I listened to the Chancellor on Monday. There were moments in his speech when we all thought that we were being led up to a new and imaginative departure in Government policy: we thought that we could glean a definite and welcome change in policy. But, like the grand old Duke of York, he marched us half way up the hill and then suddenly marched us down again.

I should qualify that remark by saying that the opposite process applied to [column 1233]those on the Government benches. He led them halfway down the hill at first, and how very glum were their faces then! But then he suddenly marched them back again to the top, much to their glee. His performance was a masterpiece of strategy. The glum faces of hon. Members opposite were suddenly transfigured by gleams of profound satisfaction. The whole speech added up to being the greatest class Budget of modern times. In fairness to the Chancellor, it must be said that his was a very brave and courageous speech. Who but a brave Chancellor would have dared to hand over £83 million to the highest earners only a few weeks after the Government had raised Health Service charges by £65 million? It was bravery, nevertheless, debased to brazenness, and courage reduced to outrage.

The crux of the problem is our balance of payments. This the Chancellor glossed over beautifully, as is admitted by hon. Members on both sides of the Committee, although 1960 was our worse balance of payments year for the last decade. The Chancellor skated skilfully over the subject, like a master performer, but he offered no solution of the problem. So the problem remains, and it will remain until the question is faced from the point of view of production. The facts of the situation are admitted by all. To meet our obligations we require a surplus of £450 million a year, earned through goods and services. The year 1959 was a good one. We are told that our surplus was then £51 million, which is only one-ninth of our recognised requirements if we are to have a safe basis to our economy.

In 1960, we had a deficit of £344 million. In other words—this is a striking fact—we were £800 million short of our requirements. What followed? We were saved by borrowing. We borrowed heavily through Bank Rate manipulations. Hot money, easily attracted, came into the country, but that hot money can easily be attracted elsewhere. Those facts are known to all.

The stark truth which has to be faced is that this nation has become utterly dependent on the short-term borrowing of hundreds of millions of pounds a year. Do not let us delude ourselves; the big concessions made to a mixed crowd of [column 1234]about 300,000 Surtax payers is no answer to the problem of production and productivity. Unless the answer is found we shall be faced, with the same problem a year hence, perhaps in a more acute form.

Many years ago I came to the conclusion that the Government are working to preconceived but false ideas. I refer in the first instance to the doctrinaire attitude about wages displayed by hon. Members opposite. On Monday, the Chancellor stated that

“The rise in personal consumption must be restrained” —[Official Report, 17th April, 1961; Vol.638, c. 801.]

What he meant, in practice—and what other hon. Members opposite mean when they say this—is that the personal consumption of the wage-earning class must be restrained. We are familiar with that argument. The President of the Board of Trade expressed it on 7th February, 1961, when he said:

“if we allow demand to expand, the home market gets too strong, incomes rise faster than output, prices rise, imports rise, and exports fall” .

The hon. Member for Dorset, South (Viscount Hinchingbrooke) expounded the same argument. He said:

“The trade unions are now the greatest engines of inflation that exist in our society … The trade unions alone are rogue elephants in our society. They are absolutely uncontrolled … they create money out of nothing.” —[Official Report, 7th February, 1961; Vol. 634. c. 286–340.]

The hon. Member instanced the case of the National Union of Agricultural Workers, forgetful of the fact that the maximum wage of its members is only £8 9s. a week. It is time that we got this picture clear and in its true perspective. It is no use adding together the various wages and incomes of different groups and then finding the average. That average obviously cannot be the correct figure for the lowest or the highest paid members of our community. Yet, when the lower income groups seek increases it is the average which is presented to us as a reason for resisting their claims.

People who receive £8 9s. a week, such as agricultural workers, or bus workers, and railway workers, who are getting £10 a week, are all told, when they ask for 10s. a week extra, that they are threatening our economy. We are reminded of the danger of inflation, and that our balance of payments would be in jeopardy if these claims were met. [column 1235]

I am heartily tired of that argument. There are other inflationary pressures at work in this country and there are other sources of revenue, about which the Chancellor had very little to say on Monday afternoon. He never admitted to the inflationary tendency of the handout to Surtax payers—to the people who spend not upon necessities or near-necessities, but upon luxury goods which could very well be exported, to the good of this country.

I will give examples of investments of which I read recently. An investor who invested £120 in 1952 in Jaguar cars is now worth £3,300, or twenty-seven times as much in nine years, without having put a single additional penny into his original investment. An investor who invested £250 in the British Assets Trust in 1952 is now worth £1,500, or six times as much, without investing a single additional penny in his investment. An investor who invested £400 in Glaxo in 1952 is now worth £4,000, or ten times the original value. There is not much evidence of sweat and blood in that type of gain. These people do not spend their gains on necessities, or near-necessities, but on luxury goods which could very well have gone to the export trade.

We hear the oft-repeated argument that an increase in wages will bring pressure to bear in the home market and our economic position will be brought into jeopardy. At the same time, there is the sickening spectacle of our Clores and our Cottons, hovering like hawks ready to swoop down on their prey. It is a frightening thought that two or three financiers can juggle with scores of millions of pounds, seeking to reap their millions of tax free gains, when the country is unable to balance its trade accounts.

Mrs. Thatcher

What makes the hon. Gentleman think that the gentlemen whom he has mentioned were not, in fact, taxed on their gains as dealers?

Mr. Jones

That is the general impression. Although our economy is sick, it does occasionally rally to make a small balance, but as soon as it rallies a little it is subjected to a lethargic inoculation. We know what that is. It is high interest rates which [column 1236]stupefy, but, by some strange alchemy, that which stupefies the economy is tonic to the financiers of the world. It is true that the economy is sick, but it is a sickness inherent in our economy—the sickness of an acquisitive society.

I now come to the payroll tax. This is a new departure which has obviously not been carefully considered nor enthusiastically received by hon. Members. The hon. Member for Eastleigh (Mr. D. Price), in his speech yesterday, could give it only qualified support. He said:

“I think that we will need to know a little about it in detail.” —[Official Report, 18th April, 1961; Vol. 638, c. 1105.]

When the President of the Board of Trade spoke on this question all that he could say was that he thought that it was a good idea. It seemed to him to be a good idea. He said:

“This is the argument for a payroll tax and it seems to me to be a good one.”

The right hon. Gentleman thinks that it will be a good idea. It seems to him to be a good idea. He is not absolutely certain, and the Committee and the country have a right to expect Ministers to be absolutely convinced themselves that their policy is right before they embark upon a new departure in policy.

The objects of the payroll tax are several. There is the question of revenue. The Chancellor may, if he desires, raise additional revenue to the extent of £200 million. Is there anyone in the Committee who does not believe that this 4s. payroll tax will not be passed on to the consumer? Is not that the line of least resistance for the industrialists? Are we so naïve as not to believe that this is exactly what will happen?

Then there is the other avowed purpose of the proposal—to provide an incentive to the industrialist to capitalise his industry and make it less labour intensive and more capital intensive. It was in this connection that I heard the President of the Board of Trade using an expression which I had not heard for many years. It was:

“…   . our scarcest commodity is labour, …” —[Official Report, 18th April, 1961; Vol. 638, c. 1008.]

Labour is a commodity—to be bought and sold, moved about and dispensed with. Marx would have rejoiced to see [column 1237]the Tory President of the Board of Trade sitting in the gallery of prophets. If labour is our scarcest commodity, why quibble when it asks for a better price? But labour is not a commodity. I am on these benches because I have always believed that labour is not a commodity. It is a human being with family attachments and with social and community roots.

Direction of industry? No. There is not an hon. Member opposite who believes in the direction of industry. Industry must not be directed. Industry may be persuaded, but it must not be directed in this land of freedom. That is why the Distribution of Industry Act, one of the finest pieces of legislation that this country has ever had in the economic field, has been nullified by the Government. They do not believe in the direction of industry.

But labour—here is a treasured commodity to be moved about. The Government's policy is to give incentives to the industrialists to dispense with labour, so that through the play of economic forces it can be directed to where it is most wanted and where it will provide the greatest gain to the industrialist. What does it matter if families are pulled up by their roots and communities in certain of our semi-industrial areas, in the Principality of Wales, to take an example, are weakened beyond repair?

Comparisons with other Western nations are inevitable, and when we are making comparisons with other nations we do not come out favourably. It was the Chancellor who, on 6th February, said:

“Germany's exports, have more than doubled; the United Kingdom's have gone up by about a quarter …   .” —[Official Report, 6th February. 1961&semi: Vol. 634. c. 57.]

Fifteen years ago country lay in ashes. Her factories were razed to the ground, her people had to be fed according to the calculated amount of calories available. And yet our country, with no industrial centre further removed from the seaboard than 50 miles, has been allowed to fall seriously behind a country which, fifteen years ago, was reeling before the devastating blow of the most crushing defeat in history. What an indictment of ten years of Tory rule. And yet we are asked to believe [column 1238]the Surtax concessions will help to solve the problem.

In February, the President of the Board of Trade said that the Government had freed the economy at home. That is exactly what the Government have not done. The country is in the clutches of foreign financiers and we have virtually lost sovereign control over our economy. Were it not so, there would be no dilemma today between our finances and our production. What the Chancellor said on Monday offered little hope of restoring the sovereignty of our economy.