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AMENDMENT OF THE LAW

I think it began the day the Chancellor started announcing proposals to investigate overseas earnings and bring them into the United Kingdom tax regime, on top of charging £30,000 per member of a household. I am pretty sure that concerns will be lowered if he has indeed performed a complete U-turn. The one thing that we do know about the Chancellor’s proposals is that he has committed the next Parliament not to change them. But, as the hon. Member for Great Grimsby (Mr. Mitchell) will know, one cannot commit a future Parliament to anything. One can commit one’s party for a future Parliament, but one cannot rely on its being in government. I certainly hope that we cannot rely on the Chancellor’s party remaining in Government. I think he should at least have made clear that he was speaking only for his own party. I am sure that my party will do all in its power to alleviate the problems that he has created, but the next Parliament cannot be bound by anything that he has announced today. The central issue underlying the Budget was how prepared we are in this country for a potential slowdown in the British and world economies. It is not the job of Members of Parliament to forecast the future. When it was my job and I was a forecaster, I enunciated Lilley’s rule, which was ““Never make a forecast except about the very distant future or the immediate past””. That is the safe thing to do, because one cannot be found out, but one can claim to have forecast what has just happened. I do, however, remember the distant past. One of the advantages of having reached my stage in life but having, before arriving in the House, had a career in the real world is that I observed what happened in the 1960s and 1970s, and I have a sense of déjà vu. Then as now, America was fighting an unpopular war. Then as now, it was financing its unpopular war without raising taxes. Then as now, that produced a huge deficit in the American Budget. Then as now, that Budget deficit produced a corresponding deficit in the balance of payments and a big outflow of dollars across the world, which was absorbed in the foreign exchange reserves—then those of Germany and Japan, now those of China and other countries. For quite a long while, the best part of a decade, that outflow of dollars across the world produced an unparalleled period of prosperity and strong growth combined with low inflation. We seemed to have the best of all possible worlds, much as we have had for the last decade or more in the western world. But, then as now, the outflow of dollars began to drive up commodity and oil prices. We are in roughly that position at the moment. We know what happened next then: for a while the rising commodity prices seemed to be absorbed by, for instance, the squeezing of margins of companies and a burst of productivity increases, but after a while that could not be maintained. Rising commodity prices showed up in rising prices of goods and services, and inflation began to accelerate. When Governments tried to slow that inflation by putting on the brakes, they were landed with stagnation with no reduction in inflation. Stagflation was the phenomenon of the future. The only question that we need ask is ““Why should it be different this time?”” Why should history not repeat itself now? Our history does not always repeat itself.