Chapter 16 Section 2 Against the Chancellor of the Exchequer

As expected, Harold Wilson called a snap election in late March 1966.The result of the general election was also expected: the Conservative Party lost, and the Labor Party won with an overall advantage of 97 seats over the Conservative Party.Our campaign was flat, with a pallid manifesto titled "Actions, Not Words," which accurately summed up Ted's impact on politics.The election was seen by most as a continuation of Wilson's 1964 victory, so no one blamed Ted.I'm mainly concentrating on campaigning in the Finchley constituency.This time, I continued to maintain a relatively large advantage of 9,464 votes over the Labor Party candidate, and the Liberal Party came in third, so I am very happy.But overall it's been a frustrating time.Dennis understood my mood and went out and bought me a ring surrounded by diamonds to cheer me up.

My spirits have been lifted even more by Ted Heath's appointment of me as Treasury tax spokesman under Shadow Chancellor Ian MacLeod.There has been speculation in the press that I will be promoted to the Shadow Cabinet.I didn't have that luxury at the time.Now reading Jim Pryor's memoirs I know that Ted did consider me, too, but he rather presciently decided not to, because if they called me in, "they'd never try to throw me out." go out". In any case, I would be more useful as a spokesman for finances outside the shadow cabinet than any role in the shadow cabinet.As a tax lawyer, my new role is one that I feel familiar with.Although I have no formal training in economic theory, I am naturally comfortable with the conceptual aspects of economics.As I discovered when I was a junior minister in the Ministry of Pensions, I was fortunate to have the gift of grasping technical details and understanding fairly complex calculations with relative ease.Of course, these do not mean that I dare to slack off.As an opposition party, when debating the finance bill, it naturally does not get technical help from the civil service, but can only rely on the help of some experts outside the parliament and colleagues in parliament, so this is a job that requires a lot of effort.

Fortunately, things are well organized at home, allowing me to work within the extremely busy schedule of Parliament.Mark and Carol are both at boarding school and away from home.Although Dennis sold his family-owned company to Castrol in 1965, which was soon acquired by Bermacher Petroleum, he remained very active in business.We felt that life would be more convenient if we took a house in Westminster Gardens, not far from the House of Commons.We sold our house in Farnborough and bought a house called "The Mount" in Lamberhurst, near Tunbridge Wells.This is a house imitating the architectural style of Dufeng, with a large garden.Interior decorating is one of the few hobbies I have.I was spending most of my time painting the bedroom.On the wallpaper - there are 8 bedrooms in total.But I was still intimidated by the big living room and the stairs and had to call in a professional.One of the reasons we bought the house was to give the kids a place to go in the country when they came back from boarding school for the holidays.But kids their age seem to prefer spending time with their friends in London.So "Monte" wasn't as well utilized as I'd hoped.But my decorations and improvements were not in vain, and in 1972 we sold the house and used the proceeds to buy the house on Fulard Street (Chelsea). The house was my home until I moved into No 10 Downing Street in 1979.

I feel this new job is right for me and I'm starting at an exciting time.The discontinuity and irresponsibility of socialist economic management was already evident at that time.As the Labor government failed to achieve the optimistic forecasts for economic development in George Brown's "National Plan" published in September 1965, his "National Plan" became a heavy burden for the Labor Party.In the May 1966 Budget, the Labor government announced that it would impose a "choice to employ tax", in doing so the Labor Party broke its pre-election promise of "no substantial tax increases", and the burden of this payroll tax was actually particularly low. to the service industry.Opposing this new tax is an important task for me.A joint "declaration of intent" had been announced by the government and the trade unions as early as the eventful December 1964.The failure of the manifesto shows that the Labor government has lost its credibility in relying on what it claims to be a special relationship with trade unions to achieve "voluntary restraints on income growth" and to control inflation. In July 1966, the Labor Party government abandoned this method of "voluntarily limiting income growth" and announced a six-month wage freeze, followed by a six-month wage "strict limit".Prices will be frozen for a year and there is also a call to cap dividends over the same period.The National Price and Income Commission authorized by the Labor Party government has the right to require relevant units to notify the Commission one month in advance when raising prices or increasing wages.The committee also has the power to defer, by order of the Privy Council, plans to raise prices or wages for a maximum of three months.Governments can also use their powers to direct that a specific price or wage increase not be enforced.Opposing the policy in general and, under Ian McLeod, opposing the moratorium orders brought to the House of Commons are several other important tasks for me.

As Treasury speaker in preparation for my first major speech in the House of Commons, I read from the Commons library every Budget speech and Finance bill since the end of the war, so that I was able to present to Jim Callaghan, then Chancellor of the Exchequer, and Callaghan was left speechless as his chief chancellor, Jack Diamond, argued that it was the only postwar budget that failed to make any small concessions on social services.Then I slammed the "employment tax of choice".I had a hard time exposing the antics of the tax.Attempts to distinguish manufacturing from services and shift the tax burden to services.Then transferring the money as a subsidy to the manufacturing industry can prove to be an inefficient and highly dysfunctional procedure.As I said in Parliament: "Whatever this payroll tax is, it's a terribly bad system...I just wish Gilbert and Sullivan were alive today so we could write another play." This strike back won warm applause from my colleagues in the lower house of the party. The press also reported on me. The "Daily Telegraph" commented: This time a woman knocked down the government's ministers of state and then set foot on another Ian McLeod himself wrote quite a few words of praise for my performance in this debate in another newspaper.

In the autumn of that same year I gave my first real success as a speaker at the Blackpool Conservative Party's annual conference.Ian McLeod also wrote extensively for the newspaper.I worked a lot preparing for that speech - of course the nine hours I spent were nothing compared to the time I later spent writing the conference speech when I was leader of the Conservative Party.That fall, I spoke only in outlines, which allowed for more spontaneity and flexibility, allowing a joke or sarcasm to be thrown in at any time.Even though the debate I'm talking about is about taxes, the delegates applaud when I criticize the government's arbitrariness in revenue policy and tax policy that undermines the rule of law.And with great hyperbole, I must admit, "All this is fundamentally wrong for Britain. It's not just a step towards socialism, it's a step towards communism." Some Fuss-loving journalists beg to differ, but the recently renamed The Sun, still center-left, took a different view, commenting: "A powerful blonde warns of the road to ruin."

I rightly see a connection between the socialists' attitude to public spending and taxation and their attitude to public spending and revenue policy—two sides of the same collectivist programme.If they were fully implemented, they would jeopardize not only economic freedom but also political freedom.But at the time, neither I nor nearly all of my colleagues had seriously considered the full implications of these issues for our own policy.As much as we want to lower and simplify personal and business taxes, we've always tended to assume (and this isn't just for publicity, but what we actually think)—a fast-growing economy, the ratio of public spending to GDP Constantly lower, will allow us to reduce taxes.We had programs to reduce public spending on socialist projects to reduce waste.But because we think we can create a favorable environment for business so that we can create a "virtuous circle" in which high economic growth leads to lower tax rates but also massive tax increases; and lower tax rates further stimulate economic growth.So we're not taking austerity in public spending as seriously as we should.In fact, throughout this entire period, whether it was 1956, 1966, or 1976, the Conservative or Labor governments only really did it in critical situations like the sterling crisis, the gold shortage, or the intervention of the International Monetary Fund. Cut public spending.This practice was not finally changed until the run-up to the 1979 general election.The Conservatives in opposition put forward plans for austerity in public spending actually because we believed it had to be done.

It was at least as serious a problem in the 1960s that we, as the opposition party of a potential future government, failed to consider where we really stood on income policy.For example, when Ian Macleod and I strongly opposed Labour's statutory income policy, we knew what we were against, but we were not quite sure what we were for.This is understandable, as the Shadow Cabinet is deeply divided on the issue.Ted Heath was always practical and problem-solving, and prided himself on it, so he never took the lead on this issue as he should have.The only person in the shadow cabinet opposed in principle to any kind of income policy - whether voluntary or involuntary - was Enoch.Powell.And when I entered the Shadow Cabinet in 1967, he had not yet been able to convince his colleagues.

But Enoch was right.He made two leaps of reason on economic policy.It took Keith Joseph and I many years to make that intellectual leap.First, he had realized that it was not unions that raised wages that caused inflation, but that the government caused inflation by increasing the money supply in the economy.Thus, income policy is largely irrelevant to policy against inflation.The other effects of incomes policy—demotivating people, misleading people, causing strikes, pitting the state against trade unions—are quite another matter.It is actually the government that has caused the problem itself and blames others.The only aspect that Enoch failed to grasp then and later was the importance of the indirect relationship between union power and inflation.This is mainly because the excessive power of the trade union will make the real wage level much higher than the market level, and this kind of excessive wage will cause the union members to lose their jobs, leading to an increase in the number of unemployed members and non-members.Since the government is extremely sensitive to long relief lines, it responds by lowering interest rates and increasing the money supply.This expands demand and employment for a while, but it also increases inflation.All of these changes will prompt unions to drive up wages again.All will be repeated again from a higher level of inflation.The only way to solve this problem is to reduce the power of trade unions by implementing monetary tightening policies.The former is to stop inflation and the latter is to keep unions from creating unemployment, so we're going to have to sort out union laws at some point.Beyond that, Enoch's insight into the causes of inflation is extremely important.

Second, he has recognized that consensus economic policy creates another very pernicious idea, which concerns the so-called "constraint" of the current account of the balance of payments.In order to increase exports and reduce imports, it was considered necessary to implement a totalist interventionist industrial policy.But the real "constraint" is brought about by the linked exchange rate system.People accepted it and didn't challenge it.If the pound was allowed to float freely, as Enoch proposed, the so-called "constraints" on the balance of payments would disappear.The pressure to engage in other interventionist practices is likewise absent.As he stated in a pamphlet for the Institute of Economic Affairs in 1967, "Controlling the international price of money, like any other practice of controlling market prices, will lead to other controls that are free to everyone. , travel, investment mockery."

Of course, if the linked exchange rate system is abandoned, the supporting role of the US dollar (gold) will also be lost.It is also true that a country that routinely runs trade deficits is likely to be one with a weak economy that requires fundamental structural adjustment.This won't always be the case, however: running a current account deficit can also be evidence of a large influx of private capital into an economy.Due to reforms, the return on investment in the country was quotient, and thus a large influx of private capital, resulting in a current account deficit. Of course, no shortcomings or flaws can reduce the enormous importance of Enoch Powell's contribution.By showing that government monetary policy, not wages, caused inflation and that a freely floating exchange rate would break the so-called current-account "constraint" of the balance of payments, Enoch made it possible for the Conservative Party to make a major revision of its economic policy.He freed us from the old thinking that would make Britain's economy and society more and more planned. In October 1967 Ted appointed me Front Bench Fuel and Power Speaker and member of the Shadow Cabinet. Perhaps because of my good performance in the House of Commons, perhaps because of Ian McLeod's recommendation, Ted changed his mind. The original intention of letting me into the cabinet.My first task was to read all the sources on the investigation into what caused last year's Aberfan disaster.A total of 116 children and 28 adults were killed in the disaster, which was caused when a dump of ore slid into a small Welsh mining village.I feel sorry for the parents of many of the deceased who attended this debate in the public gallery.The National Coal Board has been heavily criticized.I thought someone should take the blame and resign, but I didn't quite make it clear that I was speaking to Parliament for the first time as a Shadow Speaker.The problems revealed by this report made me realize how easily, in any large organization, it is assumed that someone else has taken the necessary action and assumed responsibility, as later tragically demonstrated, an industrial A problem that civilization needs to solve urgently. Outside of parliamentary activity, my main interest is trying to find mechanisms to privatize electricity generation.For this purpose I visited several power plants and sought as much advice as I could from my business friends, but in vain.By October 1968, when I was transferred as spokesman for transportation, I hadn't found a solution that I thought would work.The Ministry of Transport Affairs is not a terribly interesting department, as Parliament has just passed a major transport bill that restructures the railways, nationalizes bus companies and creates a new National Transport and Goods Agency.This effectively amounts to implementing most of the government's proposed transportation policy at once.During my tenure as spokesman for transport, I was strongly opposed to the nationalization of ports.But, all in all, transport affairs are not a promising sector.