selwyn lloyd’s hour of glory must have seemed sadly brief. The Monday evening was his alright, with press and TV too bemused by detail to venture criticism at such short notice. Messrs. Carron and Woodcock tried weakly—they had clearly not done their homework. By next morning the professionals had. Not only were the popular papers heavily against him. The Financial Times had serious reservations on all points except the surtax relief and, over the next few days, these reservations hardened.

The Chancellor is left with two dusty consolations: The casual gratitude of the rich—casual because swamped by hungry anticipation of January 1963—and the general relief that Bank Rate is discredited as the fundamental instrument of economic policy. There can be little in this to please a member of the party which abandoned its fanatical orthodoxy only after years of wanton obstinacy.

His two new “economic regulators” are unhappy hybrids and predictably sterile. A flexible system of purchase tax could have advantages as a substitute for existing methods of restricting demand, but there is no indication that the present squeeze, still virtually in full force is to be relaxed. The 10 per cent addition to PT seems to have been introduced as an extra weapon rather than a substitute, for the time being at least.

A payroll tax had several advocates prior to the Budget. All of them meant it to be intimately connected with payrolls. The idea was not just a levy based on the number of people employed by a firm, but a tax which would actively influence that number. The notion was prompted by the serious and increasing shortage of manpower and anxiety to prevent its wastage. This would have been a long-term instrument discriminating between unnecessarily large and unavoidably large labour forces. Commonsense as well as social justice would have demanded a rehabilitation scheme for displaced workers, to satisfy the unions and avoid industrial unrest. Existing location of industries legislation could have been co-ordinated with this.

Carefully avoiding the complications of this entire issue, Whitehall gratefully accepted the suggestion of a new tax and persuaded itself that a non-discriminating levy could be used to lower the economic temperature if needed. The problem of labour hoarding has been left severely alone, and we now have a deflationary weapon of such flexibility that a mere three months will suffice to set it in motion.

For a man so occupied with the threat of inflation, Selwyn Lloyd produced an odd budget altogether. Apart from aiming at a large surplus— achieving it may be another matter—almost all of his measures are just those likely to encourage an upward spiral. Forty-five million pounds has been added to our fuel bill, much of it falling on industry which must also find around £13m. for increased vehicle licences. The rise in profits tax will cost £70m. in a full year. Little of this is calculated to tug at socialist heartstrings, least of all the £8m. tax on TV jingles, but will it be passed on to the consumer in price increases, along with the burden of the payroll tax if imposed? (The relief on surtax should push up the price of mews cottages, if nothing else).

Admittedly, nothing like the full effect of all this will be felt this year. But already the Conservatives’ much prized economic stability is faced with heavy potential pressure. For over a year, manufacturing costs have been rising sharply, and so far this has not been translated into price increases to anything like the full extent. How long is this restraint on the part of businessmen likely to continue? In recent months a whole string of companies has complained that it is difficult to maintain profits even with greater turnover. Should anything like a real economic recovery occur, the growth in demand could result in a whole round of price increases. The manufacturers, after all, can be expected to make hay as soon as the sun shines strongly again. Only the need to fight for their share of a market depressed by the credit squeeze has held them back this long.