In still another attempt to hold down government budget deficits that have helped make a shambles of monetarist economic strategy here, Prime Minister Margaret Thatcher's government today announced more tax increases affecting the vast majority of Britons.
The increases in social security taxes, National Health Service prescription and dental-care charges, local government taxes and public-housing rents are being made to offset substantially greater government spending forced by continuing recession and pressures from Thatcher's critics within her Conservative Party and Cabinet.
This additional money for training programs for the still growing number of unemployed, along with government aid to ailing nationalized industries, were cited today by Thatcher's economic ministers as examples of her government's new "flexibility" and "a measure of our reaction to circumstances today."
The new government spending is partly offset by additional tax increases. It falls far short of the amounts that Thatcher's Conservative critics and opposition political parties have demanded for public works and job-creation programs to help pull Britain out of its deepest recession in half a century.
Presenting the budget changes to Parliament, Chancellor of the Exchequer Sir Geoffrey Howe was greeted with derisive laughter when he said the economy would experience a "gradual recovery" next year despite the new tax increases. Opposition Labor Party economic spokesman Peter Shore contended that the budget changes would instead increase "the sheer wanton damage" inflicted by Thatcher's economic policies.
Howe was echoing Thatcher's recent statements that the recession was ending. But she was contradicted today by one of her most outspoken Conservative critics, former prime minister Edward Heath, who told reporters, "I do not believe the end of the recession is in sight."
Thatcher also suffered the embarrassment of having one of her principal supporters among British economists declare he now believes some of his monetarist theory has been proven wrong. Alan Budd, director of the London Business School's Center for Economic Forecasting, told a seminar of economists here he came to this conclusion because the British economy had not responded to Thatcher's policies as he had expected.
The new Social Democratic Party, which has so far been the primary political beneficiary of unpopularity of the Thatcher government, today gained another parliamentary defector from the Labor Party. The announcement by Ronald Brown, who represents an east London constituency, gives the Social Democrats 25 members of the 635-seat House of Commons, including 23 defectors from Labor, one from the Conservatives, and one elected as a Social Democrat. The new party, in alliance with the centrist Liberals, currently has the support of more than 40 percent of the British voters, according to opinion polls and recent by-elections to fill vacant parliamentary seats.
The centerpiece of the government's new commitment to alleviating the impact of record high unemployment is a program Thatcher first announced earlier this year to provide some form of job training for all unemployed teen-agers from the time they leave school at 16 until they turn 18. Details are to be revealed later.
But as part of the government savings necessary to pay for this program, Howe said today, government benefits for unemployed adults will rise by 2 percentage points less next year than the current 12 percent inflation rate, a move also criticized by opposition politicians today.
Thatcher's employment secretary, Norman Tebbit, also announced recently that the government next year will seek to curb British trade unions' considerable legal protections by making them liable to damages for illegal strikes and restricting their ability to set up and enforce closed shop arrangements. Opinions polls have shown these proposals to be more popular with voters, including Social Democrats, than most other Thatcher government policies.