text:
§ 10A. Subject to paragraph 14A below, section 21 of the Development Land Tax Act 1976 (chargeable disposal where company ceases to be a member of a group) shall not apply where a company ceases to be a member of a group by reason only of an exempt distribution.'.
§ Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 144.
Mr. ReesThese amendments were tabled in response to a point that was ably made in Committee by my hon. Friend the Member for Gosport (Mr. Viggers). He pointed out that though we had built in a series of reliefs from income tax, capital gains tax and stamp duty to facilitate demergers, we had done nothing about development land tax. On reflection, we felt that that was an omission. In order to remedy it, we have tabled these two amendments.
§ Amendment agreed to.
Amendments made: No. 104, in page 149, line 46, after '1973', insert:
'or Article 8(5) of the Finance (Miscellaneous Provisions) (Northern Ireland) Order 1973'.
§ No. 144, in page 151, line 25, at end insert:
§ 'Re-instatement of development land tax charge
§ 14A. Paragraph 10A above does not apply if within five years after the making of the exempt distribution there is a chargeable payment: and the time for making an assessment 1847 under section 21 of the Development Land Tax Act 1976 by virtue of this paragraph shall not expire before the end of three years after the making of the chargeable payment.'—[Mr. Peter Rees.]
§ Motion made, and Question proposed, That the Bill be now read the Third time.
7.16 pm§ Mr. Denzil DaviesBefore we reach a conclusion one way or the other on the Bill it is necessary to sum up and draw together some of the threads.
Invariably debates on Finance Bills tend to become repetitive. We cannot easily avoid that, although I am sure that the Treasury Ministers would like to avoid it if they could. These debates tend to overlap. No doubt my speech will overlap what I have said in the past, and the Chief Secretary's speech, if he winds up the debate, will no doubt overlap some of the noble sentiments that he has uttered in the House in the past.
Before looking at the details of the Bill, it is only right to say that the economic background against which we are debating the Third Reading is worse than it was at the time of the Budget. At that time we had a Treasury forecast that the fall in output in the coming year would be about 2 per cent. to 2½ per cent. I should think that even the Treasury would now be prepared to admit—at least privately—that the fall in output is likely to be greater and may be about 4 per cent. in the coming year.
Bankruptcies and liquidations are now at a record high level. Manufacturing industry in many parts of the country is fast disappearing. Unemployment is climbing to 2 million and over. Neither this Government nor the Labour Government made a forecast of unemployment. I understand the difficulties of forecasting levels of unemployment, but the Government Actuary, for the purposes of the national insurance fund, assumed that unemployment would be about 1.8 million. The Government have more or less admitted—certainly the Chancellor seems to have admitted in the Select Committee on Treasury matters upstairs—that unemployment is likely to be higher than 1.8 million. It could be 2 million and will probably go higher than 2 million. Even more dis- 1848 turbing is that next year one in seven young people will be out of work. That is the greatest tragedy of all in the growing unemployment from which we suffer.
On Friday the retail price index will probably be about 21 per cent. I know that that will bring a certain amount of pleasure to Treasury Ministers. I cannot understand why, because they have more than doubled the RPI since coming into office. If the RPI falls to 16½ per cent. by the end of the year—I do not know whether it will or not—it will be because the depression is deeper than the Government envisage. The depression in the British economy has come on faster and much deeper than the Government realise. If the RPI falls to 16½ per cent., which is still almost twice the figure when the Government took office, it will do so at the price—too high a price—of destroying much of our manufacturing base and of creating a level of unemployment which will be far too high.
The Government cannot blame the world recession or the increase in the oil price for this state of affairs. The Government are and have been primarily responsible for the high rates of inflation and unemployment from which we are suffering and for the problems in our manufacturing industry.
The Opposition believe that the Government have tried to reduce inflation at the expense of the unemployed and of private industry. In the main it is the unemployed who are bearing the brunt and the burden of the fight against inflation. We believe that inflation and unemployment are twin evils, which must be defeated simultaneously. We do not believe that one should use unemployment, whether directly or indirectly, whether intended or not, to try to reduce the rate of inflation. Why should the unemployed, the poor, and the people on social security benefits, have to bear the brunt of the battle against inflation? Often they have not even caused that inflation.
Moreover, there is not equality of sacrifice between different areas of the country. If unemployment is a consequence of the Government's antiflation measures, certain parts of the country are making a bigger sacrifice to try to reduce inflation—if that is the purpose of the policy—than are other parts. That is why the Government should 1849 not proceed in August with reducing the development area status of so many areas that are bearing the brunt of the fight against inflation. If there is to be an unemployment consequence, it should be shared equally, not only between groups of people but between different parts of the country.
Last night we had a debate on the public sector borrowing requirement. The Opposition say that considerable damage has been done, but at least the Government still have an option open to them to try to repair some of that damage. It is no good Ministers saying that there is no alternative; of course there is. The first is to increase the Government's borrowing requirement at a time of recession. There is no reason why they should not increase their borrowing requirement. We have said consistently that there is no reason why the PSBR should not be increased to £10½ billion or £11 billion. That could be funded quite reasonably, in view of the amount of money that comes into the pension funds and various other institutions.
It is necessary to increase the PSBR partly because, as the Government know very well, unemployment levels will be higher than the Government thought when they produced the Budget and the Red Book. If unemployment will go higher than 1.8 million, money will have to be found somewhere to pay the extra unemployment benefit. It would be a disaster to try to find the increased amount of unemployment benefit by cutting public expenditure even further or by increasing indirect charges, such as national insurance payments. If the Government were prepared to increase the PSBR that would at least to some extent alleviate the problems of unemployment and would not make it worse, which is what would happen if public expenditure were cut.
It is not an attempt to resurrect Keynes to say that in a recession one should increase the PSBR. Plenty of good monetarist economists agree with that. I believe that the chief economic adviser to the Treasury agrees, and no doubt there are others in the Treasury who agree. Even Professor Friedman agrees. He has criticised the Government for making a fetish of the PSBR and for paying too much attention to the balancing figure between expenditure and receipts, which 1850 is all that it is. We say "Increase the PSBR." That can be done, especially if inflation is coming down, as the Chancellor says it is, and it can be financed at lower rates of interest.
The Bill deals with the taxation of North Sea oil. I do not want to go into the matter in detail, but the revenues from North Sea oil are crucial for the development of the economy over the next 5 to 10 years. There have been debates, and there will be debates again, about what to do with the North Sea oil revenues. Unfortunately, if the Government are to make a fetish of the PSBR and of reducing it over the next four or five years, that deprives them of the ability to use those revenues for the benefit of the British people.
It may be that in the past, because of our slow growth, we were not able to maintain the kind of public expenditure that we would wish to have. But now we are in a different ball game. We cannot look at the matter in terms of the past; we can now look forward to a considerable increase in revenues. The Opposition believe that those revenues should be used for public investment in industry, in capital projects—investment to rejuvenate our manufacturing base.
If the Government keep on reducing their borrowing requirement every year, oil funds that would otherwise go into public investment—capital investment that also helps private industry—will be used more and more to pay unemployment benefit if they are not used for an increased PSBR. Those of us who read the recent article in The Guardian, by Mr. John Kay of the Institute of Fiscal Studies, recall that that is a point that he made—that on present policies all that will happen will be a high level of unemployment, and much of the North Sea oil revenues will go merely to pay unemployment benefit and keep people on the dole. If the money is used to cut taxes, it will go into imports, and some of it will go abroad to create privately owned assets.
We shall return to the question of North Sea oil, but it is right to mention it in this debate because it is germane to the Government's attempt to reduce the PSBR, instead of using oil revenues for the benefit of the economy and of the public.
1851 As is self-evident, the Bill does nothing to help the unemployed and the underprivileged, and it does nothing for large sectors of manufacturing industry now suffering from the Government's policies. As far as I can see, the only people who will gain any benefit from the Bill are the owners of capital and high-income earners. When we go through the Bill we see in clause after clause a few million pounds here and a few million pounds there going to people with capital, people with property, and high-income earners. One has only to look at some of the income tax changes to see this.
In the Chancellor's efforts to increase the tax thresholds he was able, in effect, only to increase them by 11 per cent., which is below the rate of inflation. As a result of the abolition of the reduced rate band, as inflation progresses there is a tax increase in the Budget, because the right hon. and learned Gentleman has not been able to index the thresholds to the rate of inflation. Therefore, the ordinary taxpayer gets nothing from the Bill; when inflation is taken into account, we see that he gets nothing at all.
However, the higher-paid taxpayer gains considerable benefit from the Budget. For proof we have only to look at the clauses that extends the indexation provisions to the higher rate thresholds. As a result of the Bill, those earning more than £11,000 a year will have their higher rate thresholds automatically indexed and increased every year. That is a considerable benefit to a fairly small group of people who are receiving fairly high incomes.
The point was very well put in an article in The Sunday Times business section shortly after the Budget, under the heading
Hidden rise for the higher paid".It said:Highly-paid people, who had their tax burden eased last year by a reduction in the top rate to 60 per cent., are to get further hidden hand-out much better than those on lesser pay levels will receive.It stems from an almost unnoticed measure in the April Budget"—in fact, we did notice it, and we debated it in Committee and on the Floor of the House, and voted on it—which … comes down firmly on the side of top-bracket people.1852If inflation continues around its present levels to the end of the present calendar year, the married man on a £30,000 salary, if he gets nothing else, will for the tax year 1981–82 receive the equivalent of a 13 per cent, pretax pay increase.This compares with only about 4½ per cent. for the man with the £5,000 a year pay slipThe article goes on to make the point that the man earning £5,000 a year gets very little. The main earning £10,000 a year gets very little from the Bill, but the man earning £30,000 a year benefits considerably.One reason why we object to that, apart from its inequity, is that the tax benefits are not going to those who could improve supply in British industry. We heard a great deal from the Conservatives in Opposition about the need to improve what was described as the supply side of industry. I take that as manufacturing industry in the main. The people in manufacturing who can improve the supply side—the middle manager, the foreman on the shop floor, the people who work with their hands or who work on the shop floor in a small or medium manufacturing unit—do not earn £30,000 a year. They earn nothing like that. They are not getting any benefit from the Finance Bill. Those who benefit are those in the financial sector, those in the banking sector and those in the higher echelons of the Civil Service, where earnings are higher. They do not work in the main productive industries of our country, yet they will benefit the most.
The Bill benefits not only those who earn high incomes but those who own capital. If one looks at the Red Book, one sees that the loss of revenue from capital transfer tax relief over a full year amounts to £130 million. The loss of revenue from the capital gains tax provisions amounts to £70 million. Therefore, £200 million is being given away to those who own capital and to those who do not need such largesse from the Government. If all the reliefs given to the better-off and to those with capital were added together they would amount—at a conservative estimate—to £500 million. That amount is being provided to those who are capable of looking after themselves and to those who do not suffer from inflation. Such people are not likely to be unemployed or on social security. They are the only ones to benefit from the Bill.
1853 Those facts point to the difference in philosophy between the Conservative Party and the Labour Party. If £500 million is available—and apparently it is—it should be used for other purposes. Even in recent debates we have heard about the problems of the National Health Service and about the problems of providing kidney machines. We have heard about the disabled who suffer from inflation and whose benefits have not increased at the same rate. We have also heard about the problems of the unemployed. In other legislation, the Government are engineering a cut in unemployment benefit. We have heard that child benefits will not be indexed to the cost of living. However, £500 million will be provided to those who are able to look after themselves and who do not need such benefits. That is the difference in the philosophies of the two parties.
If £500 million is available, it should be spent in order to benefit the least well-off in our society. We saw and heard a manifestation of this attitude during last night's debate on immigrant children. During that debate we ascertained—as we did upstairs—that the cost of reinstating or maintaining the present system would be about £7 million. Last night we received an insensitive reply from Treasury Ministers, which was even worse than the replies that they gave upstairs. I do not say that £7 million is the only reason why the Government are not prepared to accept our amendment. We argued only that £7 million should be allowed for a group of deprived and mainly poor children. The Government did not offer any sensitivity, let alone any help or benefit.
We should compare the response that we received with the considerable sensitivity that Treasury Ministers show when Conservative Members, representing pressure groups, speak for the building industry and for various other groups in the City. The Government show considerable sensitivity and sympathy to Conservative Members, and sometimes their amendments are accepted, but when we argued on behalf of a group of immigrant children the Government showed no sensitivity and little sympathy.
I had thought that the Conservative Party was concerned about the public sector borrowing requirement. If I were to go through all the amendments that 1854 Conservative Members have tabled on behalf of various pressure groups, and if I were to add the costs in terms of the PSBR, they would probably amount to another £500 million. The Government did not accept their amendments, but Conservative Member after Conservative Member showed little concern for national finance, for balancing the budget, or for keeping it within reasonable limits. Every pressure group wants £50 million or £100 million. That would amount to a considerable sum. It demonstrates that the Conservative Party is concerned not about these issues but about advancing the interests of various propertied groups in the community. We have seen that time and again.
Those who have sat through Finance Bill after Finance Bill know that such things happen. Conservative Members will be back next year asking for a little more and tabling other amendments. They represent certain groups, and no doubt they go back to them and show how assiduous they have been about looking after their interests.
§ Mr. Nicholas BakerDoes the right hon. Gentleman accept a principle that the right hon. Member for Leeds, East (Mr. Healey) accepted? Does he accept that high-paid, high-taxpayers are to a large extent responsible for starting the businesses that provide jobs? Secondly, does he accept that such high-taxpayers left this country as a result of the pre-left this country as a result of the Labour Government's high taxation provisions?
§ Mr. DaviesI do not think that such people did leave the country. When the present Chancellor of the Exchequer was in opposition he bemoaned the fact that Tom Jones and Engelbert Humperdinck had left the country, but Tom Jones did not come back after the last Budget. The Tory Party seems to believe in the myth that there will be growth in the economy. The Government's first Budget cut taxes, but we have not seen any such growth. Indeed, the economy has spiralled downwards. I do not expect that we shall see any growth as a result of so-called entrepreneurs.
We oppose much of the Bill. We shall vote against it, because the Government have done nothing to tax the excess profits of the banks. They have not taken sufficient action in relation to the oil 1855 companies. We have already debated those subjects. If the Government wanted revenue in order to help those who suffer most from inflation and unemployment they could have got £200 million from the banks, and a few hundred million pounds from the oil companies. It should have been possible to provide £750 million—on a conservative estimate—for the disadvantaged, without increasing the famous PSBR.
This Bill may not be as dramatic as the last Bill, but it is further testimony to the Tory Party's ever-vigilant crusade in the interests of property and those who have it. The Bill shows little sympathy for those without property, privilege or influence. It does nothing for the unemployed, the under-privileged and the poor. It speaks volumes for the privileged, the wealthy and those who have influence. Apart from everything else, that is a good reason for voting against the Third Reading.
§ Mr. John BrowneIn general, I support the Bill. I shall not repeat the details of that support, because I set them out on Second Reading. The revival of an economy is somewhat similar to the sowing of seeds. The Government must give incentives, and we must act to ensure that they are taken up. It is people who create wealth. They create a sound economy. The Government will not and cannot do that.
Monetarism is a difficult option, but it is the correct seed. It is difficult to sow, and it requires great courage and determination to ensure that it comes to fruition. The Prime Minister and the Chancellor of the Exchequer and his team could not be better farmers. They have tremendous ability, determination and, above all, courage to sow the seed of monetarism. The climate is good in the Western world. Even at the grass roots our people accept that monetarism—the reality—must be accepted, although it is a painful doctrine.
Most people may not like monetarism because it is a hard and bitter pill, but they accept that sound housekeeping economics are a "must" and that the days of false money must be stopped. On the other hand, the weather is not so good. It is far easier to sow monetarist 1856 seeds into world and national growth. The sad thing is that we are facing a deep world recession, and that makes things very difficult.
The most worrying element of all is the soil—the economy into which we sow the seeds of monetarism. We have found that the soil is very hard—it has not been worked for ages, it has had years of stagflation and to some extent it is unreceptive to the incentives and disciplines of monetarism. It is here that the really difficult things must be done. The employment cartels' bad effects must be reduced so that market forces can penetrate employment and wage negotiations as a prerequisite for the success of monetarism.
At present, monetarism is greatly affecting employees in the private sector, which is wide open to the effects of the market. But that is not so in the public sector. We have a lot to do in this respect, and that fact must be taken on board by the Government. On one side we have trade unions, particularly those operating a closed shop and no secret ballot, and on the other we have public sector employers who can pay both wages and prices that are totally unrelated to the market place.
The second point relating to the tilling of this ground is the matter of indexation. In this Bill we are approving the indexation of tax thresholds and allowances. I believe that indexation cannot be a part of the Government's philosophy if they really mean business about breaking the inflationary spiral. That is so for two reasons. First, indexation builds in increased Government expenditure and, secondly—and much more insidiously—it reduces the will to beat inflation. Worse still, it actually creates the will to keep inflation going.
All of us who benefit in any way from indexation—and we are all taxpayers—lose, to some degree, the will to swallow the bitter pill of monetarism and, therefore, defeat inflation. I have in my constituency a number of retired Army officers and civil servants who benefit from index-linked pensions. There are some people who benefit from the indexation of salaries. If people are insulated by their index-linked salaries, tax thresholds and pensions, they actually benefit from inflation in that they have an advantage over anyone else living in 1857 the same village or town who is not index-linked. Any spare income they have they can invest in a capital account or property and receive benefit in terms of capital growth. That is the most insidious part of all, for it reduces the grass roots support that we need to beat inflation. That is particularly so if the Government intend to do it in a realistic way, because monetarism is the hard option—the bitter pill.
I urge the Government, most strongly, not to accept the continuation of indexation. They must give real thought to breaking down indexation. When I hear siren voices talking about the Government issuing an index-linked bond in the gilt-edged market, I realise that this is a matter of great urgency.
My third point is that I applaud the provisions in the Bill relating to small businesses, but I do not think that they go far enough. We all abhor the rise in unemployment. The difference between the Labour Party and the Conservative Party is that we accept that unemployment is a necessary agony through which we must go to get our economy straight. I believe that unemployment will get worse. I believe, too, that we are being optimistic when we talk about 2.3 million unemployed next year. It could be a lot worse. While we have unemployment in the major dying and dead industries, we are not getting sufficient growth in new and small businesses. Indeed, we are behind target. Therefore, the targets that we set ourselves and the incentives that we give to new and small businesses must be increased, because that is the only true way in which we can solve the unemployment problem.
The right hon. Member for Llanelli (Mr. Davies) mentioned the problem of youth unemployment, which is very serious. We must ensure that the placement of the unemployed is in real, profitable jobs, and that will come, by and large, only from the new and small business sector. If our country is to achieve the necessary technological revolution, and if we are to maintain a higher standard of living than other countries, we need to ensure that 80 per cent. or 90 per cent. of that new employment comes from the new and small businesses. We should urge the Government to do much more and give more liberal allow- 1858 ances to the new and small business sector.
I shall not delay the House any longer, but I hope that I have made my feelings known. I applaud the Bill because, generally, it shows a real analysis of the desperate and unpleasant problem facing this country. This is the first time in my adult life that a Government have had the courage to face the facts and take effective action. I wish my right hon. and hon. Friends all good fortune, and I hope that they will hold on and not be tempted in any way to back off.
§ Mr. Martin J. O'Neill (Clackmannan and East Stirlingshire)Before I came to this House I did not appreciate that people like the hon. Member for Winchester (Mr. Browne) really existed. I say that with the greatest respect. I have always felt that it was very dangerous to try to sustain a metaphor throughout a speech. At the beginning of the hon. Member's speech I felt that the business of sowing seeds and developing an agricultural metaphor was a bit difficult. I began to appreciate it as the manure was heaped on the land of England. Then, later, I saw quite clearly that this was not the development of an agricultural metaphor but simply a scorched earth economic policy—that we should burn and destroy and hope that after that there would be some growth.
This Budget affords no opportunities for growth. In the forecasts for the next 15 to 18 months we see none of the indicators that would suggest that by December 1981 we shall have regained the position that we were in in May 1979. The London Business School gives one of the more optimistic forecasts, with wages and salaries this year expected to rise by 16 per cent., and 13 per cent. in the year after. Prices are expected to rise this year by 17.7 per cent., and in 1981 by 14.1 per cent. Those figures to do not suggest a meaningful regeneration in our economy or a great improvement in our conditions compared with May 1979. If we judge the Budget by the improvement in living standards of those who have benefited from the £500 million tax handouts, we realise that it is a Budget for a selected few.
It is customary for other hon. Members to have a go at the South-East in these debates. I shall not deal with the 1859 rise in the number out of work. However, last month's unemployment figures show a record drop in the number of job vacancies in the South-East. Conditions are getting exceedingly bad. No longer will hon. Members from the fat, plush South-East constituencies be able to return there at the weekend and not worry about unemployment. By the end of the summer the youngsters leaving most of the schools in the South-East, though perhaps not the Winchester comprehensive, will be looking for jobs. By September or October hon. Gentlemen will be glad to return to the House from Monday to Friday to get away from people ringing them to complain that their children cannot find employment.
Since the Budget was announced, many firms in my constituency have gone out of business. Others are teetering on the brink. I was asked to visit a small firm which makes pallets for the transport industry and which employs 20 men. There is no padding. There is only one salesman, and everyone has a proper job. It is about the second biggest producer of pallets in Scotland. The owner told me that he would probably have to close down, as he was running out of orders. He had never had a bank loan or any trouble with overdrafts. Any money that he had saved had been eroded by inflation or thrown away in sustaining the business that he had nurtured over the years. He said to me "I am not political. I just vote Conservative." When he comes to me looking for a council house, he will doubtless tell me that he voted Labour. He did not unduly concern himself with politics, because his life had always been fairly comfortable. He was now questioning why he had elected a Tory Government if that was what they were doing to the country.
Last year's election was a regional victory for the Conservatives. North of Watford most of us knew what was likely to happen if this Government came to power. The Budget is proving to the remainder of the country that the Government are incapable of doing anything for the vast majority of people.
§ Mr. John Major (Huntingdonshire)Does the hon. Gentleman recall a most remarkable speech made by his right hon. Friend the Member for Leeds, East (Mr. Healey) at the Lord Mayor's banquet in 1860 1976? The right hon. Gentleman forcefully made the point that there was a time lag between economic cause and subsequent result of 18 months to two years. If the hon. Gentleman accept that, does he also accept that many of the problems faced today are the results of actions taken 18 months or more ago, before this Government came to power?
§ Mr. Arthur Lewis (Newham, North-West)On a point of order, Mr. Deputy Speaker. Can you please point out any reference in the Bill to the Lord Mayor's banquet of 1976? I understood that on Third Reading we should be discussing what is in the Bill, and not what one would like to see or what the Lord Mayor or the Chancellor said. We have had a long discussion. We should not start talking about what someone said three or four years ago. May I ask you to interpret the rules strictly? Some of us feel that we have spent long enough on this matter.
§ Mr. Deputy SpeakerThe hon. Member for Clackmannan and East Stirling-shire (Mr. O'Neill) was speaking on an intervention. I do not believe that there is anything in the Bill about the Lord Mayor's banquet. However, on Third Reading of the Finance Bill it is traditional to allow a fairly wide debate.
§ Mr. O'NeillI am not responsible for what my right hon. Friend the Member for Leeds, East (Mr. Healey) says after he has had a good meal. Had the hon. Gentleman been in the Chamber when I started my speech, and had he listened to what I had to say—
§ Mr. O'NeillI was talking about the period from May 1979 to December 1981. Even such indicators as the London Business School, which is regarded as sympathetic, suggest that the country's economic performance will be miserable in that time scale. The period that I am talking about covers about 30 months, starting from the Budget of last year, which was to be a liberating Budget, and this Budget was to be a further step along the road.
Any number of quotes can be bandied about of what the previous Government did or did not do, but they do not alter the fact that this Government have the power. They have a majority, and 1861 they are making an incredible mess of the economy. There is no chance of an improvement until they change their policies or leave office.
§ Mr. Allan Stewart (Renfrewshire, East)We had interesting debates in Committee on excise duties and petroleum revenue tax. The use of oil revenues was referred to by the right hon. Member for Llanelli (Mr. Davies).
I make no apology for raising yet again the issue of enterprise zones and how successful they may prove. We can now probably take a balanced view of the likely consequences of the Government's initiative in making provision for enterprise zones, including that in west central Scotland, near my constituency. I pay tribute to the Labour district councils, in Renfrew, Glasgow and Clydebank. Despite doubts and political suspicions, they have responded positively to the Government's invitation to submit proposals for an enterprise zone in west central Scotland. In the past regional policy has suffered from inevitable political pressure to constantly extend boundaries. If an area has problems, an area nearby will almost certainly have similar problems.
I represent a constituency in a special development area, and I warmly welcome the changes that the Government are making in the coverage of development areas. Particularly at a time of recession, it is sensible to concentrate resources in the areas in greatest need of extra incentives and jobs.
I hope that one of the long-term effects of enterprise zones will be that the politics of regional policy will work in reverse and that there will be constant pressure from surrounding areas that want to become enterprise zones. I hope that the Government will be flexible in responding to such demands, so that the boundaries can be extended throughout our inner cities and beyond. I stress the importance of that approach—growth from below through the Scottish economy.
We have benefited greatly in Scotland from investment by multinational companies, from North America and elsewhere, which provide about 20 per cent. of Scotland's manufacturing jobs and have provided technology, exports and management expertise. However, that 1862 source of jobs will not be available to the same extent in future, however successful Scotland may be in attracting jobs. We cannot look to that sector to provide all the jobs that we need.
People have asked whether enterprise zones will work and have questioned whether the will is there and whether there are entrepreueurs waiting to be energised in places such as west central Scotland. We ought to be positive and optimistic. We already have in Glasgow an area called the Barrows, which could be described as a sort of enterprise zone. Trading takes place there every Saturday and Sunday and is a tribute to a great deal of enterprise.
§ Mr. John Heddle (Lichfield and Tam-worth)The pessimism that the Opposition exude about enterprise zones is reminiscent of that wonderful Guinness advertisement
I do not like it because I have never tried it.
§ Mr. StewartMy hon. Friend has summarised the attitude of the Opposition perfectly. They are pessimistic about the prospects, but I point out to them the success in west central Scotland of Clyde Workshops, a programme initiated by the BSC to provide small units, and the success of projects carried out through some of our universities that have been trying to encourage new enterprise. They have found that their courses and programmes are constantly oversubscribed
We ought to be optimistic. I believe that if we give those in west central Scotland and other depressed areas the chance to create wealth and jobs they will take it.
We had a particularly interesting debate in Committee on excise duties. There was, I think, a consensus on the view that it makes no sense to say that we ought to discourage people, with health warnings or whatever, from consuming alcohol and tobacco, but not to maintain the real price of those products. That is a nonsensical policy and I hope that in future Finance Bills the Government will at least maintain, through taxation, the real price of those products. That should give the lie to the comments of some Labour Members who claim that my hon. Friends are subject to pressure groups. I am sure that my suggestion 1863 will lead to harsh words from those in the industries involved.
The right hon. Member for Llanelli mentioned petroleum revenue tax and the use of oil revenues. There are ideological divisions in that debate and it is difficult to forecast the likely scale of oil revenues. The hon. Member for Clack-mannan and East Stirlingshire (Mr. O'Neill) and I visited Ireland recently with the Scottish Select Committee. I hope that he agrees that one of the points that struck home was the attractive corporation tax system in the Republic, which guarantees industrialists who set up there a nominal 10 per cent. rate of corporation tax which, with similar reliefs to those in this country, means an effective zero rate between now and 1990. That is a significant incentive to industrialists, especially because of the stability of corporation tax over the next decade and beyond.
§ Mr. O'NeillThe officers of the Irish Development Agency who told us about the corporation tax arrangements also explained that the agency was an interventionist body which was prepared to provide all sorts of assistance, to help with training and to spend vast sums of public money at the same time as affording attractive tax incentives.
The hon. Gentleman suggests that we should introduce one part of the package, but he should remember that there were many other aspects which his hon. Friends would not be prepared to accept, because they were semi-Socialist.
§ Mr. StewartI disagree with the hon. Gentleman. Of course the Republic provides selective assistance, and so on, but the evidence is that the grants and selective assistance add up to a similar package to that available in this country, especially in Northern Ireland. There are differences of detail, but the major difference is the corporation tax framework.
Labour Members talk about using oil revenues for public investment, while my hon. Friends concentrate on using the revenue to bring down inflation, direct taxes and capital taxes. We should also put into the debate how we could use the revenues to reduce corporation taxes. I am not suggesting that we should change immediately to the Irish system, 1864 though that would have an immense effect, but let us not forget in the continuing debate about the use of oil revenues the possibility of using them to ease the impact of corporation tax on our wealth-creating sector.
§ 8 pm
§ Mr. Donald Anderson (Swansea, East)The debate has ranged from the parable of the sower, which was repeated by the hon. Member for Winchester (Mr. Browne), to the fairy tales of the hon. Member for Renfrewshire, East (Mr. Stewart).
In the view of the hon. Member for Winchester, the sower of monetarism dispersed the seeds widely, but our criticism is that the seeds fell on selective ground and that the areas that I and most of my hon. Friends represent receive few of the seeds.
We heard in the hon. Member for Winchester's description of the difficult climate perhaps a beginning of the mythology that may grow that though the seeds were sown there was no benefit, because of factors outside the control of the sower.
As for the fairy tales of the hon. Member for Renfrewshire, East, he represents an assisted area and I suggest that he should ask himself honestly whether his area is better placed now than it was before the Government announced their new regional policy on 19 July last year.
§ Mr. Allan StewartThat is not the question. The question is whether areas that the hon. Member and I represent will be better off when the Government's policies work. I believe firmly that the answer is "Yes".
§ Mr. AndersonWhen? The hon. Member and I look forward with great interest to see the thrust of this Government's policy in terms of their assisted areas and in terms of the people they are assisting. The improvements for those with capital that have resulted from the Finance Bill will not go to people in his area or mine. They will go to people in areas of the country that are already prosperous.
The hon. Gentleman commended the changes in assisted area policy in July last year. He knows as well as I that the motivation of those changes was not 1865 the improvement of Scotland and Wales. The whole reason was part of the cut back in total public expenditure. The hon. Gentleman talked of the enterprise zones as though half a dozen zones of 500 acres, scattered around the country, will have any effect on the totality of unemployment. We are bound to be sceptical of these zones. How will success be judged in this context? Because of the new grants and rate-free areas, there may be success for the relatively small areas of privilege encompassed within the zones. In a wider context, with the possibility of hedge hopping, one may come to a different conclusion.
I invite the hon. Gentleman to examine what the Government mean by the criterion of success. Will any new jobs be created in these enterprising zones? Or will there be a transfer of jobs possibly from the same travel-to-work area? The proposal is a pipe-dream. Labour local councils in the hon. Gentleman's area and in my area are rushing to put in bids for these enterprising zones. Why? Because they are desperate for jobs. They will grasp at any straw that comes from the Government.
We do not know yet what the Government will do to compensate local authorities for the infrastructural investment that will be necessary in these areas. What can prevent a large part of these enterprise zones, without planning controls, from simply being cluttered with warehouses and scrap dealers and being an environmental eyesore? Anyone who looks objectively at the enterprise zones must have a basic scepticism about the motivation and the likely effect.
A number of hon. Members have touched upon the regional theme. One clear picture in terms of electoral configuration that arose from the general election was the two nations of this country. Rightly or wrongly, the Labour Party gained few seats in the South-East. We maintained, by and large, our support in the North-East, in Wales, and in Scotland. That was the picture—unfortunate in national terms—that emerged. I ask whether that electoral map has changed as a result of the policies pursued over the last year.
Have the Government, in their financial policies, sought to build bridges between the two nations? Or have they 1866 deepened the ditches that have divided regions and divided people in our country? I hope that this is a matter of considerable concern to the Government. According to their policy last July, a thousand blossoms were to bloom and incentive was to be the order of the day when industrialists, with the tax concessions granted them, were going to invest. That policy has been knocked off course by the increase in VAT. Do the capital advantages of the law contribute to the building of bridges or deepen the divide that exists? The answer is clear. The Government, by the signals that they are giving the country, the details of the Finance Bill, the sins of commission in respect of the benefits to the haves and the sins of omission in failing to tackle the absurdity of the excessive bank profits, have shown whose side they are on. Where, in the total financial policies of the Government, has any benefit been accorded to the less fortunate people in society? Where has there been any benefit to the unemployed? Where has there been any real benefit for the assisted regions? This is part of an inequality Budget. The one-nation group that used to exist in the Conservative Party is no doubt now designated as wet and wholly ignored by those in control of Conservative policy. The policy is part of an assault on deprived people and deprived areas.
The Government, no doubt, answer, as did the hon. Member for Renfrew-shire, East, by saying that we should wait and see. Those monetarist seeds, we are told, which are being sown, perhaps on stony ground, will take time to mature. All will be well for the country and the assisted regions in time. According to the Government, there is a trade-off between levels of inflation and employment that will have to be borne until the fruits of the policy are seen. That would possibly be an acceptable argument if there were equality of sacrifice between different areas of the country in response to the national call to combat inflation.
The effect is unequal Different groups of people and different regions are being asked to bear a disproportionate part of the price in the battle against inflation.
§ Mr. Nicholas BakerDoes the hon. Gentleman think that when income tax rates for all income tax payers were 1867 raised by the previous Labour Government those taxpayers felt that they were participating in achieving equality of sacrifice?
§ Mr. AndersonTo create employment and to regenerate the depressed areas, I would be prepared to see an increase in direct taxation. I make no secret of that to my constituents. It is one way of increasing equality. I would ask now for an increase in public expenditure as a means of equalising the disproportions in society between the "have" individuals and regions and those that do not have.
§ Mr. David Winnick (Walsall, North)Does not my hon. Friend agree that the reduction in direct taxation under this Government has not benefited the vast majority of our constituents, who are facing a heavier burden in view of the increase in indirect taxation.
§ Mr. AndersonThat is the whole point. I have a concern shared by all hon. Members about the increase in the divide within Great Britain that is being pressured by the Government and their policies.
The Prime Minister is coming to my constituency on Saturday. She will speak to the party faithful. I do not know what possible cheer she can bring to South Wales, which has suffered so much from her policies. I hope that she will pause before a large poster site on which, during the election, appeared a poster declaring "Labour is not working". It depicted a long trail of people who were paid hacks of Saatchi and Saatchi, the Conservative agents.
I invite the Prime Minister to meet, not the people who were paid by Saatchi and Saatchi for pretending to be unemployed, but the real unemployed who have been made unemployed as a result of Government policies. I could take her on a tour of South Wales and show her not only the steel industry but a group of other industries which are dismissing men as a direct result of her policies. I wonder whether she will fly to the party faithful or whether she will pause and see the depression which she and her colleagues are creating in the regions.
The benefits that go to the high earners will not come to areas such as South Wales, the North-East or Scotland. 1868 They are low-wage areas. Our wages are boosted only by the relatively high-wage steel industry. As a result of the Government's unrealistic targets for cash limits on the steel industry, and their effects on Port Talbot and Llanwern, the high wages will be lost.
The Budget benefits the wealthy and is totally unfair. We have a Government of comfortable people providing benefits for the comfortable. I am reminded of the hospital announcement which states "Operation successful—but the patient died." We might be approaching the time for a similar announcement about Government policies. In 1984 the operation might be successful in that the level of inflation might be brought down to the level that the Government inherited. Technically the operation might be successful, but at what cost? It will be at a cost of record bankruptcies, record unemployment and at a cost of deepening the social divide and increasing social unrest, which no Government should seek.
§ Mr. Richard PageApart from the ritual cries and breast-beating this evening, the debate has been good-tempered. On Report we covered about 100 clauses and 18 schedules with good humour and a degree of comradeship. I thank my right hon. and hon. Friends on the Treasury Bench for the skill, ingenuity, kindness and delicacy with which they said "No" so many times in so many different ways.
Some Finance Bills are recognised as turning points. In time, this Finance Bill might be recognised as a turning point for smaller businesses. Too often we think of the smaller business as the corner shop. It is fashionable to get on the smaller business bandwagon. However, a smaller business is one that employs up to 200 people. Germany operates the same criterion. In Japan a smaller business employs up to 500 people and in the United States—which is always bigger and better—it can employ up to 1,500 people.
I shall discuss three important aspects connected with the smaller business. Clause 54 provides for a 100 per cent. alowance for workshops up to 2,400 sq ft. That is a recognition of the fact that in the past we have suffered from the 1869 "bigger is better" syndrome. In the North, many large factories remain unoccupied. I hope that with the conversions from the private side we can create more small units to allow smaller business men to get on the road towards creating employment and wealth for the country.
I shall not dwell on the subject of enterprise zones. In the past, authorities and Governments have tended to say "Let us rip up a green field; let us take more of our valuable land". They have ignored the rotting city centres, which have gradually decayed. It is vital that we give the city centres a try. We may fail, but I hope that we shall not. The Opposition seem to be against such a policy simply because it has never been tried. Let us give it a try and see whether it works.
I record my appreciation of the temporary dips on stock relief and of the provision to allow the smaller business faced with deferrals of up to £100,000 to be removed from the net indebtedness clause. That will be of tremendous importance in maintaining liquidity at this difficult time.
The Budget started to create the environment and the mental attitude to encourage people to start their own businesses and to provide more opportunity to create wealth and employment. The Opposition live in an Alice-in-Wonderland world. Money was put into the system so that now about £1 in £7 paid out in public expenditure is interest on the money which the Labour Government borrowed and piled up against us.
It took us 300 years to get the national debt to the level that it was in 1974. The Labour Government managed to double it in five years. We and our children will have to pay off that debt. If we do not live within our income, we shall go down. Even after the cuts, we have to pay and borrow at the rate of £1 million each hour of the day.
§ Mr. AndersonDo the record interest rates assist in that process?
§ Mr. PageWhen we have to squeeze the excess money out of the system, of course it will be painful, and of course it will hurt.
§ Mr. PageMy hon. Friend is right. Unfortunately, the Opposition do not live in a real world. They think that there is a bottomless pit from which they can continue to borrow, and that it does not have to be repaid.
§ Mr. J. F. Pawsey (Rugby)Will my hon. Friend reflect on the fact that the largest item of Government expenditure is the repayment of interest on the debts incurred by the previous Administration?
§ Mr. PageMy hon. Friend is right. We in this country seem to fail to appreciate the effect on our industries of the haemorrhage of inflation. If, over the past five years, our companies had brought in current cost accounting, they would have been seen to be losing money and getting into debt year after year. It is only now, when we face the reality of having to live within our income, that this painful adjustment has to be made. I blame the Labour Party for running this country into that decline.
I should like to think that the Budge will mark a turning point from which we shall go on in the future towards the creation of equity, of better opportunities for loans, and of investment for the creation of smaller businesses. Labour Members have mocked all this, but they created the large inefficient unit. Just as the dinosaur was superseded by the smaller mammal, so in this country the smaller business will have to take over to provide employment to bolster the gross national product and provide the social standards that are required by the people.
§ Mr. Richard WainwrightI confess to astonishment that the hon. Member for Hertfordshire, South-West (Mr. Page) had the gall to lecture the House on the subject of the national debt, bearing in mind that he supports a Government who are offering to the world British Government debt at 14 per cent. well into the next century—something that our children and grandchildren will live to curse—and who, in spite of their alleged tremendous faith in their anti-inflationary remedies, resolutely refuse to sell any index-linked bonds. Therefore, the less that Conservative Members talk about 1871 the national debt, the more their face will be saved.
It is well known that this Bill is one of the vehicles of Government economic strategy that was begotten by miscalculation and born out of public misery, as the report of the Treasury Select Committee recently made clear on an all-party basis. I marvel at the Government's obstinacy in persisting in this demoralising course. All this was encapsulated earlier this evening in a memorable phrase used by the Financial Secretary in resisting an amendment. He said:
We stick where we have stuck.Let that be carved over Conservative Central Office in Smith Square. If the Conservative Party cannot afford six Anglo-Saxon words, I suspect that three Latin words would convey the same meaning.Just where are they stuck? They are stuck with what is admitted by their spokesman to be a mystery tour with no timetable. None of them can tell us how many years of million-rate unemployment there will have to be before any reasonably lower degree of inflation is reached. We have learnt in recent days that it is not only a mystery tour, but, even worse, a circular tour. When we ask how long the low prices will last when they have squeezed all the excess money out of the system, and how the Government will re-expand the economy without starting the inflationary cycle again, we get no answer. The answer, of course, is that if on this circular tour their Government bandwagon eventually passes a station called "low prices", it will whizz past at speed and be on the upward grade of the switchback almost immediately. We shall then be put through the misery of the inflationary cycle again.
In this connection, the Budget was a demoralising affair for the British people. The only reason why it has not been more condemned is that it is a dismal object against an even more dismal background, and so it does not stand out in all its horror quite as much as it otherwise would. It certainly marks the end of one part of that dishonest combination which helped to win the Conservatives the last election—the idea that huge tax incentives can be combined with a strict monetarist policy. In this Bill we say 1872 goodbye to any idea of tax incentives or of doing anything except add to the load of taxation as the Bill does.
The Government are relying on two lifebelts to get away with what they are doing. The first is the disarray of the official Opposition. The second is the hope of enormous revenues from North Sea oil, which the Government have done nothing to earn, and nor has anyone else in politics. I suspect that neither of those lifebelts will keep them afloat. However long the disarray of the official Opposition lasts, there is no doubt that public disquiet will somehow make itself felt. I only hope that it will make itself felt peaceably, through democratic channels. The Government must not rely upon the public being quiescent for much longer, even if the traditional party channels expressing opposition are at present broken up and not doing their job properly.
The Government also make a great mistake if they suppose that the British public are a lot of peasants who will calmly accept the misappropriation of the wealth that the good Lord has given us in the North Sea as a political gimmick by a Conservative Government in desperate straits. The mass of the British people are sufficiently well-grounded in biblical and liberal politics to know that God gave the land to the people. He did not give North Sea oil to the Conservative Party. The people will demand that North Sea oil be used for the long lasting benefit of the British people, and not to win the next election for a broken-down Government.
I wish to make one more comment on the Bill. It further encapsulates one of the most despicable aspects of the Government's outlook, namely, that to save a few Inland Revenue clerks we must descend to having a crude taxation system that would discredit a banana republic. The lower rate band of income tax has been one of the most civilised parts of our tax system for generations. Even I can recall the time when we had three reduced rates of income tax. It is a civilised system to let out the clutch gradually as the taxation load is picked up. It introduced people to the tax system at a low rate. Now, with a crow of triumph, those vandals and philistines at the gate have removed the last of the reduced rate bands. They say in 1873 favour of their proposal that it enables them to get rid of 1,300 Inland Revenue clerks, at a time of unemployment.
The same is true of other parts of the Bill. The Government refuse to have a civilised system of stock relief because they say that it would be too complicated to require more elaborate stock returns several times a year from large companies which take stock periodically as 1874 part of their financial discipline. The Government have introduced all sorts of crude simplicities and defended them on the ground that they enable them to dismiss a few relatively low-paid civil servants.
The Bill does no credit to the Government. I hope tha tthey will not obtain their standard majority when we go into the Lobbies tonight.
§ Mr. Nicholas BakerI was puzzled when trying to follow the speech of the hon. Member for Colne Valley (Mr. Wainwright), because I thought that the policy of his party was that the tax system in Britain was too complicated and required simplification. I was puzzled also to hear from the Opposition Benches a discussion of tax that reminds me of the real divide that exists about taxation. That divide has been caused because Opposition Members believe that the tax that people pay—whether they are rich or poor—somehow, before it is paid, belongs to the nation. Anybody who earns income and pays tax, whether rich or poor, will say that it is his money, and that by reducing direct taxation the Government are no more than giving back his money. People believe that. That is why the Opposition so often appear to be talking in wonderland.
I wish to make one brief, non-partisan point about a category of people affected by the charging rates in clause 18. They are excluded from any help under clause 27. I refer to non-resident partners of trading or professional partnerships resident in the United Kingdom. I declare an interest as a partner in a United Kingdom firm with overseas branches. The tax system discriminates against people in that category. If they are self-employed and spend a qualifying period of 365 days abroad they are not able to obtain 100 per cent. relief against income derived from their work in the way that someone who is employed is able to do.
That is a curious discrimination, for which I have never seen any proper justification. The arguments for such a discrimination are, first, that the individual, although still abroad, will derive benefits from the United Kingdom firm. That argument also applies to someone who is employed. The second argument is that it would be complicated and difficult for the Inland Revenue to make assessments. It seems to me that whether one is dealing with the self-employed or the employed there is no distinction between an argument in this connection.
My hon. and learned Friend the Minister of State, who is not in his place at present, is familiar with this point, because he has advanced those arguments 1876 himself. I was surprised and disappointed to learn that the matter was not dealt with in the Bill. The result is that it is difficult for United Kingdom firms, both professional and trading, to attract people to manage their foreign branches. Lest any hon. Member thinks that this is a small, parochial point, I believe that it is something of which the House should be disabused. In fact, British professional firms—especially accountancy and estate agent firms—are now competing world-wide.
When listening to economic affairs debates in the House one sometimes gets the impression that the country earns its living only from manufacturing industry. That could not be further from the truth.
These professional firms compete on a world-wide basis. They earn foreign currency. This piece of discrimination in our legislation is a snag that ought to have been put right. I am sorry that it has not. I hope that my right hon. and hon. Friends will consider this matter and put it in their notes for inclusion in the next Finance Bill.
§ Mr. Frank Hooley (Sheffield, Heeley)The Government's failure in relation to inflation would be comic if it were not so grotesque. The Chancellor is now boasting that by the autumn he hopes that the rate will be down to 16.5 per cent. While it is unlikely that that in itself would be successful, he does not seem to have noticed that it would be 60 per cent. higher than the rate which the Government took over when they came into office 14 months ago.
The situation with regard to unemployment is not grotesque but tragic. A major disaster is facing our young people, and the Government are doing nothing whatever which is effective to deal with that problem. During the debates, both upstairs and on the Floor of the House, I have heard nothing to suggest that the Government are even taking the problem seriously. That is a major indictment of their financial policy.
In fact, only half an hour ago a Conservative Member said that unemployment would go up to 2.3 million, and perhaps even higher. He suggested that that was something that we had to put up with. In fact, it is something that 1877 people who are unemployed have to put up with, and the disaster is on them.
The interesting feature throughout the course of the Finance Bill, both upstairs and on the Floor of the House, has been the drip, drip of give-away—not on a great scale—to special property financial and commercial interests. Conservative Member after Conservative Member has put in a plea for this or that allowance, a plea for doubling this or that calculation, and a plea for this or that particular exemption. Ministers have graciously said that their hon. Friends have a point and that they were quite right in saying that we must encourage this Poujadiste here and that Poujadiste there. They said that the special pleading for special cases had to be listened to, as a result of which the money trickled away—perhaps up to £60 million, £100 million or £200 million.
Last night, Labour Members tried honestly and honourably to put in a plea for the people who really are in difficulties, given the present situation.
We put forward a modest proposal to help widows. It would have involved a small amount of money, and it would have given some help to widows in terms of personal taxation, but 270 Conservative Members trooped through the Lobby to crash down on it and destroy it.
We made a modest plea for a tiny minority in this country—the Asian families with children in India and Pakistan—probably only 22,000 people out of a population of 50 million. The cost to the Treasury would have been about £7 million, which in terms of national revenue is not a serious amount. We heard a legalistic, pedantic explanation from the Minister that it was impossible. It would be a breach of this principle or that principle. There was no possibility that this tiny humanitarian gesture could be offered, even over a short time. We did not suggest that it should go on indefinitely. But no, it could not be done. It would ruin the country's economy, and it would be contrary to the principles—whatever they are—that Conservative Members hold.
We suggested a modification of VAT, which we argued would help people on pensions and social security. We argued that it would modify wage claims and reduce inflation—the central theme of the Government's policy.
§ Mr. Richard Pagerose—
§ Mr. HooleyI shall not give way. I wish to get on with my speech. The hon. Gentleman made a fairly long contribution a little earlier.
We made a suggestion about income tax. At present, a married couple on the supplementary benefit-plus rate would be practically in the bracket at which they would be required to pay standard rate income tax. That is a grotesque proposition, and I am astonished the the Government should be prepared to defend it. The lower band of income tax has been deliberately pushed up so that a person who is now earning less than half the national average industrial earnings goes straight into the standard rate tax band and will have to pay 30 per cent. of every pound of taxable income in tax.
We put forward those four propositions, but they were turned down by the Government. They were rejected, rejected, rejected, and again rejected.
In this Finance Bill there was one gimmick—the enterprise zones. I shall not go over the arguments again, as we have had a lengthy discussion on the Floor of the House. It has been pointed out by the Royal Institution of Chartered Surveyors that enterprise zones will do something to help the lucky owners of land in which these zones are designated.
The Government cannot be serious in saying that by designating 3,000 acres—about five square miles—to enterprise zones they will revive the country's economy. This is a silly, stupid gimmick, and it will create for the Government the sort of problems and difficulties that they encountered with the reorganisation of local government and the Health Service. It will produce many headaches. It has already produced a major squabble in Sheffield between local entrepreneurs and small business men as to who will get the pickings, if any. It is a totally irrelevant gimmick, of absolutely no value in terms of the economic problems of the country.
My right hon. Friend the Member for Llanelli (Mr. Davies) touched on one of the central points of our economic policy, namely. North Sea oil. At the moment, the Government are giving away the benefit of North Sea oil in taxation relief 1879 to the income groups. North Sea oil is also being used to finance imports from our industrial competitors. The effective use of North Sea oil at the moment is to finance the modernisation of our major industrial competitors, in that it is financing massive imports of cars from Germany, Italy and France, as well as the imports of machine tools and other equipment. The beginnings of this enormous revenue will go to benefit our major industrial competitors.
The other part of the equation, as my right hon. Friend rightly pointed out, is that North Sea oil is financing the lengthening dole queues. The greatest economic asset that we have discovered or been given since the war is not being used as it should be—to modernise our industry and to build up our industrial power. It is being squandered on dole queues, imports, and the modernisation of the economy of our competitors.
I see nothing in the Bill to indicate that the Government will adopt a more constructive line of policy in what remains of their term of office.
§ Mr. John Heddle (Lichfield and Tam-worth)I am very grateful for the opportunity to contribute briefly in the closing stages of what I hope will come to be regarded, in the fullness of time, as a historic Finance Bill. It is a Bill that will once again breathe a breath of free enterprise air into Great Britain.
It was free enterprise that made Britain the nation it was in the nineteenth century. But it is, sadly, the continual dependence upon more and more control from the centre since the last World War that has caused the industrial and economic decline of our country.
Of course, Labour Members find certain parts of the Bill objectionable, because they represent change—a change of thought, a change of approach; perhaps the right approach. We might not see the full advantages of this approach, but certainly our children will.
What worries me particularly about the contributions from Labour Members is that they poured cold water on optitimistic and objective solutions to the problems that have beset us for so long. Nowhere in the closing stages of this 1880 Third Reading debate have I heard any sense of optimism or of the feeling "Yes, we can make it again." Instead, what we have is "Pessimism rules, OK." The Opposition Benches are denuded by apathy, by dejection and by defeatism.
We have been told by Labour Members that the enterprise zones will not work. With that attitude, enterprise zones might not work. Let us be positive. Let us go into the battle against inflation, the battle against continual, gradual and spiralling decline with optimism. We can win, we shall win—if we have the will to win. Nowhere in the criticism of the enterprise zones have we heard any constructive approach. With respect to the right hon. Member for Llanelli (Mr. Davies), for whom I have the highest regard and whose intellect is regarded highly throughout the House, the only constructive comment that he made was that we all represent sectional interests. I have news for the right hon. Gentleman. His right hon. and hon. Friends were elected by sectional interests. Most of them were elected because they were endorsed by certain trade unions, and they have come to the House to speak on behalf of those sectional interests.
Society is built up of sectional interests—of a concentricity of interests. Just as the geographical make-up of this country is composed of villages, towns and communities, so the economic life of Great Britain is made up of concentricity, sectional and specialised industries, widows, one-parent families, the disabled, pensioners, ex-Service men, the self-employed, the unemployed, builders, bakers and candlestick makers.
What is wrong with speaking up for sectional interests? I put that question directly to the right hon. Member for Llanelli. If each of us tried to be a specialist in a particular subject so that we could speak for sectional interests, the jigsaw of expertise could help to paint a picture of a profitable whole.
I should like to dwell on two points in the closing minutes of this Third Reading debate. I make my first point on behalf of the small savers—people who believe that capitalism and prudent finance is for them. That includes the majority. That includes the trade unions and their pension funds and the person who has a piggy bank tucked under the 1881 bed in the third bedroom of his council house. Deep down we all believe in saving for a rainy day. Here I pay tribute to my right hon. and learned Friend the Chancellor of the Exchequer for the provision that he has included in the Bill for the unit trust movement. I refer particularly to the concessions in clauses 59 and 80.
I turn now to one sectional interest which can help to cure the deplorable level of unemployment that the Government inherited 14 months ago—the building industry. That industry cannot rely on the public sector to provide it with the funds to buy the bricks and mortar to build more monuments to State control, more council houses, more properties owned by the State. Let us revive the building industry by allowing it to provide nursery units, factories, shops, offices and starter homes for people who want to identify with freedom for themselves and to be masters of their own destiny.
I refer particularly in this context to the development land tax which was not the brain child of the previous Labour Government, but the handmaiden of an obnoxious piece of legislation which was their brain child—the Community Land Act—which my right hon. Friend the Secretary of State for the Environment is demolishing as the Local Government, Planning and Land (No. 2) Bill makes its stately progress to another place. The punitive effect of the development land tax has put a dead hand on the construction industry. I again pay tribute to my right hon. and learned Friend the Chancellor of the Exchequer who, in last year's Budget, reduced the level of taxation from 80 per cent. to 60 per cent. and in this year's Budget outlined provisions, incorporated in the Bill, for advance assessments on deemed disposal. The builder—the employer of skilled labour building homes for people at prices that they can afford—can now look forward to laying bricks and drains with one hand and not having to write a blank cheque with the other.
There is still much that needs to be done in the arena of the development land tax provisions. I make no apology for reminding the House of a Ten-Minute Bill that I introduced in March just before the Budget. There are many anomalies and iniquities still built into 1882 the Act, which was the brainchild of the Labour Party when in power.
I think, for example, of the deemed disposal provision. It is the one form of tax that a taxpayer, in this case the construction industry, has to pay before a profit is made. It is also the only form of taxation where a development loss cannot be offset against a development gain. That is another iniquity. It is the only form of taxation that does not seem to differentiate between windfall or speculative gains and gains made during the normal course of business activity. Profits made during the normal course of business from land held as stock in trade should not be subjected to the same level of development land tax as windfall or speculative gains.
Similarly, I believe that any landowner, particularly a farmer, who sells some of his land for development should be relieved of the pressures of the tax if he reinvests the profits in buildings and plant and machinery to make his holding more profitable.
Opponents of the Bill should, in all honesty, call it a curate's egg of a Bill. Hidebound though they may be by the belief that the Government should provide and should control, they surely find it good in parts. Those of us who fervently believe in free enterprise believe that deep down in their hearts and minds the majority of the British people want to work hard and to rise to the challenge, that they want a breath of fresh air to be built into the rundown docklands and the rundown inner city areas of Birmingham, Leeds, Liverpool and Manchester. It can and will be done, if we can only bring back into our lives a sense that we ourselves can make it happen.
I thoroughly endorse the provisions of the Bill.
§ 9.2 pm
§ Mr. Stephen Dorrell (Loughborough)I hope that my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) will forgive me if I do not refer to the building industry, about which he knows a great deal more than I.
I wish to refer to the speech of the right hon. Member for Llanelli (Mr Davies). I understood him to say that he would advise his right hon. and hon. Friends to vote against the Bill, basically for 1883 two reasons. The first was that he disapproved of the distribution of the burden within the Bill. That is an aspect that has been fully debated. The right hon. Gentleman also made it clear that in his judgment the Bill did not imply a sufficiently large public sector borrowing requirement, and I should like to take him up on that.
I realise that in his relatively short speech the right hon. Gentleman could not be expected to advance an alternative economic strategy on behalf of the Opposition, but if he is to argue the case for a larger PSBR he must take the argument a stage further than he did tonight or than he has been prepared to do at any other time recently.
The most obvious question that occurs to anyone when he hears a speaker advocate a larger PSBR is "What is the advocate suggesting should be the implications for domestic monetary policy?" It is no good simply saying "We shall run a larger PSBR". One must go on to argue what one wishes to do with monetary policy. One can maintain the Government's monetary policy, in which case one must accept that a larger PSBR would lead to higher interest rates, or one must say that one wants to see a larger sterling M3, or whatever measure one chooses, and that one wants to see monetary expansion going ahead faster.
If, as I suspect, the Opposition's policy would be to allow monetary expansion to go ahead faster, funding the larger PSBR through faster monetary expansion, we must look at the consequences of faster domestic monetary expansion. That would lead to extra demand. In reply, I strongly argue that if no other policy were changed, it would lead only to a higher level of imports and to a substantial deficit in the balance of payments. A larger PSBR and faster monetary expansion would not, of themselves, lead to a sufficiently large devaluation of the pound. The result, in terms of extra demand or investment at home, would be that the balance of payments would run into a larger deficit. That would provide ammunition to those who argue in favour of import controls and wish to retreat into an illiberal and protected economy. I am a fervent opponent of that.
1884 That economic prescription does not meet the problem facing the Government. Last week I suggested to my right hon. Friend the Secretary of State for Industry what the central issue might be. Although he disagreed with my remedy, he accepted that I had touched on the key issue, namely, the competitiveness of the productive sector of the economy. The quickest and most effective way of restoring that competitiveness is to allow and encourage a devaluation of the pound. My right hon. Friend argued that that would be unnecessarily inflationary. He said that he would prefer the competitiveness of British industry to improve by increases in productivity and by controlling unit wage costs by holding wages at a reasonable level.
No one would disagree with those two prescriptions. However, the argument that competitiveness can be improved solely by improving productivity and holding down wage increases does not meet the problem. That is not enough. That remedy would not work quickly enough to solve unemployment and the fall in output. Many hon. Members will have seen a report that appeared in the Financial Times earlier this week. It argued that the rise in the exchange rate and the fact that our rate of inflation was higher than that of our competitors had led to a decline of 30 per cent. in our competitiveness in the past 12 months.
It is unrealistic to expect such a gap to be made up by purely internal measures, such as improving productivity and controlling wage increases. It would require a 30 per cent. increase in productivity if we were to return to the competitive position that we held at the beginning of 1979. That is unrealistic. Even the German and Japanese economies have not come near such an increase in the rate of productivity. In good years, they experience increases of 4 or 5 per cent. Last week my right hon. Friend the Secretary of State and I agreed that competitiveness was the key issue. If that is so, other measures, apart from those to improve productivity and hold down wage increases, will be necessary if we are to restore that competitive balance.
I support the Bill because I share with my right hon. and hon. Friends on the 1885 Treasury Bench the objective of improving the competitiveness of British industry. I suspect that they believe that that can be done more quickly than it can be. However, I profoundly disagree with the Opposition's view that by running a larger PSBR, without directing the monetary consequences to the real problem—the exchange rate—they have found an adequate prescription for economic recovery.
§ 9.8 pm
§ Mr. John Garrett (Norwich, South)The Finance (No. 2) Bill is a matter of great constitutional as well as financial and economic consequence. I do not go so far as to say that it has been a privilege to sit through every debate. However, the Bill is important, because it is the means by which the House grants Supply. This year, that will amount to about £62 billion in revenue. It therefore stands at the heart of parliamentary control. It embodies the Government's concepts of economic justice as well as their view of the course of the economy and the measures needed to manage it.
This year, as I listened to every debate and argument—and I enjoyed many of them—I became conscious of the fact that the Bill was irrelevant—irrelevant to the crushing problems of inflation, social dereliction and industrial collapse that rage through this country. There seems to be very little in the Bill that seeks to remedy these afflictions and very little to give hope to the growing number of unemployed.
This arises partly from the way in which the Budget Statement was constructed. Many of the most important policies enunciated in the Budget Statement were not in the Bill at all. The policies embodied in the public expenditure White Paper must be considered alongside the measures set out in the Finance Bill.
In this Bill there are some tiny measures to help small businesses, so small in fact that they are unrecordable in the national accounts. For example, there are tax reliefs on the cost of setting up a new business. But in the public expenditure White Paper, Government aid to industry was cut by £1.2 billion, or 45 per cent., and much of that aid was aimed at the small business sector. For example, the sectoral schemes of assis- 1886 tance were aimed specifically at small manufacturing businesses. Therefore, for every penny given to the small business in the Finance Bill, £1 was taken away by the public expenditure White Paper. It is no wonder that company liquidations are at a post-war record level.
In addition, many of the policies in the Budget Statement were enacted in the Social Security (No. 2) Bill. Tax reliefs for the well-off in the Finance Bill—the £70 million relief from capital gains tax, which the Chief Secretary described as "wholly appropriate and socially just" and the £125 million relief in capital transfer tax—must be seen in the context of the wholly inappropriate and socially unjust cuts in the social security provisions. For example, we have the de-indexation of short-term national insurance benefits for sickness, injury, maternity and unemployment at a saving of £140 million. That was the first reduction in unemployment benefit in this country for 50 years. We have also seen the phasing out of the earnings-related supplement, saving about £300 million. Therefore, tax reliefs and reductions in benefit must be considered together. When we do this, we see a picture of economic injustice.
The significance of the Bill pales somewhat when one considers it alongside what is being done to industry by public expenditure cuts and to the poor by social security legislation. We must ask ourselves what relevance the Bill has to an economy in which there are 1.6 million people unemployed—and that figure will probably be 1.8 million when the July figures come out and 2 million by the autumn. At the same time, inflation is running at 20 per cent. and industry is being crushed by high interest rates. For a start, the Finance Bill adds one point to the retail price index.
However, the Bill includes an enterprise package,. I pricked my ears up when I heard the Chancellor announce that there was to be an enterprise package, because I thought that was a good idea. When I spoke during the Committee stage on the Floor of the House on 3 June, I drew attention to 235,000 redundancies that had been announced to that date. That very day Lucas Industries announced another 2,500 redundancies. Since 3 June the figure has risen to 275,000 and at present redundancies 1887 are growing at the rate of 40,000 a month. We are entitled to ask what relevance the enterprise package has to that problem.
In introducing his Budget Statement the Chancellor said that it embodied measures to arrest Britain's economic decline, mainly by promoting private endeavour. Private endeavour is encouraged in this Bill by a succession of small tax reliefs to businesses, such as that in clause 36 relating to relief for losses on unquoted trading companies. The Chief Secretary told us that that concession would ultimately be of real importance in the financing of small businesses. However, he qualified that when he said
The advantages of such measure will become apparent only once inflation and domestic interest rates are abated."—[Official Report, 8 May 1980; Vol. 984, c. 555.]We have absolutely no doubt that that is true.Then we have the enterprise zones, and we await with interest the results of those. The Financial Secretary summed up this area of Government policy in his usual silver-tongued way by saying:
The approach that is embodied in the clause is that of 'Suck it and see'. It is not as such a doctrine of the Government. It is what lies behind the concept of an experiment …"—[Official Report, 4 June 1980; Vol. 985, c. 1513.]That sounds an extremely tentative approach to industrial and economic regeneration. The £25 million to £30 million being spent on enterprise zones is as nothing compared with the damage being done to business by inflation, high interest rates and cuts in public expenditure. Business has been given hardly anything of value in the Bill.When we come to personal taxation, the injustice of the Bill becomes fully apparent. Ministers continually tell us that it will take 1.3 million people out of taxation. We all know that they will be back again within six to nine months at the present rate of inflation. The net effect of the income tax changes was to reduce the tax bill of a married couple on £40 a week by 55p a week, a married couple on £250 a week by £3.50 and a married couple on £500 a week by £10.20. About 40,000 families ended up in a deeper poverty trap than before. Any- 1888 one who is married with two children, and who earns under £15,000 a year, is worse off as a result of the Budget of which this Finance Bill is part.
In the course of considering the Bill we sought to give relief from taxation to the poorest by increasing the 25p rate band of income tax to £1,000. We argued that if it was the Government's intention, as they tell us, to reduce the standard rate to 25p in the lifetime of this Parliament, the way to do it was to extend gradually the reduced rate band and not to abolish it. The abolition of that band disadvantaged 3½ million people, including 1 million who were over 60, 1½ million working wives, and 300,000 adult males on low wages. Such a change was unjustifiable and clearly unjust.
We have frequently pointed out that more revenues could be raised from those enterprises that have gained windfall profits from high interest rates and the rise in the value of crude oil—banks and oil companies. Nothing was done at all about bank profits. We had an interesting little debate. With his usual mellifluousness, the Financial Secretary said:
There is no doubt that part of the profits represents a windfall for the banks. This windfall element is not a sign of the clearers' enterprise or of their efficiency. Nor, of course, is it a sign of exploitation, it is merely adventitious…These windfall profits can, however, be regarded in part as a by-product of the Government's determination to root out inflation by monetary policy…I accept in principle that there could be a case for the special taxation of the part of bank profits resulting from high interest rates. It is undoubtedly true that there is an element of quasi-monopoly in the clearers' position.After several more minutes of such weasel words, the Financial Secretary said that the case had not been made out for a tax on bank profits. Bank profits this year came to £1.5 billion.We also showed that the adventitious profits of the oil companies had been inadequately taxed. All informed comment from oil industry observers has made the point that the increase in petroleum revenue tax in this Bill will hardly affect oil company profits. The international oil companies are using their windfall profits to diversify into electronics, mining, departmental stores and other unrelated business, which public services are being cut for lack of revenue.
1889 We proposed that the advance payment of PRT should be raised to 25 per cent., since it was clear that the 15 per cent. advance payment had been picked by the Government completely out of the air. Our proposal would have raised a further £120 million of revenue. On no grounds at all, the Government once again came down on the side of the oil companies.
A debate that we initiated on the use of North Sea oil revenues provoked no sensible response from the Government. The Minister of State attempted to demonstrate that even to discuss such a matter on clause stand part was out of order. They said nothing about what is one of the greatest economic issues of our time. It is clear that oil revenues over the next three or four years will be at least double the Government forecast, yet we have no open discussion of their use. These oil revenues are hidden away in the national accounts as what are quaintly called fiscal adjustments—presumably tax reliefs for the next election.
I return to the question of the relevance of this Bill to the economic and industrial problems of this country. The Chancellor concluded his Budget Statement on 26 March with the following words:
we have ended the 1970s with a society that is becoming less tolerant because we live with an economy that has been growing no richer. The 1980s can be very different"—[Official Report, 26 March 1980; Vol. 980, c. 1489.]That is true, but how does the Bill and the economic policy of which it is part help us to become richer and more tolerant? It is hard to find much assurance in the 119 clauses and 20 schedules of the Bill. As an article in the Financial Times of 1 July asked:how much unemployment can Britain stand before the social fabric begins to collapse? This is the main question that Ministers should be asking themselves.The Government's strategy may eventually reduce inflation, but it will certainly not replace the production lost within the lifetime of this Parliament. It is likely to take unemployment up to the 3 million mark during this Parliament—and the Secretary of State for Industry tells us that that increase is inevitable.1890 Against that background, all the talk of the enterprise package in the Bill, and pulling ourselves up by private endeavour is claptrap. The Chief Secretary said that the advantages of these measures will become apparent when inflation and domestic interest rates have abated. That abatement may come, but it is taking a long time, and meanwhile this country is faced with industrial collapse.
Every day the great grey army of the unemployed grows larger and we are producing a generation of young people without work. The Bill is irrelevant to the basic problems of this country, and I ask my right hon. Friends to vote against the Third Reading.
§ The Chief Secretary to the Treasury (Mr. John Biffen)It is my task to commend to the House the Third Reading of the Bill, which has had a useful and good-natured debate over the past couple of hours.
My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) thought that this would be an historic Finance Bill. That is a generous judgment. Every Finance Bill has an almost instant reaction, the measured judgment that comes at this stage of the parliamentary proceedings, and a more valid judgment that can be made only in the fulness of time when its propositions can be related to the economic circumstances and requirements of the society.
I welcome the confidence expressed by my hon. Friend the Member for Lichfield and Tamworth and I believe that his instinctive judgment will be validated. Of course, the final say will rest with the British electorate. The House has been long on rhetoric, but many of the attitudes that have been struck—such as the easy assertion that we are facing industrial collapse—can be judged only when the issue is taken to a wider audience and we talk not merely to each other and to our friends in Fleet Street. The hon. Member for Norwich, South (Mr. Garrett) may be short of friends in Fleet Street.
§ Sir William Clark (Croydon, South)The hon. Gentleman is short of friends anywhere.
§ Mr. BiffenI would not be so uncharitable as to suggest that. I found the 1891 hon. Gentleman a delightful combatant in Committee.
I make the more modest assertion that, whatever the Bill may or may not do for the economic life of this nation, it is not a monument to great fiscal innovation—and it is none the worse for that. I have suffered more from reformers than from any other section of the community while I have been in Parliament.
The Bill has clearly provided the Opposition with an occasion for indulgence in a high-profile, ideological controversy. We should not be surprised at that, because it is well known that, if one has difficulties at home, one should seek external diversions. We all know the difficulties that the Labour Party is having at home.
The Bill has been singled out for the most lurid language. The right hon. Member for Llanelli (Mr. Davies), who is at most a good-natured contemporary edition of Lloyd-George, felt constrained to argue that the Bill was a fee paid by the Conservative Party to property, privilege and influence. I had not realised that such a devastating weapon had been entrusted to me when I was asked to do what I could to see the Bill pass its parliamentary stages. The hon. Member for Clack-mannan and East Stirlingshire (Mr. O'Neill) also had fairly harsh things to say. I put diffidently, perhaps, a more modest interpretation of what this Finance Bill sets out to do.
There are four themes that might be attached to the Bill. First, it provides, essentially through parts I and III, for a revenue of £62,000 million. That is a massive sum. As table 9 of the Red Book indicates, receipts from taxation are rising at a time when the public sector borrowing requirement is expected to fall. I say, perhaps as much to my hon. Friends as to other parts of the House, that we are confronted in this Bill with the truth that realistic taxation is needed to enable monetary policy to function without undue recourse to Government borrowing.
I listened with particular interest to the contribution of the hon. Member for Colne Valley (Mr. Wainwright). I thought that he was not entirely unsympathetic to the belief that, in whatever pursuit we will have of the Government's total 1892 economic objectives, it is foolish to suppose that we can proceed without realistic levels of taxation. That is precisely what is being provided for in the Bill. Of course, we proceed on that perhaps puritanical path only at the distraction of the official Opposition.
The hon. Member for Sheffield, Heeley (Mr. Hooley) did the House a service when he reminded us of the anxiety of Labour Members through their official amendments to reduce value added tax by a substantial amount in opting for a 12½ per cent. rate and by seeking to alter the personal income tax allowances by measures that would have cost £640 million in a full year. Whatever view one may take of the niceties of fine tuning of the borrowing requirement, I frankly do not see how one can conceive of tax changes of that order of magnitude without moving into fiscal irresponsibility. That was precisely the point made by my hon. Friend the Member for Lough-borough (Mr. Dorrell), whose comments I welcome in that respect.
Secondly as a theme, I would draw the attention of the House to the fact that the Bill, through clauses 1 to 3, encompasses substantial increases in excise duties on alcohol, tobacco and petrol.
§ Sir William ClarkNot enough.
§ Mr. BiffenMy hon. Friend the Member for Croydon, South (Sir W. Clark) says "Not enough". I am coming to that point. The balance of taxation between direct and indirect will always be a matter for political judgment in the House. Having heard the debates that have attended the Bill since the Budget debate itself, I can only observe that while I cannot speculate on future patterns of taxation, I have noted that in many parts of the House there is a view that the taxable capacities of excise duties have not been exhausted. I perhaps may rest with those Delphic words.
In the whole balance of taxation that one is constantly seeking between direct and indirect and the other elements of society that will have to bear them, I thought that my hon. Friend the Member for Renfrewshire, East (Mr. Stewart) made a helpful contribution in arguing the importance of seeking to minimise the impact of taxation upon the corporate sector as and when additional resources 1893 became available. I understand that he was talking very much in terms of the North Sea revenues. I contrast that with the unseemly populist language of the hon. Member for Colne Valley who said that God gave the oil to the people. He seemed to imply that he meant people in a popular sense in terms of scope for personal tax reductions as opposed to corporate tax reductions. I hope that he will assure me that he has an open mind on the issue.
§ Mr. Richard WainwrightSurely the Chief Secretary is aware that in making my remarks about an hour ago I credited him with understanding the Book of Deuteronomy.
§ Mr. BiffenThat is a valid point. However, there is nothing in the Finance Bill about the Book of Deuteronomy. I am here concerned not with trouble but with order. The rules of order covering a Third Reading debate state that I must confine myself to what is in the Bill, not to what might be in it. Tempted as I am to engage in Old Testament reminiscences, which are particularly suitable for the one Gladstonian relic in the Liberal Party, the hon. Gentleman will understand that this evening is not the correct occasion.
I turn to my third theme. As my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said, the Bill contains modest but useful aids for the small business community and a variety of clauses. Clause 28 provides relief for interest on money borrowed for investment in a close company. Relief for losses on unquoted shares in trading companies is contained in clause 37. Alterations to capital transfer tax are made in clause 84.
My hon. Friend the Member for Winchester (Mr. Browne) was eloquent on the importance of Government sowing in order to reap through taxation changes. None of us can put hand on heart and say what will happen to the smaller business sector of the economy as a result of the changes. None of us can harm ourselves or Parliament's reputation if we are modest in what we claim to be the consequence of the changes.
The hon. Member for Heeley is unfair to himself and to the Government when he says that the measures encourage Poujadistes. The measures will cer- 1894 tainly play a part in trying to secure a wider and more productive and profitable employment base. That means that one cannot create jobs other than on the basis of profitable companies. Inasmuch as the tax changes for the small companies help to create that profitability they will have some impact and consequence on unemployment.
To speak of property, privilege and influence in the context of these clauses—and I imagine that the right hon. Member for Llanelli had them in mind—is a travesty of the real motivation of the people concerned. Above all, it reveals a lack of understanding about where in today's society corporate privilege and influence is concentrated. It is not in the type of people who will be advantaged by the provisions.
That brings me to my fourth and final theme. The theme has not featured in the Third Reading debate, but we discussed it earlier. I refer to the tangible gesture made to charities in the measures contained in clauses 53 to 55, to the capital transfer tax exemption in clause 85 and the development land exemption in clause 108. It is the belief of my side of the House that it is wholly legitimate to welcome partnership between the State and private provision in the spheres of medicine, the heritage and social welfare. We believe that that objective will be furthered by the Bill. I suspect that this as much as anything will ultimately be seen to be the monument of the Bill.
What has been undertaken in those clauses marks a significant departure after a period during which this whole issue has lain dormant in terms of fiscal consideration. But, having said that, and having asserted my strong support and endorsement of these measures, I remind the House that any moves which involve tax exemptions necessarily erode the tax base. That is one continuing consideration for all those who are committed to the ultimate objective of lower basic rates of taxation. Constant erosion of the tax base must run counter to that overriding objective.
As the hon. Member for Norwich, South (Mr. Garrett) said, we come to the end of the consideration in this House of the Bill. It is a Bill of great constitutional significance. I endorse what he said on that count. It will go to the other place 1895 where, happily, it can be neither embellished nor desecrated, thanks to the wise provisions—I must say this to mend my bridges with Deuteronomy—by which Lloyd George, and may his memory long be hallowed in this place, ensured that we rather than the Duke of Norfolk have the last say upon measures of considerable fiscal significance.
This Bill deserves to leave the Com-
§ mons with the good will of all who take a realistic view of the economy and the need for levels of taxation essential to reduce deficit financing. Let us send it on its passage with good will and gainsay any who may try to impede it.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 276, Noes 213.
1899Division No. 410] | AYES | [9.40 pm |
Adley, Robert | Dunn, Robert (Dart[...]ord) | King, Rt Hon Tom |
Aitken, Jonathan | Durant, Tony | Knight, Mrs Jill |
Alexander, Richard | Dykes, Hugh | Knox, David |
Alison, Michael | Eggar, Timothy | Lang, Ian |
Ancram, Michael | Elliott, Sir William | Latham, Michael |
Arnold, Tom | Emery, Peter | Lawrence, Ivan |
Atkins, Robert (Preston North) | Eyre, Reginald | Lawson, Nigel |
Atkinson, David (B'mouth, East) | Fairgrieve, Russell | Lee, John |
Baker, Kenneth (St. Marylebone) | Faith, Mrs Sheila | Lennox-Boyd, Hon Mark |
Baker, Nicholas (North Dorset) | Farr, John | Lester, Jim (Beeston) |
Bell, Sir Ronald | Fenner, Mrs Peggy | Lewis, Kenneth (Rutland) |
Bendall, Vivian | Fisher, Sir Nigel | Lloyd, Peter (Fareham) |
Benyon, Thomas (Abingdon) | Fletcher, Alexander (Edinburgh N) | Loveridge, John |
Benyon, W. (Buckingham) | Fletcher-Cooke, Charles | Luce, Richard |
Bevan, David Gilroy | Fookes, Miss Janet | Macfarlane, Neil |
Biffen, Rt Hon John | Forman, Nigel | MacGregor, John |
Blackburn, John | Fowler, Rt Hon Norman | MacKay, John (Argyll) |
Blaker, Peter | Fraser, Rt Hon H. (Stafford & St) | Macmillan, Rt Hon M. (Farnham) |
Bo[...], Richard | Fraser, Peter (South Angus) | McNair-Wilson, Michael (Newbury) |
Bonsor, Sir Nicholas | Fry, Peter | McNair-Wilson, Patrick (New Forest) |
Boscawen, Hon Robert | Gardiner, George (Reigate) | McQuarrie, Albert |
Bottomley, Peter (Woolwich West) | Gardner, Edward (South Fylde) | Madel, David |
Bowden, Andrew | Garel-Jones, Tristan | Major, John |
Boyson, Dr. Rhodes | Gilmour, Rt Hon Sir Ian | Marland, Paul |
Braine, Sir Bernard | Glyn, Dr Alan | Marshall, Michael (Arundel) |
Bright, Graham | Goodlad, Alastair | Mather, Carol |
Brinton, Tim | Grant, Anthony (Harrow C) | Maude, Rt Hon Angus |
Brittan, Leon | Gray, Hamish | Mawby, Ray |
Brocklebank-Fowler, Christopher | Grieve, Percy | Mawhinney, Dr Brian |
Brooke, Hon Peter | Griffiths, Eldon (Bury St Edmunds) | Maxwell-Hyslop, Robin |
Brotherton, Michael | Griffiths, Peter (Portsmouth N) | Mayhew, Patrick |
Brown, Michael (Brigg & Sc'thorpe) | Grist, Ian | Meyer, Sir Anthony |
Browne, John (Wincheser) | Grylls, Michael | Mills, Iain (Meriden) |
Bruce-Gardyne, John | Gummer, John Selwyn | Mills, Peter (West Devon) |
Bryan, Sir Paul | Hamilton, Hon Archie (Eps'm&Ew'll) | Miscampbell, Norman |
Buchanan-Smith, Hon Alick | Hamilton, Michael (Salisbury) | Mitchell, David (Basingstoke) |
Buck, Antony | Hampson, Dr Keith | Moate, Roger |
Budgen, Nick | Hannam, John | Molyneaux, James |
Bulmer, Esmond | Haselhurst, Alan | Montgomery, Fergus |
Burden, F. A. | Havers, Rt Hon Sir Michael | Moore, John |
Butcher, John | Hawkins, Paul | Morris, Michael (Northampton, Sth) |
Butler, Hon Adam | Hawksley, Warren | Morrison, Hon Charles (Devizes) |
Carlisle, John (Luton West) | Hayhoe, Barney | Morrison, Hon Peter (City of Chester) |
Carlisle, Kenneth (Lincoln) | Heath, Rt Hon Edward | Mudd, David |
Carlisle, Rt. Hon Mark (Runcorn) | Heddle, John | Murphy, Christopher |
Chalker, Mrs. Lynda | Henderson, Barry | Myles, David |
Channon, Paul | Heseltine, Rt Hon Michael | Neale, Gerrard |
Chapman, Sydney | Hicks, Robert | Needham, Richard |
Churchill, W. S. | Higgins, Rt Hon Terence L. | Nelson, Anthony |
Clark, Hon Alan (Plymouth, Sutton) | Hill, James | Neubert, Michael |
Clark, Sir William (Croydon South) | Holland, Philip (Carlton) | Newton, Tony |
Clarke, Kenneth (Rushcliffe) | Hooson, Tom | Normanton, Tom |
Clegg, Sir Walter | Hordern, Peter | Oppenheim, Rt Hon Mrs Sally |
Cope, John | Howe, Rt Hon Sir Geoffrey | Osborn, John |
Cormack, Patrick | Howell, Rt Hon David (Guildford) | Page, John (Harrow, West) |
Corrie, John | Howell, Ralph (North Norfolk) | Page, Rt Hon Sir R. Graham |
Costain, A. P. | Hunt, David (Wirral) | Page, Richard (SW Hertfordshire) |
Cranborne, Viscount | Hunt, John (Ravensbourne) | Parkinson, Cecil |
Critchley, Julian | Irving, Charles (Cheltenham) | Parris, Matthew |
Dean, Paul (North Somerset) | Jenkin, Rt Hon Patrick | Patten, Christopher (Bath) |
Dickens, Geoffrey | Johnson Smith, Geoffrey | Patten, John (Oxford) |
Dorrell, Stephen | Jopling, Rt Hon Michael | Pattie, Geoffrey |
Douglas-Hamilton, Lord James | Kaberry, Sir Donald | Pawsey, James |
Dover, De[...]shore | Kellett-Bowman, Mrs Elaine | Percival, Sir Ian |
du Cann, Rt Hon Edward | Kershaw, Anthony | Pink, R. Bonner |
Dunlop, John | Kimball, Marcus | Pollock, Alexander |
Porter, George | Speed, Keith | van-Straubenzee, W. R. |
Prentice, Rt Hon Reg | Spence, John | Vaughan, Dr Gerard |
Price, David (Eastleigh) | Spicer, Jim (West Dorset) | Viggers, Peter |
Proctor, K. Harvey | Spicer, Michael (S Worcestershire) | Waddington, David |
Pym, Rt Hon Francis | Sproat, Iain | Wakeham, John |
Raison, Timothy | Squire, Robin | Waldegrave, Hon William |
Rathbone, Tim | Stainton, Keith | Walker, Rt Hon Peter (Worcester) |
Rees, Peter (Dover and Deal) | Stanbrook, Ivor | Walker, Bill (Perth & E Perthshire) |
Rees-Davies, W. R. | Stanley, John | Walker-Smith, Rt Hon Sir Derek |
Renton, Tim | Steen, Anthony | Waller, Gary |
Rhodes James, Robert | Stevens, Martin | Walters, Dennis |
Ridley, Hon Nicholas | Stewart, Ian (Hitchin) | Ward, John |
Ridsdale, Julian | Stewart, John (East Renfrewshire) | Warren, Kenneth |
Rifkind, Malcolm | Stokes, John | Wells, John (Maidstone) |
Roberts, Michael (Cardif[...] NW) | Stradling Thomas, J. | Wheeler, John |
Roberts, Wyn (Conway) | Tapsell, Peter | Whitney, Raymond |
Ross, Wm. (Londonderry) | Taylor, Robert (Croydon NW) | Wickenden, Keith |
Sainsbury, Hon Timothy | Taylor, Teddy (Southend East) | Wiggin, Jerry |
Scott, Nicholas | Tebbit, Norman | Wilkinson, John |
Shaw, Giles (Pudsey) | Temple-Morris, Peter | Williams, Delwyn (Montgomery) |
Shaw, Michael (Scarborough) | Thomas, Rt Hon. Peter (Hendon S) | Winterton, Nicholas |
Shelton, William (Streatham) | Thompson, Donald | Wolfson, Mark |
Shepherd, Colin (Hereford) | Thorne, Neil (Ilford South) | Young, Sir George (Acton) |
Shepherd, Richard (Aldridge-Br'hills) | Thornton, Malcolm | |
Shersby, Michael | Townsend, Cyril D. (Bexleyheath) | TELLERS FOR THE AYES |
Silvester, Fred | Trippier, David | Mr. Spencer Le Marchant and |
Sims, Roger | Trotter, Neville | Mr. Mr. Anthony Berry. |
Smith, Dudley (War. and Leam'ton) | ||
Adams, Allen | Dubs, Alfred | Kerr, Russell |
Alton, David | Duffy, A. E. P. | Kilfedder, James A. |
Anderson, Donald | Dunn, James A. (Liverpool, Kirkdale) | Kilroy-Silk, Robert |
Archer, Rt Hon Peter | Dunnett, Jack | Lamble, David |
Armstrong, Rt Hon Ernest | Dunwoody, Mrs Gwyneth | Leighton, Ronald |
Ashley, Rt Hon Jack | Eadie, Alex | Lewis, Arthur (Newham North West) |
Ashton, Joe | Eastham, Ken | Lewis, Ron (Carlisle) |
Atkinson, Norman (H'gey, Tott'ham) | Edwards, Robert (Wolv SE) | Litherland, Robert |
Bagier, Gordon A. T. | Ellis, Raymond (NE Derbyshire) | Lofthouse, Geoffrey |
Barnett, Guy (Greenwich) | Ellis, Tom (Wrexham) | Lyon, Alexander (York) |
Barnett, Rt Hon Joel (Heywood) | English, Michael | Lyons, Edward (Bradford West) |
Beith, A. J. | Evans, Ioan (Aberdare) | McDonald, Dr Oonagh |
Bidwell, Sydney | Evans, John (Newton) | McElhone, Frank |
Booth, Rt Hon Albert | Faulds, Andrew | McKelvey, William |
Boothroyd, Miss Betty | Field, Frank | MacKenzie, Rt Hon Gregor |
Bottomley, Rt Hon Arthur (M'brough) | Fitch, Alan | Maclennan, Robert |
Bradley, Tom | Flannery, Martin | McTaggart, Bob |
Bray, Dr Jeremy | Fletcher, L. R. (Ilkeston) | McWilllam, John |
Brown, Hugh D. (Provan) | Fletcher, Ted (Darlington) | Magee, Bryan |
Brown, Robert C. (Newcastle W) | Foot, Rt Hon Michael | Marshall, David (Gl'sgow, Shettles'n) |
Brown, Ronald W. (Hackney S) | Ford, Ben | Marshall, Dr Edmund (Goole) |
Brown, Ron (Edinburgh, Leith) | Forrester, John | Marshall, Jim (Leicester South) |
Buchan, Norman | Foster, Derek | Martin, Michael (Gl'gow, Springb'rn) |
Callaghan, Rt Hon J. (Cardiff SE) | Fraser, John (Lambeth, Norwood) | Mason, Rt Hon Roy |
Callaghan, Jim (Middleton & P) | Freeson, Rt Hon Reginald | Maynard, Miss Joan |
Campbell, Ian | Garrett, John (Norwich S) | Meacher, Michael |
Campbell-Savours, Dale | Garrett, W. E. (Wallsend) | Mellish, Rt Hon Robert |
Cant, R. B. | Ginsburg, David | Mikardo, Ian |
Carm'ch[...], Neil | Graham, Ted | Millan, Rt Hon Bruce |
Carter-Jones, Lewis | Grant, George (Morpeth) | Miller, Dr M. S. (East Kilbride) |
Clark, Dr. David (South Shields) | Grant, John (Islington C) | Mitchell, Austin (Grimsby) |
Cocks, Rt Hon Michael (Bristol S) | Hamilton, James (Bothwell) | Mitchell, R. C. (Soton, Itchen) |
Cohen, Stanley | Hamilton, W. W. (Central Fife) | Morris, Rt Hon Alfred (Wythenshawe) |
Coleman, Donald | Hardy, Peter | Morris, Rt Hon Charles (Openshaw) |
Cook, Robin F. | Harrison, Rt Hon Walter | Morris, Rt Hon John (Aberavon) |
Cowans, Harry | Hart, Rt Hon Dame Judith | Moyle, Rt Hon Roland |
Crowther, J. S. | Hattersley, Rt Hon Roy | Newens, Stanley |
Cryer, Bob | Haynes, Frank | Oakes, Rt Hon Gordon |
Cunliffe, Lawrence | Heffer, Eric S. | Ogden, Eric |
Cunningham, Dr John (Whitenaven) | Hogg, Norman (E Dunbartonshire) | O'Halloran, Michael |
Dalyell, Tam | Holland, Stuart (L'beth, Vauxhall) | O'Neill, Martin |
Davidson, Arthur | Home Robertson, John | Orme, Rt Hon Stanley |
Davies, Rt Hon Denzil (Llanelli) | Homewood, William | Owen, Rt Hon Dr David |
Davies, Ifor (Gower) | Hooley, Frank | Parker, John |
Davis, Clinton (Hackney Central) | Horam, John | Parry, Robert |
Davis, Terry (B'rm'ham, Stechford) | Howell, Rt Hon Denis (B'ham, Sm H) | Pavitt, Laurie |
Deakins, Eric | Hughes, Mark (Durham) | Pendry, Tom |
Dempsey, James | Hughes, Robert (Aberdeen North) | Powell, Raymond (Ogmore) |
Dewar, Donald | Janner, Hon Greville | Prescott, John |
Dixon, Donald | Jay, Rt Hon Douglas | Price, Christopher (Lewisham West) |
Dobson, Frank | John, Brynmor | Race, Reg |
Dormand, Jack | Jones, Rt Hon Alec (Rhondda) | Radice, Giles |
Douglas, Dick | Jones, Barry (East Flint) | Richardson, Jo |
Douglas-Mann, Bruce | Jones, Dan (Burnley) | Roberts, Allan (Bootle) |
Roberts, Gwilym (Cannock) | Soley, Clive | Weetch, Ken |
Robertson, George | Stallard, A. W. | Wellbeloved, James |
Robinson, Geoffrey (Coventry NW) | Steel, Rt Hon David | Welsh, Michael |
Rooker, J. W. | Stoddart, David | White, Frank R. (Bury & Radcliffe) |
Roper, John | Stott, Roger | White, James (Glasgow, Pollok) |
Ross, Ernest (Dundee West) | Strang, Gavin | Whitehead, Phillip |
Ross, Stephen (Isle of Wight) | Straw, Jack | Whitlock, William |
Rowlands, Ted | Summerskill, Hon Dr Shirley | Willey, Rt Hon Frederick |
Ryman, John | Thomas, Jeffrey (Abertillery) | Williams, Rt Hon Alan (Swansea W) |
Sandelson, Neville | Thomas, Dr Roger (Carmarthen) | Williams, Sir Thomas (Warrington) |
Sheerman, Barry | Tilley, John | Wilson, Gordon (Dundee East) |
Sheldon, Rt Hon Robert (A'ton-u-L) | Tinn, James | Winnick, David |
Shore, Rt Hon Peter (Step and Pop) | Torney, Tom | Woolmer, Kenneth |
Silkin, Rt Hon John (Deptford) | Urwin, Rt Hon Tom | Wright, Sheila |
Silkin, Rt Hon S. C. (Dulwich) | Varley, Rt Hon Eric G. | |
Silverman, Julius | Wainwright, Richard (Colne Valley) | TELLERS FOR THE NOES: |
Skinner, Dennis | Walker, Rt Hon Harold (Doncaster) | Mr. Hugh McCartney and |
Smith, Rt Hon J. (North Lanarkshire) | Watkins, David | Mr. George Morton. |
Snape, Peter |
§ Question accordingly agreed to.
§ Bill read the Third time and passed.