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would be forgiven--to use the phrase which the hon. Member for Leeds, West dislikes. In other words, that implies that there is some conflict of interest between banks and the taxpayer in how those debts are to be treated if they are written down, and whether the claims on the borrowers are waived.

The Labour party's position is that there is such a conflict of interest. I put it to the House seriously that there is no such conflict of interest, because the taxpayer shares exactly the same interest as the depositor or shareholder of a bank in maintaining the claim. If that claim can ultimately be made good and the debt is ultimately serviced and repaid, not only can the bank write back that amount to profits, but those profits will be taxable and the taxpayer will gain his full due proportionate benefit in due course. There is that fundamental error in the Labour party's position and it is important that the debate should not proceed without its having been identified.

I am not insensible of the need to think carefully about how we can better structure the capital flows in the world, including the capital flows between the OECD area and the Third world. There is no question but that in contrast with previous periods there was a greater distortion in those capital flows in the 1970s which led to many of the problems with which we live today.

The period before 1914 was characterised by substantial net capital outflows from the developed countries to what we would now call the Third world--Latin America, Asia, the Russian empire and so on. In contrast to that period there was an extraordinary phenomenon in the 1970s when almost the total sum of capital flows went through the banking market and virtually none went in the form of private debt through the bond market or through the equity market in the form of direct industrial investment or portfolio flows. That was a distorted flow and it means that the Third world has had a distorted portfolio of indebtedness and the OECD countries have a distorted portfolio of Third world assets which is in the interests of neither party. What does one do about that.? One creates conditions in which it is possible for deficit countries to exploit other forms of capital, particularly to attract private debt to the bond markets and equity flows in the form of direct investment or portfolio flows. A small number of Third world countries have achieved that. Malaysia and South Korea are pertinent examples. They have not only thrived and prospered-- they have been models of economic success--but they have not had the problems to which we are referring today and have not had to write off any of their bank debt.

The remedy is there. It is important that we make it clear to Third world countries that the solution largely lies in their hands and that if they create the conditions in which those flows are attracted a great deal of the problem will automatically be solved. But there is one thing that we shall not do. We shall not do a good day's work for the Third world, for investors in Britain or for the future prosperity of the globe if we live in the Alice-in-Wonderland world of financial illusions and make-believe which the Labour party currently appears to inhabit.

Mr. Max Madden (Bradford, West) : On a point of order, Madam Deputy Speaker. The hon. Member for Stamford and Spalding (Mr. Davies) made a number of


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references during his remarks to conflicts of interest and other remarks that were relevant to banking. I note from the Register of Members' Interests that the hon. Gentleman is a consultant to Morgan Grenfell, merchant bankers. Would you confirm, Madam Deputy Speaker, that the entry in the register in no way lifts the obligation on hon. Members to declare a relevant interest during the course of their remarks? I hope that in future the hon. Gentleman will make clear his direct interest when contributing to debates such as this.

Madam Deputy Speaker (Madam Betty Boothroyd) : I confirm that it is for an hon. Member to declare his interests. I am sure that if the hon. Member for Stamford and Spalding (Mr. Davies) has such an interest to declare he will do so on a future occasion.

Mr. Quentin Davies : I have declared an interest on many occasions, including in Committee. The fact that I was a director of Morgan Grenfell until fairly recently, and am now a consultant to the firm, was referred to earlier this afternoon. Therefore, it seemed otiose to refer to it again lest it was interpreted as a plug for a particular financial institution.

Madam Deputy Speaker : I am sure that the House is much obliged.

Mr. Tam Dalyell (Linlithgow) : It often happens in the House that hon. Members preface their speech by saying that they hope that they will be excused if they do not follow the previous speaker. I should like quietly to follow the hon. Member for Stamford and Spalding (Mr. Davies). I listened intently to his speech and I shall send a copy of it in Hansard to Morgan Grenfell to ask whether it represents its point of view. It is a matter of some seriousness if some of the great merchant banking houses in Britain share that view. I know merchant bankers who are a great deal wiser than the hon. Gentleman and who understand the desperate situation in South America that we are often talking about.

My hon. Friend the Member for Leeds, West (Mr. Battle) raised the question of morality and he received a legitimate, sensible and calculated answer from the hon. Member for Beaconsfield (Mr. Smith). It happens that I believe in a degree of fiduciary responsibility, because otherwise the world does not work. But is not there an obligation on the part of lenders? When some institutions in the West were awash with money much of the lending to Brazil was irresponsible.

I had the good fortune to go to Altimera, at my own expense, with Friends of the Earth, and then to talk to people in the Brazilian Government. Like the hon. Member for Beaconsfield. I speak with some knowledge. Is it responsible for the West to lend huge sums of money for nuclear power stations? I happen to be unashamedly pro-nuclear, but it is not acceptable for us to lend enormous sums for power stations that do not work. The three power stations between San Paolo and Rio, one of them made by Westinghouse and the other two basically by Siemens, are not working properly. That is no way to treat Brazil with its problems.

If we do nothing, the result will be simple--the rain forests will go. It is no good talking about keeping the rain forest if we adopt the general attitude of the hon. Member for Stamford and Spalding that we cannot have our cake and eat it.


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We must be clear about the view of Morgan Grenfell. I want to ask the Economic Secretary a direct question. It so happens that when I was in Brasilia a lunch was given by the excellent British ambassador, Michael Newington, physicist and many other things, for Kit McMahon, an old friend of mine from the Bank of England in the 1970s when he used to brief me for the budget committee of the European Parliament. Let me say openly in the House that I think that he has been greatly attacked, as has Jeremy Morse, for being "callous" about the rain forest. I am sure that, in his personal capacity, Kit McMahon is as concerned about the rain forest as I or any other Opposition Member--as is Jeremy Morse. I criticise neither the chairman of Lloyds bank nor the chairman of the Midland bank.

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I should, however, like to ask the Treasury a question. On his return from Brasilia, Kit McMahon talked at some length--if not to Ministers, at least to officials--about practical ways of alleviating the debt problem. He had been accompanied by senior debt advisers from the Midland bank. My first question is, what has been the result of the McMahon mission? Is there anything that the House can be told?

As a result of the initiatives of the hon. Members for Wycombe (Mr. Whitney) and for Gravesham (Mr. Arnold) and other officers of the Latin American parliamentary group, I met over lunch--and subsequently--the Ecuador ambassador, Senor de Correa. My hon. Friend the Member for Leeds, West gave a striking example of the results of the many earthquakes in the area : after one of them oil pipelines were cut, and it became difficult to repay the debt.

This is my second question : have the Government any contingency plans for what might be called "hiccups", when for one reason or another it becomes difficult to pay debt in the short term? It is the old moratorium problem. Unless we do something, there will be a simple consequence : the Japanese will give Ecuador money for fishing round the Galapagos Islands, with terrible consequences to the ecology of that unique archipelago.

Incidentally, we should understand that the huge Green vote in the European elections did not necessarily represent an endorsement of every aspect of Green policy. It was about something else ; it registered a general unease about the problems described so excellently in "The Fragile Earth" and other programmes on all four main television channels.

My third question is this : is the Minister able to report on the success of the mission to Brasilia undertaken by the Minister for Overseas Development--the Patten mission? As one who has secured Adjournment and Consolidated Fund debates on rain forest problems, I am led to believe by what I read and hear that the Minister did extremely well in Brasilia. I happen to share the view of a leader in The Times that the way to go about such matters is through quiet diplomacy. If a British Minister has done well, I feel that it is up to Opposition Members to say so. That is my view until such time as the Minister can report back in detail.

I should, however, like to know under what Treasury guidelines the right hon. Gentleman reached last week's agreement. I say that as one who was invited by the Foreign Office Minister--as were a number of others--to


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meet the British ambassadors to South America when they were in London last month. They were extremely cognisant of the problem. That brings me to my fourth question, which concerns the Paris summit. What will be the Treasury's view of the general concept of debt-for-nature swaps? The Times leader of 6 July, quoted so approvingly by the Prime Minister at today's Question Time, states : "Brazil's own newly- minted environmental scheme for the Amazon, launched last April under the nationalistic slogan Our Nature', has been widely criticised as a public relations exercise. It includes new forest reserves and nature parks, forest guards, and a much-needed new soil map, and has temporarily suspended subsidies for logging and ranching. Land reforms are proposed to encourage small farmers to settle in the more fertile scrublands of central and west Brazil.

But the funds to match the plan are lacking ; and it was accompanied by cuts in the budgets of the two major Amazon research institutes. Brazil's difficulty in servicing its foreign debt, underlined again this week by its formal notification of delays in payments to its creditors, ought to make possible some form of debt-for-environment deal."

What is the Treasury's view?

I know that there are constraints on time, and this is my last question. Treasury Ministers, along with many other people, will know about the long articles on the Brazilian rain forest that have appeared in The Sunday Times. I--like, I suspect, a number of my colleagues--wrote a detailed letter to Sir Peter Walters. BP has always been extremely helpful to me ; I represent one of its big units in Grangemouth, where many people work. I should like to ask the Treasury about an aspect of the reply to my letter. I think that this is in order, as it directly concerns the World Bank.

Madam Deputy Speaker : Order. It is indirectly related, but as I am sure that the hon. Gentleman is about to conclude his remarks, I shall allow him to do so.

Mr. Dalyell : It is difficult to scrutinise the actions of the British director of the World Bank in the House--although I do not criticise him personally. Presumably he acts under Great George street instructions.

Item 2 of Sir Peter Walters' reply states :

" The mining company says the total directly cleared for open cast mining sites is 13,500 acres', whereas, an expert employed by the World Bank and surveys by the Brazilian forestry service estimate that as much as 250,000 acres has been adversely affected'." BP replied :

"The area of the Jamari National Forest is 215,000 hectares (531, 000 acres) in which Jacunda's mining rights cover 59,500 hectares (147,000 acres) about 28 per cent. of the Forest. The area of land cleared for operations, including mining, access roads, housing and caring for the workforce and their families, is 4,500 acres, less than 1 per cent. of the Forest ; depending on the season, a further 2,500 to 7,000 hectares are flooded areas to provide water for the operation. These figures have been confirmed by the forestry service, IBAMA.

As we have so far been unable to contact Marc Dourojeannie, the World Bank authority cited by the Sunday Times, we cannot comment on the basis of his calculations, or his statement on the area being affected', but if they are intended to apply only to the Jacunda project they are simply incompatible with the scale of this operation."

As the Treasury is the British Ministry responsible for World Bank actions, I am entitled to ask for a considered reply from the Treasury--although obviously I cannot expect an answer

tonight--explaining what instructions it has given our own executive director of the World Bank about the controversy between Sir Peter Walters and BP on the one hand The Sunday Times on the other.


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Mr. Lilley : Hon. Members on both sides of the House have expressed concern about the burden of debt, including servicing debt, placed on many underdeveloped countries. The question we must consider is whether the new clause provides an appropriate way of dealing with the problem. As my hon. Friend the Member for Beaconsfield (Mr. Smith) correctly and lucidly spelt out, the existing law already relieves all bad debts from taxation, whether they are owed to sovereign Governments or commercial entities, and no distinction between the two is made.

In practice, new clause 7, which grants relief when a debt to a sovereign third world country is cancelled, would add nothing to the existing law. It would be neither a relief nor, as it stands, a restriction of a relief. It would simply reaffirm part of a relief that is inherent in the law as it stands.

The debate is circling around new clause 8 which, for technical reasons, has not been called. New clause 8 would limit tax relief in respect of other bank loans to Third world countries which have not been cancelled. The question is whether the new clause would help. It is obviously intended to encourage the cancellation of Third world debts to banks, but it would discourage new lending by banks to Third world countries. Banks would be unlikely to enter into new loans with Third world countries if they knew that, in the event of failure to repay, tax relief would not be made available to them, as it is when they make provision for expected repayments in their dealings with sovereign countries or commercial companies. We should be creating a disincentive to banks to engage in new lending to underdeveloped countries. That would be good. A resumption of new lending by banks to underdeveloped countries is vital, where appropriate, and where confidence exists. That is part of the reason for the so-called Brady plan and the encouragement of moves along those lines by the Group of Seven. We should like the burden of servicing existing debt to be alleviated and new lending to be resumed by commercial banks to large debtors. I cannot therefore recommend either new clause 7 or new clause 8, although I recognise the entirely benevolent intentions of the Opposition in tabling them.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that the effect of Government lending and of the lending by international financial institutions had enabled the underdeveloped countries to repay their interest on commercial debt to commercial banks and that it had amounted, therefore, to a subsidy to the banks. He is saying, in effect, that Government aid goes not to underdeveloped countries but by a circuitous route to banks. It was an interesting attempt to undermine the case for Government aid to underdeveloped countries. According to that analysis, none of it reaches underdeveloped countries.

My hon. Friend the Member for Stamford and Spalding (Mr. Davies) rightly pointed out that banks have a fiduciary responsibility in the running of their affairs both to their shareholders--the people who ultimately finance the provisions that are made against bad debts--and to their depositors and that it is right that they should behave responsibly and recognise their duties. We welcome the fact that the worst phase of the debt crisis has passed. It poses much less of a threat to the world financial system than it did because banks have built up provisions, at the expense of their shareholders, to enable them to finance the bad debts on their books. We do not believe


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that it is wrong that in meeting the tax law requirements they should enjoy tax relief on those provisions against bad debts. It is accepted that people should not pay tax on profits that they have not made. If we were to deprive them of tax relief on the provisions that they have made against genuine bad debts, we should be taxing them on profits that they have not made. That could not be in the interests of the banking system, depositors and the many shareholders who ultimately are the owners of the banks.

Ms. Diane Abbott (Hackney, North and Stoke Newington) : I am grateful to the Minister for giving way because I was not here during the earlier part of the discussion on the new clause. The Minister says that the worst part of the debt crisis is over. It may be over for the European banks, but for Third world countries, which are under the hammer of the International Monetary Fund, the worst part of the debt crisis is yet to come. The debt crisis is not just about making life easy for western European banks ; it is also about social and political conditions in Third world countries. Does the Minister agree that banks which made unwise loans to corrupt and illiberal re gimes should not get a tax rake off from the taxpayer?

8.15 pm

Mr. Lilley : I hope that the hon. Lady is satisfied with making that rather pedantic point. I said that the worst threat to the international financial system is over. I accept that the real concern of the House, as I began by saying--perhaps the hon. Lady was not in the Chamber even then-- relates to the poverty burden that has been placed on underdeveloped countries. I gave up five years of my life to working on aid programmes in underdeveloped countries, so I know considerably more about it than perhaps the hon. Lady does. Therefore, attempts to prove that she is holier than the rest of us carry little weight.

Our contribution to the well-being of indebted countries takes a number of forms. My hon. Friend the Member for Beaconsfield paid tribute to the fact that my right hon. Friend the Chancellor of the Exchequer took a leading part in what became known as the Toronto terms agreement, under which sub- Saharan African countries--those most heavily indebted and whose debts are primarily to Governments--have had their loans converted into gifts by the creditor companies, while the servicing costs of non-aid loans have been reduced. That has been a major achievement of British diplomacy. A number of countries are already benefiting from that international agreement.

It is vital that we should also encourage the renewed flow of private capital from developed countries to underdeveloped countries--not least equity capital. Since we abolished exchange controls, the flow of private capital from this country to developing countries has exceeded that of all the other member states of the European Community put together and amounts to many billions of pounds. [Interruption.] When equity capital is invested by developed countries in developing countries, it increases considerably the wealth of those countries-- [Interruption.] The hon. Member for Hackney, North and Stoke Newington (Ms. Abbott), who knows absolutely nothing about trade, chooses to demur.

Ms. Abbott rose--


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Mr. Lilley : The second way in which this country can help developing countries is by opening up the prospects for free trade. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) said that we give aid with one hand and take it back via trade. Nothing could be further from the truth. By opening the markets of developed countries to the products of developing countries we are benefiting them. [Interruption.] The whole House must surely welcome that. [Interruption.] Unless the hon. Member for Hackney, North and Stoke Newington has anything novel to say on the subject, I shall not give way to her.

We also want to encourage, by means of aid provision and any technical assistance that we can give to developing countries, the development of their own economies so that they will be able to prosper on their own without having to rely on aid. [Interruption.] Does the hon. Lady wish to intervene or just to continue to chatter?

Ms. Abbott : I am grateful to the Minister for giving way because, as he says, I was not here during the early part of the debate. However, is he aware that 3 per cent. of the gross domestic product of developing countries flows not from us to them but from them to us?

Mr. Lilley : If the hon. Lady had been here during the early part of the debate she would have known that that point had been agreed by all the parties. She has not contributed to the debate by intervening and making that point now.

Having taken the initiative in the case of the sub-Saharan African countries--the most impoverished and the most indebted countries whose debt is primarily to Governments--our concern now relates mostly to middle income debtors. Their debt is, by and large, with the commercial banks. It is therefore up to them, in consultation with the commercial banks, to reach arrangements to their mutual benefit to enable those countries satisfactorily to service debts, where appropriate, for the banks to recognise that debts may have to be written off, to reschedule or reduce the burden of those debts and, above all, to try to open the way to renewal of lending. That is the way forward, but it cannot be achieved by the Government manipulating the tax system, and for that reason I urge the House not to accept the new clause.

The hon. Member for Linlithgow (Mr. Dalyell) asked a lengthy list of questions. Obviously I shall have to write to him, but I hope that he will clarify his second question asking me whether I am aware of the hiccup problem and the fact that it could well lead to Japanese fishermen going round the Galapagos Islands. I shall need considerable clarification before I can answer that question, but I shall do my best.

I urge the Opposition to withdraw new clause 7 which fails to achieve what they sought, and would simply create a disincentive to new lending by banks to underdeveloped countries, which the whole House wishes to continue.

Mr. Nicholas Brown : The Economic Secretary's style in the House seems to be deteriorating. He seems to be modelling himself on the Chief Secretary to the Treasury, and I cannot commend that. As I understand his summation of the debate, the decision to borrow money carries great moral obligations which can never be redressed, yet the decision to lend does not. We do not accept that proposition. Nevertheless, the Economic


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Secretary was right in discerning that our heart was really in clause 8 which has not been called. Therefore, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 9

Schedule E : Benefits in Kind

(1) Section 154 ICTA 1988 shall not apply to any benefits facilities or expenditure falling within subsection (2) below. (2) This subsection applies to the bona fide provision of workplace nurseries of other creche facilities which are made available generally to the children of employees at a location on a basis that such provision would not have the effect of conferring benefits wholly or mainly on directors of companies or on those employees who are in receipt of the higher or highest levels of remuneration.'.-- [Mr. Chris Smith.]

Brought up, and read the First time.

Mr. Chris Smith : I beg to move, That the clause be read a Second time.

Madam Deputy Speaker : With this it will be convenient to discuss new clause 11--

Tax Relief for nursery care--

(1) For the purposes of the Tax Act 1988, section 154, there shall be excluded from a charge to income tax of a benefit in kind any benefit arising from an employee from the provision by the employer of nursery care facilities to any children under 5 of the employee, provided only that such nursery facilities are available to employees of the employer generally.

(2) An employee making payments for nursery care in respect of any of their own children under 5 shall be entitled to claim, as a deduction qualifying for basic income tax relief only, any payment made in this regard up to a limit of £45 per week per child. (3) For the purposes of the above clause, an employee is defined as a person who works 25 hours a week or more, excluding meal breaks.'.

Mr. Smith : On 11 April, the Home Office issued a news release from the ministerial group on women's issues headed :

"Choice and high standards are the key to the provision of childcare".

It emphasised how important the Government believed the provision of good quality childcare was. The Minister of State, Home Office, the hon. Member for Oxford, West and Abingdon (Mr. Patten), said : "Employers also have a significant part to play--using the tax reliefs available to them, to provide childcare facilities and to attract skilled mothers who have chosen to return to work in a time of demographic change."

That point was emphasised later in the press release. One of the points in the five-point plan announced by the Government to assist women to enter the work force was :

"Further encouragement to employers to use the tax reliefs available to provide childcare facilities."

To ram the point home even further, the Minister of State, Department of Education and Science said :

"These initiatives are a significant contribution in developing the provisions of childcare."

That news release demonstrated clearly that the Government have hit on the extremely important principle of supporting the provision of good childcare facilities by employers at the workplace. But by their actions the Government are fundamentally undermining the principle they purport to uphold. For a start, there is very little incentive in the tax system--and very little take-up by employers--to provide workplace nurseries. The offsetting


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of workplace nursery provision against corporation tax liability involves, among other things, a long-term commitment which many employers are reluctant to make.

The crucial drawback to providing workplace nursery provision is the tax on the deemed benefit that a parent receives when placing a child in a subsidised workplace nursery. Since 1985, the Inland Revenue has regarded the taking up of a subsidised nursery place as a benefit in kind. The subsidy has to be added to the income for income tax computation, provided that the total of income plus deemed benefits is at least £8,500. The tax on workplace nursery take-up acts as a powerful disincentive to parents with young chidlren, especially mothers considering taking up employment when the changing demography of the work force means that we should be encouraging rather than discouraging women from taking up work.

There are about 100 workplace nurseries in the United Kingdom. The main providers tend to be local authorities and health authorities. It is estimated that as few as 20 companies in the private sector provide workplace nurseries. One honourable potential exception to that is Midland Bank plc which is proposing a large-scale development of between 200 and 300 workplace nurseries. If that goes ahead, the bank will deserve considerable credit, but the current figure of 100 workplace nurseries throughout the country is far too low. It demonstrates first the need to ensure that the provision of workplace nursery space is increased, and secondly that the income to the Exchequer from the tax which the Inland Revenue imposes on the deemed benefit is minimal.

On the need to increase provision, Britain is currently one of Europe's poorest providers of childcare facilities. We should be developing a pattern of provision in which employers certainly have a part to play alongside local authorities and voluntary organisations. Most of Europe and the United States have no tax on workplace nursery provision. The tax discourages employees from taking up workplace nursery places and employers from providing workplace nurseries. While the tax exists for the potential beneficiaries, employers will be much more reluctant to establish workplace nurseries. The tax acts as a discouragement to the provision of workplace nurseries, and removing the tax would assist.

As for the income to the Exchequer, every time I have asked the Financial Secretary by means of parliamentary questions for information about how much money accrues to the Exchequer as a result of the tax on the deemed benefit of workplace nursery provision, the answer is that the Government do not know. The figure is so small that the Government are unable to compute the benefit to the Exchequer. That makes nonsense of the argument that the Inland Revenue has occasionally deployed and, in particular, deployed in a letter of 4 May to the Workplace Nurseries Campaign, in which it set out what I presume is the Government's policy on the matter. It said :

"The Government recognise both the contribution to the economy of women with children and the importance of making the best use of their skills in the future."

So far, so good. The Inland Revenue sensibly made an important point.

8.30 pm

However, the letter continues :

"But they believe that it is better to encourage those mothers who wish to work to do so by reducing tax rates and


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increasing personal allowances rather than by providing special exemptions which tend to narrow the tax base and drive tax rates up."

We know that the income from the deemed tax on nursery workplace provision is minimal. How on earth can it be assumed to narrow the tax base and drive tax rates up? The Government and the Inland Revenue ignore the fact that it is possible both to follow the pattern that the Government themselves wish to set on tax rates and personal allowances, and to take the step for which we argue and remove the tax on workplace benefit. There is no fiscal or financial excuse for the Government to keep this tax in place.

When the Government initially brought in the measures to tax workplace nursery provision, they argued that it would be a tax only on the benefits of the high paid. They set a threshold of £8,300, about which one might have had queries even at the time. That figure is now equal to roughly the average working woman's wage. It is hardly a threshold which means that only the high paid end up having to face this tax. It is a particular irony that one can be liable for workplace nursery tax at the same time as receiving family credit because one's income is too low for the needs of the family. One specific example has been drawn to my attention by the Workplace Nurseries Campaign. The single mother in question works in Leicester and uses the Leicester city council workplace nursery. She has monthly outgoings of £62 in nursery fees, £50 in nursery tax, £140 in mortgage and £23 in rates. Even with the addition of £32 a month family credit, she is left with less than £40 a week to feed and clothe herself and her four-year-old child. The fact that the Government can with one hand take away £50 in the workplace nursery tax and with the other hand give £32 a month in family credit makes a nonsense of the tax which the Government seek to continue by rejecting new clause 9.

The workplace nursery tax causes hardship in many cases. The Government argue that taking up workplace nursery provision is a perk or benefit, like a company car. But nursery provision is completely different from that. It is an essential, necessary and insurmountable provision, which not only enables a woman to take up work, but has to be available before she can even contemplate being able to do so. One cannot say the same about the great majority of people who benefit from a company car. If the Government want to use the argument about perks and benefits, why do they not extend the workplace nurseries principle to subsidised canteens, sports grounds or aspects of pension provision? All those are tax free and are not subject to the same provisions as workplace nurseries.

What about the security provisions of clauses 50, 51 and 52? It is right that those clauses should be included because they are sensible and justifiable measures. However, the same principle that applies to the essential provision of security measures should apply to the essential provision of workplace nursery space for women who need to avail themselves of that space to enable them to go to work. For many years, the Labour party has argued that the workplace nursery tax should be removed. In moving new clause 9, we seek to achieve precisely that. The tax causes hardship, it discourages women from seeking work and it provides a disincentive for enlightened employers seeking to establish good workplace provision. The workplace nursery tax should have been scrapped years ago and we


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are offering the House a chance to do so, at long last, today. It brings in a minimal income to the Exchequer and acts as a powerful disincentive to women, with young children, who are thinking of going out to work. We should be encouraging them, not discouraging them with an extra burden in tax. The Government claim that a nursery place is a perk ; it is not. It is an essential facility to enable women to play a full part in the economic life of our nation. There is no such tax in other European countries or in the United States and there should not be one in Britain.

Mr. George Walden (Buckingham) : I am rather puzzled by the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith). I will not support his point because it is far too timorous. We do not need workplace provision for children ; we need nursery education for all. I am surprised to hear the hon. Gentleman speaking in a rather technocratic way, which suggests that the Labour party is losing its radical impetus and, perhaps, its broader vision.

I also have an ideological objection to what the hon. Gentleman said. It is not the function of employers to look after the dependants of employees. The answer to the problem he raised is much broader. We should have high- quality nursery provision for all. It is rather typical of the hon. Gentleman that at no point did he mention the function of that dreadful, anonymous word "provision". I am concerned not with child care, but with educating children and doing something productive for a child's development, rather than merely looking after a child in some "caring" mode.

Mr. Madden : Will the hon. Gentleman give way?

Mr. Walden : No, because I am going to speak very briefly.

Dame Elaine Kellett-Bowman (Lancaster) : Will my hon. Friend not give way even to me?

Mr. Walden : How can I refuse?

Dame Elaine Kellett-Bowman : Is my hon. Friend aware that in the teeth of opposition from Lancashire county council we have opened a gorgeous nursery provision in our local Skerton county primary school? The county council which is, of course, Labour-controlled turned the scheme down two years ago. However, as a result of the pupils themselves putting the case forcefully and the parents' support we obtained the wonderful provision for which my hon. Friend is now speaking.

Mr. Walden : My heart is warmed, but not overflowing. I remember defending the Government record, which was creditable, when I was an Education Minister. Provision had risen from 17 per cent. to 42 per cent. over about 10 years and that sounded fine. Fortunately, no one ever asked two basic questions. The first was that if nursery provision was so good, why was it not available to everybody? People could have asked me why it depended on where a child lived. Secondly, there was the question of the quality of nursery provision. I would not spend a penny piece, to paraphrase an hon. Member, on low quality "caring" child care.

We should spend as much as we possibly can on high-quality, educative nursery provision for all. We have 42 per cent. nursery provision, and it is extremely patchy. Some of it is amateur and some of it consists of play care. Some of it is very good--I have seen some very good


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nursery schools run by local authorities-- but the fact remains that in Britain we have only 42 per cent. provision, whereas in France the figure is 97 per cent. That may account in part for the generally higher quality of the behaviour of children in French schools and the generally higher quality of their educational attainment. We frequently see in the newspapers touching photographs of Princess Diana taking her children to nursery school. She is setting a splendid example, but there are an awful lot of people in this country who will never have the money to buy private nursery education and there are an awful lot of places where nursery education is not provided by local authorities. Having briefly served in Government, I have the disadvantage of being a realist. I know that such provision costs a lot of money. Indirectly, the Government are already spending about £400 million on local provision. If we are to double nursery provision, therefore, we are talking about a figure of about £1 billion.

I do not expect the Government to give me the assurance that I should like to hear. Clearly we shall have to be extremely careful about public expenditure in the short term. Having said that, I do not understand the Government's argument--which, as a loyal supporter, I naturally had to advance--that nursery education is an excellent thing, but that it should not be available for everyone.

Mr. Beith : The hon. Member for Buckingham (Mr. Walden) has underlined the case supported by members of all parties for more widespread nursery education. We had hints of such support from the Prime Minister in her earlier guise as Secretary of State for Education, but since them nursery education has slipped further and further down the list of priorities.

The question of such provision is an important part of the background to the new clause. The first and main argument for providing nursery education is that it is in the interests of the children themselves. In many cases, their subsequent school career can be greatly enhanced by a year or more of nursery education. The second compelling reason for such provision is to be found in current demographic trends in Britain. It is obvious that in many areas it will be impossible to recruit sufficient people of the necessary skill and ability into industry and the public service if more opportunities are not provided for women to take employment, and that cannot be done without nursery provision.

The third argument in favour of nursery provision concerns rights and opportunities for women. Quite apart from the labour shortages of the future, we should remember that many women feel prevented from developing their potential in employment and serving the community, whether in the public service or the private sector, because of lack of nursery provision.

I support the proposals in the new clause, but, as the hon. Member for Buckingham said, they are somewhat timid and lacking in radicalism, as they do not go beyond the concept of the workplace nursery, which at the moment accounts for a minuscule proportion of nursery provision. Workplace provision has actually shrunk. I can remember when there was at least one workplace nursery in my constituency, but it is no longer there.

Perhaps the new clause will lead to some enlargement of workplace nursery provision. That would be a good thing and would be of benefit, as people would then be able to take advantage of workplace provision without suffering a


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