Home Page

Column 819

House of Commons

Thursday 30 November 1989

The House met at half-past Two o'clock


[Mr. Speaker-- in the Chair ]


Private Bills (Procedure)

Motion made,

That--the Promoters of every Private Bill which originated in this House in the last Session and which is listed in Schedule A to this Order, or which originated in the House of Lords in the last Session and which is listed in Schedule B to this Order may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session ; and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with ; --every such Bill which originated in this House shall be presented to the House not later than the seventh day after this day ; --there shall be deposited with every Bill so presented a Declaration signed by the Agent for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the last Session ;

--every Bill so presented shall be laid by one of the Clerks in the Private Bill Office upon the Table of the House on the next meeting of the House after the day on which the Bill was presented ; --every Bill listed in Part I of Schedule A shall, after being so laid on the Table, be deemed to have been read the first, second, and third time, and shall pass ;

--every Bill listed in Part II of Schedule A shall, after being so laid on the Table, be deemed to have been read the first and second time and reported from Committee and ordered to lie upon the Table ; --when any Bill originating in the Lords, which was brought from the House of Lords in the last Session and to which this Order relates, is brought from the Lords in the present Session, the Agent for the Bill shall deposit in the Private Bill Office a Declaration, signed by him, stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session, and, as soon as a certificate by one of the Clerks in the Private Bill Office that such a Declaration has been so deposited has been laid upon the Table of the House, the Bill shall be deemed--

(i) in the case of the Buckinghamshire County Council Bill [Lords], the London Local Authorities Bill [Lords], the South Yorkshire Light Rail Transit Bill [Lords] and the United Medical and Dental Schools Bill [Lords], to have been read the first and second time and committed and shall be committed to the Chairman of Ways and Means, who shall make such amendments thereto as have been made by the Committee in the last Session, and shall report the Bill as amended to the House forthwith, and the Bill, so amended, shall be ordered to lie upon the Table ;

Column 820

(ii) in the case of the Nottingham Park Estate Bill [Lords], to have been read the first and second time and committed ;

(iii) in the case of the Medway Tunnel Bill [Lords] and the Vale of Glamorgan (Barry Harbour) Bill [Lords], to have been read the first time and ordered to be read a second time ;

(iv) in the case of the Greater Manchester (Light Rapid Transit System) (No. 3) Bill [Lords], to have been read the first time and referred to the Examiners of Petitions for Private Bills ; --in respect of all the Bills listed in Schedules A and B to this Order, the various stages deemed to have been taken shall be recorded in the Journal of this House as having been taken ;

--only such Petitions as were presented against any Bill brought from the Lords in the last Session which stood referred to the Committee on the Bill and which have not been withdrawn shall stand referred to the Committee on the Bill with the same title in the present Session ;

--in relation to any Bill to which this Order applies Standing Order 127 relating to Private Business shall have effect as if the words "under Standing Order 126 (Reference to Committee of Petitions against Bill)" were omitted ;

--in respect of any Bill originating in the House of Lords to which this Order relates and upon which the Examiners have reported in the last Session that no Standing Order not previously inquired into was applicable thereto, the Examiners shall, if the Bill is brought from the Lords in the present Session, be deemed to have made the same report in the present Session ;

--no further Fees shall be charged in respect of any proceedings on any of the Bills to which this Order relates so far as Fees were incurred during the last Session ;

--this House doth concur with the Lords in their Resolution contained in their Message [22nd November] relating to the River Tees Barrage and Crossing Bill [Lords] , the Happisburgh Lighthouse Bill [Lords] , the Great Yarmouth Port Authority Bill [Lords], the Southampton Rapid Transit Bill [Lords] , the Heathrow Express Railway Bill [Lords] , the London Local Authorities (No. 2) Bill [Lords] and the Greater Manchester (Light Rapid Transit System) Bill [Lords].

Schedule A

Part I 1. City of London (Spitalfields Market) Bill

2. Hythe Marina Village (Southampton) Wavescreen Bill

3. Isle of Wight Bill

4. New Southgate Cemetery and Crematorium Limited Bill

5. St. George's Hill, Weybridge, Estate Bill

6. Penzance Albert Pier Extension Bill

Part II 1. British Film Institute Southbank Bill

2. British Railways Bill

3. City of London (Various Powers) Bill

4. Redbridge London Borough Council Bill

Schedule B 1. Buckinghamshire County Council Bill [Lords] 2. London Local Authorities Bill [Lords]

3. South Yorkshire Light Rail Transit Bill [Lords]

4. United Medical and Dental Schools Bill [Lords]

5. Nottingham Park Estate Bill [Lords]

6. Medway Tunnel Bill [Lords]

7. Vale of Glamorgan (Barry Harbour) Bill [Lords]

8. Greater Manchester (Light Rapid Transit System) (No. 3) Bill [Lords]--[The Chairman of Ways and Means.]

Hon. Members : Object.

To be considered on Thursday 7 December.

Column 821

Oral Answers to Questions


EC Meetings

1. Mr. Adley : To ask the Chancellor of the Exchequer when he next intends to meet his European Economic Community counterparts ; and what he expects to discuss.

The Chancellor of the Exchequer (Mr. John Major) : The next meeting of the Council of Economic and Finance Ministers will be held in Brussels on 18 December 1989. Its agenda has not yet been determined.

Mr. Adley : Is my right hon. Friend aware that everyone in the House will wish to congratulate him on this, his first appearance at the Dispatch Box at Question Time? All Conservative Members wish him 100 per cent. success in what he sets out to achieve.

Will my right hon. Friend confirm that within the Finance Ministries of the EEC countries different criteria are used to assess rail investment proposals in their state railway systems? Is he aware that our Treasury demands a higher rate of return yet pays lower regard to environmental and congestion factors than any other Finance Ministry in Europe? Is he aware, for example, that France spends twice as much as us on its railways and West Germany three times as much? Will he therefore, in concert with his colleagues, prepare a report so that we can factually assess railway investment decisions?

Mr. Major : I am grateful for my hon. Friend's opening remarks. Our rail investment programme is large, as he knows. The required rate of return is 8 per cent. in the United Kingdom, and it certainly varies in different parts of Europe, but the precise details of EEC countries' rates of requirement are unknown to me. I should need to check them and write to my hon. Friend.

Mr. Allen : The Chancellor will be aware that Members on all sides of the House, and the public, are concerned about war widows' pensions. When he meets his counterparts in Europe, will he take time to discuss with them their arrangements for war widows' pensions? Without committing himself today, will he listen to them with an open mind and bring before this House proposals for fair pensions for all war widows?

Mr. Major : I admire the hon. Gentleman's ingenuity in raising that important matter on this question. I discuss a large number of matters with my Finance Minister colleagues in Europe, but the issue to which he referred is more a matter for discussion within the Government.

Mr. Tim Smith : Is my right hon. Friend aware that the CBI favours early membership of the exchange rate mechanism of the European monetary system because it believes that that will lead to more stable exchange rates and lower interest rates? Does my right hon. Friend share my hope that the two conditions that the Government have laid down--lower inflation and the abolition of exchange controls within the Community--will have been met in a year's time?

Mr. Major : Quite apart from the two conditions that my hon. Friend mentioned, other important matters need

Column 822

to be determined before we think it right for sterling to enter the exchange rate mechanism. I certainly hope to see lower inflation in this country and throughout Europe in a year's time.

Mrs. Beckett : When the Chancellor next meets his counterparts in Europe I suppose that he may discuss with them what his exchange rate policy is. Will he therefore tell the House what it is today?

Mr. Major : First, I welcome the hon. Lady to her first Question Time in her new position.

I shall continue to take account of the exchange rate, along with other monetary indicators, when setting interest rates. That has been and remains our policy.


2. Mr. Caborn : To ask the Chancellor of the Exchequer what is the percentage rise in imports of (a) manufactured consumer goods excluding passenger cars and (b) manufactured capital goods.

The Chief Secretary to the Treasury (Mr. Norman Lamont) : In the six months to October, the volume of imports of consumer goods less cars was 3 per cent. higher and the volume of imports of capital goods was 8 per cent. higher than in the previous six months.

Mr. Caborn : I thank the Chief Secretary for that answer and I was interested in the reference period. Can he confirm that in the years 1988 and 1989 imports of consumer goods have risen in value to a greater extent than those of capital goods? Does that not blow the Government myth that the trade deficit is due to an investment-led boom allegedly taking place in this country?

Mr. Lamont : I will certainly have to check the hon. Gentleman's figures. If he tables a written question, I shall be happy to answer it. Looking at the issue over a long period, for the first 10 months of 1989 capital goods imports were up 19 per cent. and consumer imports up 15 per cent. There has been a trend for some time for the growth of capital goods imports to be higher, which is a reflection of the strong investment in this country. It cannot be denied that we have had an investment boom ; investment as a proportion of GDP is at its highest level ever. It is not surprising that this also shows up in the import figures.

Mr. Beaumont-Dark : Does my right hon. Friend agree that a balance of payments deficit of £15 billion or more matters to the long-term well-being of this country? Does he also agree that if tax concessions are available in the next Budget they should be to encourage manufacturing industry, not to lower the highest taxation rates, which would be inflationary?

Mr. Lamont : I note my hon. Friend's early Budget representation and we shall take it into account. We have made it clear that it would be prudent for the current account deficit to be reduced, and the Government's policies are designed to do that. It is not right to say that a country cannot finance a current account deficit for some time. My hon. Friend will know that the United States has run a current account deficit for seven years, Australia has run one for 15 years and Sweden ran one for 10 years. It is prudent to get the deficit down, but in a world in which

Column 823

there has been extensive capital liberalisation, there are bound to be imbalances between different countries. In itself, that is not wrong.

Mr. Nicholas Brown : Is not the truth of the matter that the Chief Secretary's reference to an investment boom conceals the fact that the Government are desperately looking for an intellectually respectable argument as to why the balance of payment deficit does not matter but have failed to find one? It is certainly implausible for the Chief Secretary to come to the Dispatch Box and to present as good news the fact that our country now imports capital goods such as machine tools which we could make for ourselves if the Government had put their weight behind British domestic manufacturing.

Mr. Lamont : The current account deficit is a reflection of the excess growth of demand in this country, not a reflection of a lack of competitiveness. If it were, there would not have been the strong growth in British exports and we should not have seen British industry holding on to its share of world trade in the way that it has.

Mr. Forman : Does my right hon. Friend agree that the Labour party tends to exaggerate this problem, partly because it is coming right as a result of Government policies and partly because in the modern world there is a trend towards international specialisation and we are bound to see greater dependence on external factors?

Mr. Lamont : My hon. Friend is right and it is clear that Government policies are beginning to have an effect ; export volumes are rising faster than imports. In the three months to October, export volumes were 3 per cent. higher than in the previous three months and 10 per cent. higher than a year earlier. The same figures for imports, less oil and erratics, were 1 per cent. and 8 per cent., so exports are obviously doing well.


3. Mr. Bill Michie : To ask the Chancellor of the Exchequer what percentage of the average household expenditure is accounted for by value added tax ; and what was the equivalent figure in 1978.

19. Mr. Harry Barnes : To ask the Chancellor of the Exchequer what percentage of the average household expenditure is accounted for by value added tax ; and what was the equivalent figure in 1978.

The Economic Secretary to the Treasury (Mr. Richard Ryder) : A married man on average earnings with two children, who will have seen his real take-home pay increase by nearly 32 per cent. since 1978-79, would have paid approximately 2.7 per cent. of his earnings in VAT in 1978-79 and will pay about 5 per cent. in 1989-90.

Mr. Michie : The Economic Secretary is apparently admitting that a married man with two children and average earnings will pay double the VAT that he paid 10 years ago. Does that not show that the Government give tax cuts with one hand but with their other, invisible hand take more away through VAT and mortgage rate hikes?

Mr. Ryder : The hon. Gentleman conveniently forgets that when we came to office in 1979 we faced a large budget deficit, bequeathed to us by the Labour Government. As a result, we raised some taxes during the first two years to

Column 824

get into surplus. We are now in surplus again. In recent years, the take has been diminishing. The crucial figure for the hon. Gentleman to recall is the 32 per cent. to which I referred in my main answer.

Mr. Harry Barnes : Value added tax is a regressive form of taxation as it takes more from the poor than from the wealthy. Will the Government ensure that they do not go further down that road by putting VAT on essentials, including medicines, newspapers, books and children's clothes? What will be the position if the Government go down that road given that the public will also face the extra burden of the poll tax?

Mr. Ryder : The hon. Gentleman asked two supplementary questions. First, VAT is not regressive because VAT payments as a proportion of expenditure rise with income. Secondly, I do not wish to anticipate next year's Budget statement to be made by my right hon. Friend the Chancellor.

Mr. Burns : In the light of my hon. Friend's previous answer, does he agree that it is voodoo economics for the Liberal Democrats in Chelmsford to call for an increase in VAT to 18 per cent. to curb inflation when that would put 1 per cent. on the rate of inflation, cost £75 billion to industry and commerce, and increase the expenditure of the average household through increased VAT payments?

Mr. Ryder : It is never difficult to find a loony Liberal, but if there were to be any difficulty I know from my own experience that it is easy to find one in Chelmsford.

Mr. Anthony Coombs : Are not the Government to be congratulated on resisting the European Commission's proposals to extend VAT to children's clothes and food? Will my hon. Friend confirm that as a result of the enormous changes in national insurance and taxation which have taken place in the past 10 years, the average household pays--on a tax basis alone-- £10 less per week now than it would have paid in 1979, and that 2 million people have been taken out of tax altogether?

Mr. Ryder : That is correct.

Mr. Jack Thompson : Will the Minister consider commenting on the effect of VAT on unemployed households, and will the Treasury consider issuing a leaflet explaining the VAT implications for households in which the parents are unemployed so that they can identify the things that they cannot buy?

Mr. Ryder : If the hon. Gentleman cares to write to me, I will consider his suggestion. I remind him that the benefit system in this country already takes care of the sort of people to whom he has referred.

Corporation Tax

4. Mr. Gill : To ask the Chancellor of the Exchequer what is the corporation tax rate in the United Kingdom and other Organisation for Economic Co-operation and Development countries.

The Financial Secretary to the Treasury (Mr. Peter Lilley) : The United Kingdom corporation tax rate is one of the lowest in any major industrial country in the OECD. With permission, I will circulate the complete list of rates in the Official Report.

Column 825

Mr. Gill : I congratulate the Government on having one of the lowest rates of corporation tax in the EEC. That could have been achieved only under a Conservative Government. I urge my hon. Friend to give further consideration to the impact of corporation tax on the many small and medium-sized companies which depend on ploughed-back profits for their investment and expansion.

Mr. Lilley : I thank my hon. Friend for his remarks. He will know that we have a special low rate of tax for small companies. In his last Budget, my right hon. Friend the Member for Blaby (Mr. Lawson), the former Chancellor of the Exchequer, raised the threshold above which the higher rates come in. We have taken account of that already, but I shall consider further what my hon. Friend has said.

Mr. Duffy : Is the Minister aware that the master cutlers told the Sheffield chamber of commerce at its annual dinner last week that despite the reduction in corporation tax, investment capital project decisions have become more difficult since 1983 because of the reduction in offset allowances, at a time when business men find themselves locked ever more severely into competition with European and other overseas competitors?

Mr. Lilley : Since we introduced the reforms in corporation tax, the quantity of investment has reached record levels and the quality of investment has improved considerably. That is evidenced by the profitability of industry, which is at its highest level since the 1960s. Despite the fact that we have the lowest rate in the OECD, the revenues from corporation tax have doubled in cash terms.

Mrs. Currie : Is it not true that our favourable corporation tax rates are a major factor in encouraging foreign investment in this country? Is my hon. Friend aware that yesterday we heard that the compulsory purchase order had been granted for the land in my constituency required by Toyota, which will shortly be investing more than £700 million in our country? Is not the fact that that business is coming to Britain a tribute to our good work force and our favourable business environment? No other sweeteners are needed.

Mr. Lilley : My hon. Friend is correct. Foreign businesses, like British businesses, prefer a low-tax low-subsidy regime rather than the high-tax and, inevitably, high-subsidy regime that Labour offered. The success of my hon. Friend's constituents and others in Derbyshire in attracting Toyota is a tribute to them, as is the success of the tax regime that we have provided in attracting it to Britain.

Following is the information :

                         |Main national |Total national               

rate per cent.           |and local tax                               


Australia                |39.0          |-                            

Austria                  |30.0          |40.1                         

Belgium                  |43.0          |-                            

Canada                   |28.0          |<1>43.5                      

Denmark                  |50.0          |-                            

Finland                  |33.0          |46.5-51.5                    

France                   |42.0          |-                            

Germany                  |56.0          |<2>64.8                      

Greece                   |46.0          |-                            

Iceland                  |51.0          |-                            

Ireland                  |43.0          |-                            

Italy                    |36.0          |46.4                         

Japan                    |40.0          |<3>56.0                      

Luxembourg               |34.0          |41.2                         

Netherlands              |35.0          |-                            

New Zealand              |33.0          |-                            

Norway                   |50.8          |-                            

Portugal                 |36.5          |-                            

Spain                    |35.0          |35.7                         

Sweden                   |52.0          |-                            

Switzerland              |9.8           |<4>29.2                      

Turkey                   |46.0          |47.84                        

United Kingdom           |35.0          |-                            

United States of America |34.0          |40.13                        

<1> Ontario.                                                          

<2> Average.                                                          

<3> Approximate average.                                              

<4> Zurich.                                                           


1. The rates of company tax shown are those at present in force.      

2. There are lower rates for smaller companies in Belgium, Canada,    

Finland, Germany, Japan, Luxembourg, United Kingdom and United States 

of America.                                                           

Interest Rates

5. Mr. Hoyle : To ask the Chancellor of the Exchequer how many letters he has received from small businesses about the level of interest rates.

Mr. Ryder : A small number each month.

Mr. Hoyle : Is the Minister not aware that high interest rates are crippling small businesses? What assumption has he made for the level of interest rates in 1990, based on the very optimistic forecast in the Autumn Statement of 5.75 per cent. inflation?

Mr. Ryder : If the hon. Gentleman looked a little more closely at the Autumn Statement, he would have his reply. Obviously he has not read it carefully enough.

Mr. Donald Thompson : Is my hon. Friend aware that small business men in Calder Valley are worried about interest rates, concerned about inflation and absolutely terrified of any prospect of a Labour Government?

Mr. Ryder : My hon. Friend, as usual, is correct in most of his assumptions. I concede that high interest rates are causing a great deal of concern among small business men and mortgage payers. I am interested in my hon. Friend's question because a Gallup poll on Tuesday showed that the vast majority of people in this country.

Hon. Members : Reading.

Mr. Speaker : Order. Ministers have discretion in what they read from the Dispatch Box.

Mr. Ryder : The poll showed that the vast majority of people in this country are content with the Government's economic policy and frightened of a Labour party coming to office with rising inflation, economic chaos, high taxation and undoing all that this Government have put right. That is what the people of this country said categorically in the poll published by The Daily Telegraph.

Mr. Boateng : We appreciate the Economic Secretary's difficulties, but why is he so singularly unforthcoming--even coy--about the assumptions as to interest rates which underlie the Autumn Statement? Does he agree with his

Column 827

officials who, only this morning, are reported as saying that concern about the upward pressure on interest rates and concern about sterling was "so much political froth"? What comfort is that to the small business man suffering an investment nightmare or to the home owner suffering a mortgage hell? Is not the political froth that we should be concerned about the froth that has been washed up on the Treasure Bench? The Government should come clean or get out.

Mr. Ryder : I welcome the hon. Gentleman to the Labour Front Bench, but his three years of rehearsal have done him no good at all. If the hon. Gentleman were to read the Autumn Statement and previous Autumn Statements, as I advised his hon. Friend to do, he would find that interest rate figures are never given and were not given by the Labour Government either.

Mr. Andrew Welsh : Will the Minister show that he is aware how especially vulnerable small businesses are to high interest rates? What specific steps is he taking to help small businesses during what will obviously be a prolonged period of high interest rates?

Mr. Ryder : I fully concede that many small business men and people paying mortgages are suffering from high rates, but a far worse enemy to small business men and to mortgage payers is high inflation. The hon. Gentleman asked what we were doing to help small business men and I will tell him. The loan guarantee scheme has helped more than 20,000 small businesses. Increased corporation tax bands have helped small businesses. The 150 deregulatory measures introduced by the Department of Trade and Industry and detailed in a White Paper are helping small businesses. Improved inheritance tax provisions have also helped small businesses, particularly small family businesses.

Sir Anthony Grant : Is not my hon. Friend astounded at the sheer cheek of the Opposition when, instead of a record number of small firms starting up, as has happened under this Government, in the days when the hon. Member for Bradford, South (Mr. Cryer) was the Minister responsible for small firms a record number were closing every week?

Mr. Ryder : Despite what the Labour party may wish in its heart of hearts, new small businesses are starting at the rate of 1,300 per week. In the last full year of the Labour Government in which the hon. Member for Bradford, South (Mr. Cryer) was a Minister, the number was diminishing at a rate of 100 per week.

Several Hon. Members rose --

Mr. Speaker : Order. In fairness I should call the hon. Member for Bradford, South (Mr. Cryer).

Next Section

  Home Page