House of Commons Hansard Debates for 18 Jan 1990

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attack small businesses constantly, particularly in relation to the social charter? What, in my hon. Friend's view, would be the effect of their policies on such investment?

Mr. Lilley : My hon. Friend is absolutely right. The fact that this country has the lowest rate of corporation tax makes it an attractive country in which to do business, as countless foreign investors have discovered. The fact that our corporation tax rate for small businesses is now only 25p--far the lowest of any of the rates of which I am aware--is one factor behind the healthy growth of such businesses, at a rate of more than 1,300 new businesses every week during the past year.

Mr. Mullin : In that case, are we to assume that the Chancellor has no objection to the record profits being shared with the work force?

Mr. Lilley : Profits, by definition, are measured after the benefits to the work force--both pay and profit-sharing. We have introduced schemes to encourage profit-sharing, and to give a tax incentive to companies that take part in it. I am happy to say that that has given a stimulus to the spread of profit-sharing arrangements in British industry.

Mr. Oppenheim : Would not one of the best tax-related ways of helping British industry be a reduction in tax on savings, which would make a larger pool of investment income available to industry? Is my hon. Friend aware that this country taxes savers twice--first, when they earn and then on the yield of their investments?

Mr. Lilley : I note my hon. Friend's point, and I am sure that my right hon. Friend the Chancellor has done so, too. My hon. Friend will appreciate, however, that I cannot anticipate my right hon. Friend's Budget statement.

Mr. Ron Brown : Is not the Minister really saying that Britain has become a tax haven for dodgy money, and does that not sum up the political values of his Government?

Mr. Lilley : I did not catch the first part of the hon. Gentleman's question, but I imagine that he was probably welcoming the low rate of corporation tax and the great boost that it has given to small businesses.

Following is the information :

Bank of Credit and Commerce International

12. Mr. Rathbone : To ask the Chancellor of the Exchequer what discussions he or his officials have had with United States counterparts about the banking operations of the Bank of Credit and Commerce International.

Mr. Major : There has been close liaison between United Kingdom and United States customs officials in connection with Operation C-Chase, a drugs money-laundering investigation directed at the Medellin cartel, involving bank accounts held with the BCC group.

Mr. Rathbone : The Chancellor will be aware of newspaper reports of the handling of huge amounts of drug-trafficking money by the bank, which transferred £15 million from this country to Luxembourg last year and has held the major part of $60 million in deposits for Mr. Rodriguez Gacha and the Medellin drug cartel this year. Is he satisfied that there is sufficient national and international supervision of the bank's operations? In the light of his investigations, what initiatives will he present for inclusion in the report by the international financial action task force, which is due in April?

Mr. Major : I am aware of the reports to which my hon. Friend refers and I am satisfied with the supervision responsibilities and powers available to the Bank of England. As my hon. Friend will know, under the Banking Act 1987 the operations of BCCI in the United Kingdom are supervised by the Bank of England. Internationally, overall supervision of the group is carried out by a college of supervisors with representatives from a number of countries in which the bank has its operations. I have no doubt that those supervisors will give careful consideration to the outcome of the case, and it would be inappropriate of me to comment on that now.

Mr. Skinner : If the Chancellor of the Exchequer really wanted to get hold of the money that has been salted away by the drug barons, he need only use the system that was adopted by the previous Chancellor of the Exchequer during the miners' strike. Is the right hon. Gentleman aware that when the miners' money was in banks in Switzerland and elsewhere on the continent, the British Government found ways and means of sequestrating that money that belonged to the National Union of Mineworkers? Is the right hon. Gentleman aware that if he adopted a similar system, he could get at the drug barons' money? If he wanted to adopt an even stronger method, he could tell all the banks that the Government intend to stop the tax relief that they give them every year.

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Mr. Major : I am fascinated by those post hoc revelations. On money- laundering, the hon. Gentleman will be aware that the Drug Trafficking Offences Act 1986 strengthened considerably the powers of enforcement agencies and introduced a provision for financial institutions to report suspicious transactions to the police. The United Kingdom is participating fully in the financial action task force that has been established, with representatives from a number of countries, specifically to deal with this problem.

Mr. Dykes : Does my right hon. Friend agree that although the Florida allegations are serious and must be pursued rigorously, it would be unfair--particularly as he has confirmed that supervision of the BCCI is correct so far as he can tell--to criticise on a worldwide basis this successful international bank, which apparently has helped millions of people in the Third world?

Mr. Major : As my hon. Friend will know, senior representatives of that bank are facing trial in the United States. It would be unwise of me to comment.

Dr. Marek : The Chancellor will accept that this is a most serious affair in that it could besmirch the good name of the City and the whole financial industry in this country. Will he assess the amount of man and woman power that should be available to Customs and other officers in the Bank of England to assure the public that there is no cause for alarm, that this is an isolated incident and that it will not recur in the City or anywhere else in this country?

Mr. Major : I share the hon. Gentleman's view that this is a serious matter, and I hope and believe that it is an isolated incident. The Bank of England has sufficient staff working on the proposition. The hon. Gentleman will be aware of the successful year that Customs and Excise has had in combating and grabbing hold of illegal drug imports.

European Monetary Union

13. Mr. Day : To ask the Chancellor of the Exchequer what representations he has received on the Delors plan for a three-stage advance towards the full integration of European Community economic and monetary policies.

Mr. Major : I have revceived a number of representations.

Mr. Day : Does my right hon. Friend agree that the current arguments surrounding the Delors plan, particularly in the area of economic sovereignty, do not, as is often thought, offer us a choice between the Prime Minister's vision of a free market in Europe and a federal Europe, but rather offer the prospect of a single unitary European state about which both federalists and free marketeers should be equally alarmed?

Mr. Major : I share that view and believe that that danger exists with the full stages, 1 to 3, of the Delors proposals. I recollect that the House was almost united in rejecting those proposals some time ago.

Budget

14. Mr. Bernie Grant : To ask the Chancellor of the Exchequer what submissions he has received in respect of his 1990 Budget.

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Mr. Lilley : My right hon. Friend has received a number of representations from a variey of individuals and organisations.

Mr. Grant : Has the Minister received representations about the growing gap between rich and poor, and the now poorer underclass in inner cities--those who have to live in cardbord boxes and scrounge in rubbish bins for something to eat? Will he guarantee to the House that he will not reduce personal income tax but will increase public expenditure to ensure that those people have a reasonable chance of survival?

Mr. Lilley : I certainly cannot anticipate my right hon. Friend's Budget statement on tax matters. Had the tax rates and allowances in real terms that we inherited from the Labour Government been retained, people would be worse off at every level of income. Under this Government, the rise in real living standards, even of a married couple on half average earnings with two children, has been 25 per cent., whereas under the Labour Government it was only 4 per cent.

PRIME MINISTER

Engagements

Q1. Dr. Reid : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

The Prime Minister (Mrs. Margaret Thatcher) : This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Dr. Reid : Following her speech last night when she outlined plans to ensure maintenance payments by absent fathers, may I welcome the move but inform the Prime Minister that the question being asked this morning by many people is : who will benefit financially, the Chancellor or the children? Will the Prime Minister clear up the matter by giving a pledge today that every pound saved by the Exchequer from the enforcement of the new regulations will be committed to child welfare?

The Prime Minister : Both the mothers and the children will benefit. A scheme is being worked out and my right hon. Friends will come forward with it in due course.

Sir Peter Tapsell : If the governor of the Bundesbank was being serious and was not merely seeking to tease his own Minister of Finance when earlier this week he called for the establishment of a European central bank, totally free from all political control, will my right hon. Friend reiterate that that would be overwhelmingly rejected by people of all political persuasions in this country and, one would hope, by everyone throughout Europe who subscribes to the concept of parliamentary democracy?

The Prime Minister : Yes, Sir. I am grateful to my hon. Friend and agree entirely with what he said. I believe that this hon. House does, too, judging from the debate. It was clear that all parts of the House totally and utterly rejected stages 2 and 3 of the Delors report, which would mean a central bank that took powers out of the hands of the House, not only on monetary policy but on budgetary policy, too.

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Mr. Kinnock : Will the Prime Minister take the opportunity to confirm that the poll tax bills that people will receive will be much bigger than the bills which the Government promised? Does not the gap between promise and reality show that the Government are guilty of incompetence and deception?

The Prime Minister : No, Sir. The Government set the level of reasonable spending for the coming year at 11 per cent. above the reasonable spending for this year. If local authorities spend above that, the community charge will go up. If there are very high community charges, it would be as well to look for the fault to Labour local authorities.

Mr. Kinnock : The Prime Minister is trying to deceive yet again-- [Interruption.]

Mr. Speaker : Order. Perhaps the right hon. Gentleman will rephrase that.

Mr. Kinnock : The Prime Minister just cannot stop herself trying to misrepresent the position. Does she not yet understand that local authorities, Conservative as well as Labour, are telling her repeatedly, as are some of her hon. Friends, that the poll tax system is absurd and dishonest?

The Prime Minister : The poll tax system will reveal to the electorate-- [Hon. Members :-- "Ah!"] The adult community charge-- the new system for contributing to local authority expenditure--will be very much fairer, will make local councils accountable to their electorate and will demonstrate which are the extravagant authorities and which are the careful spenders. It is because Labour authorities are extravagant that Labour Members oppose the community charge.

Mr. Kinnock : If that is even partly true, will the Prime Minister tell us why she thinks that so many of her hon. Friends will have such difficulty supporting her tonight?

The Prime Minister : Perhaps they should reserve their firepower for extravagant Labour local authorities.

Mr. Dickens : Does my right hon. Friend agree that since time immemorial young couples have always had a job rearing and educating their children? Can it be right, just and fair for those couples to pay, through their taxes, for other people's children because fathers walk away from their financial responsibilities? May I say-- [Interruption.]

Mr. Speaker : Order. The hon. Member for Littleborough and Saddleworth (Mr. Dickens) has been away for some time. We all want to hear him.

Mr. Dickens : May I say to the Prime Minister that Conservative Members and most of the general public who care about children very much welcome the statement that she made last night and give her our support?

The Prime Minister : May I thank my hon. Friend, and welcome him back in his customary vigorous form? He will know that we believe that people who have a responsibility for the maintenance of children should not be allowed to escape that responsibility. We propose to make the arrangements for collecting maintenance more effective than they are now.

Q2. Mr. Kennedy : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

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The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Kennedy : May I congratulate the Prime Minister--

[Interruption.] May I warmly congratulate the Prime Minister on at last getting the title of the poll tax correct? Does she share the distinct sense of irony felt by Opposition Members who represent Scottish constituencies in that, although we are to witness yet another Conservative Back-Bench revolt on the issue, only three Conservative Members who are likely to withhold their support or vote against her in the Lobby tonight bothered to vote against precisely the same legislation on Scotland when it was pushed through this place? Does not that reality and the fact that Scottish Office Ministers have been warning their colleagues on the Back Benches of the "dire consequences" in Scotland for them of the poll tax highlight not only the fraudulent nature of the tax but the failure of so- called Governments in Scotland under her rump of a party?

The Prime Minister : The community charge is by far the fairest way of paying for a very small proportion of local authority expenditure. The taxpayer pays by far the greater part, the business taxpayer pays the next greatest part and all the rebates and transitional reliefs are paid for by the taxpayer. I wonder why Opposition Members who criticise the community charge have no alternative to put in its place.

Q3. Mr. Janman : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Janman : Is my right hon. Friend aware that since the abolition of the dock labour scheme the port of Tilbury has attracted 14 new shipping services, has refurbished its cruise line terminal and is expecting that business to increase next year and is recruiting youngsters from the area for the first time in many years? The productivity record of the container division has recently been broken, with 230 containers being loaded off one ship in one eight-hour shift. Will my right hon. Friend join me in congratulating the chief executive, his management team and all the men and women who work in the port on their success, and does she agree that the facts that I have given the House prove that the Government were absolutely right to abolish the dock labour scheme?

The Prime Minister : I gladly accept my hon. Friend's invitation and congratulate those in the port of Tilbury. When we abolished the restrictive practices under the dock labour scheme, it was evident that ports would begin to flourish and that the surrounding areas and companies would benefit. That is now happening. The Opposition accepted and supported the dock labour scheme and opposed its abolition, but it is because we abolished it that there is now extra prosperity.

Mr. Canavan : Is the Prime Minister aware that in Scotland an estimated 1 million people are in serious arrears with poll tax payments, of whom 500,000 have made no payment at all? As even today's Financial Times describes the poll tax as a fiscal monstrosity, and as 40 or more English Tories are set to rebel in the poll tax vote tonight, will the Prime Minister do the decent thing and

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abolish that iniquitous tax, which is unjust, unworkable and unwanted by the vast majority of people in this country?

The Prime Minister : The community charge is much fairer than domestic rating revaluation. As the hon. Gentleman is aware, in Scotland domestic rating revaluation after seven years caused immense problems. The hon. Gentleman should remember that the revaluation for England has taken place after 17 years. The community charge is much fairer than the proposed alternative, which would involve two taxes, including a local income tax. Once the community charge is working properly, people will know that it is a much better and fairer tax than the one which it replaces.

Q4. Mr. David Shaw : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Shaw : At a time when eastern Europe is moving away from Socialism, centralisation and unelected government, does my right hon. Friend consider that her Government should do all in their power to oppose yesterday's proposals by Mr. Jacques Delors for more centralised bureaucratic power in the European Commission, which would do nothing to further the free enterprise system that should become the Europe of the 1990s?

The Prime Minister : I note my hon. Friend's views. I have read Mr. Delors' speech. I made the same point as my hon. Friend in my speech in Bruges some time ago. We do not want more bureaucratic control, especially as eastern Europe is trying to get away from it. We want more free trade and the dismantling of barriers. The House made clear its view that it would not accept stages 2 and 3 of the Delors report. It is a great pity that the Commission is trying to take more powers unto itself, and away from democratically elected Parliaments.

Q5. Mr. Maxton : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

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Mr. Maxton : Is the Prime Minister aware that Lothian health board is seeking sponsorship from private companies to carry out open-heart surgery in its hospitals and that it has said that if it does not find the sponsorship, the operations will not take place? If she considers that proposal to be as obscene as I do, will she today ensure that the Scottish health boards are properly financed so that no Scottish person's life depends upon the whims of a private company? Is not that sponsorship proposal just one more move towards a Health Service that fulfills her Victorian ideals, whereby the rich pay for their health but the poor rely on charity?

The Prime Minister : There are far more open-heart operations now than there were 10 years ago. The amount spent on the Health Service in Scotland is more than 30 per cent. higher, after inflation, than it was 10 years ago. If people wish to raise more money--and there will always be room for more expenditure because of the swift progress of medical research --the hon. Gentleman should welcome that as it would assist the work of the Health Service.

Q6. Mr. Waller : To ask the Prime Minister if she will list her official engagements for Thursday 18 January.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Waller : Is my right hon. Friend aware that most industrial companies that provide employment in the north and midlands greatly welcome the revalued uniform business rate? It will not only protect them from high -spending Labour authorities but provide a much more equitable basis for payment. Is my right hon. Friend aware that their only complaint is that the phasing-in period will prevent them from gaining the full benefits for a considerable time?

The Prime Minister : I am grateful to my hon. Friend. The business rate should be welcomed by all who believe in helping the north to get more jobs, keep their business costs down and ensure that they are not the prey of extravagant local authorities. Over five years, the north and midlands will benefit to the extent of £900 million. It is right that the south should have a transition period in which to pay that amount.

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