House of Commons Hansard Debates for 21 Mar 1990

Mr. Julian Critchley (Aldershot) : To speak in the House of Commons, even on a subject as important as the Budget, between 7 and 8 o'clock is like appearing on Sky Television. Sooner or later, one has the nasty feeling that one is all alone.

I do not wish to exaggerate. We are lucky enough to have a distinguished junior Minister, somnolent but assiduous, in his place--and a young man in the Whips Office who is paid to attend and who has upon his knee a chart on which he writes down his opinion as to the speakers on this side of the House. Phrases such as "sound" or "very satisfactory" are the ones that come to mind. Even the political correspondents are drinking their proprietors' champagne. Only the Wykehamists in the Treasury, whose task it is to sustain our masters in argument, are prepared to stay on. I can only say that, as a Back Bencher of very long standing, I can remember the time when my right hon. Friend the Prime Minister was a brunette. I can also remember when Lord St. John Stevas was a Protestant.

It is an awkward time for a loyal Tory Back Bencher to be on his feet, sandwiched between the harshest Budget since 1981--remember the halcyon days of 1981?--and the Mid-Staffordshire by-election tomorrow. It is a position of some discomfort, so I shall tread with great care.

After 11 glorious years, we are looking at the next election and there are three possible scenarios. First, it could be rather like 1970, when we snatched victory from the jaws of defeat and were returned with a reduced majority--clearly that is the aim and ambition of all Conservatives. The second option is another 1964 when the Labour party sneaked back with a majority of three, and sometimes six, votes. We must remember that in 1964 the Conservative Government enjoyed the same majority

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as we do today. The third alternative, which hardly bears thinking about, is a repeat of 1945, which could conceivably happen after a period of 11, 12 or 13 years. Clearly Conservatives must aim for a repeat of 1970.

I watched yesterday's Budget upstairs in my office on a very small black- and-white television set made in Japan. I thought that, perhaps because of the cameras, everyone was marvellously well behaved. It was a bit like being at divine service, until towards the end the Scots became rather agitated. But I am told that in Scotland they do that sort of thing in divine service ; they are encouraged to participate in a way that does not happen south of the border. I wonder whether my right hon. Friend the Chancellor, who made a good impression, might not have fallen between two stools--one being that the aim and objective of Government policy ought to be to overcome inflation and thus maintain the exchange rate, and the other being to restore the morale of Conservative Members. I noticed that, after his performance yesterday, there was a spring in our step and more bottles were opened last night at dinner than for some time. However, there is a contradiction between those two objectives. Clearly one must hope that my right hon. Friend the Chancellor has achieved both, but the prospect for 1990-91 is not a cheerful one, with a 1 per cent. increase in growth, interest rates at 15 per cent. and wage rates at 9.5 per cent. or more which must mean an increase in unemployment. If inflation is still at its current rate this time next year, we shall be denied an election-winning Budget. How many Governments in the past, of all political complexions, have relied on the cyclical manipulation of the economy to achieve the return of their own political party?

It dawns on me that people are most prosperous in the year before an election. As elections take place only every five years, if we were to reduce the time between them and hold them every three years, surely we would be able to enjoy wider prosperity.

In the three and a half minutes that I have left to speak, I shall revert to the morale of the Conservative party. I voted against the poll tax. That gives me little comfort and my constituents no consolation whatsoever, so I resist the temptation of saying, "I told you so." I am not against obliging the working class to pay for local government, but there should have been a more sensitive relationship between a person's ability to pay and the size of the tax. Between now and next year, my right hon. Friends the Secretary of State for the Environment and the Chancellor must get together to oblige the Prime Minister to inject into local government spending an additional £4 billion, so that next year the poll tax is brought down to more manageable levels. They must make the Prime Minister an offer that she cannot refuse. Unless that demand is met, I see very gloomy prospects for the Conservative party being returned to office. Finally, the Tory party is threatened with a running leadership campaign. We have a superfluity of contenders, one of whom, if he is ever elected to Downing street, has promised to make me the last governor of the Falkland Islands. Might it not be wiser if the Tory party, meeting upstairs in Committee Room 14 on a Thursday evening--the longest running show on earth--instead of altering the rules of election for our leadership, as was threatend by my hon. Friend the Member for Shipley (Sir M. Fox) on "The World at One", reverted to the magic circle, so that

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our next leader eventually emerges from a smoke-filled room at Pratt's or Whites and has the blessing of Lord Whitelaw himself? 7.26 pm

Mrs. Maria Fyfe (Glasgow, Maryhill) : Follow that!

I shall not congratulate the Government on abolishing the tax on workplace nurseries. They should never have imposed it in the first place. My sympathies are with the women who have forked out several hundred pounds every year in tax for the past five or six years. Perhaps the Government will consider reimbursing them now that they have acknowledged that it was wrong to collect it in the first place. My sympathies are also with the thousands of women and men who could not use workplace nurseries because taxation had made it impossible for their employers to run them. Many people in Britain find it impossible to have the child care facilities that they need. As recently as 7 March, the Under-Secretary of State for Employment, the hon. Member for Teignbridge (Mr. Nicholls) was still denying that it would be possible to abolish the tax on workplace nurseries, so it appears that the Government should try to get their act together. Although it is a small advance, it will be useful only to a tiny minority of women.

Abolishing the tax on workplace nurseries will cost that Government only about £1.5 million in revenue. The cost of providing comprehensive child care facilities would be about £2 billion. That is the yardstick against which the Government's neglect of child care can be measured. The figure that they are willing to spend comes nowhere near what is needed.

Separate taxation for women has been proclaimed as a great advance. Of course the idea of separate assessment is welcome, but many women must have assumed that that meant that they would be taxed equally. However, in reality if Harry meets Sally and they get married, tax independence does not mean tax equality. If, for example, a husband and wife each earn £15,000 he will pay £2,558.75 in tax, while she will pay £2,998.75 in tax, so he will take home £430 more. Why could not the Chancellor allow married couples to divide the allowance between them? Does he believe in equality? It seems incredible that he did not undertake that small step, which would have cost precious little. Another attack on women's rights is the phasing out of child benefit.

Separate assessment of taxpayers is welcome, but for the life of me I cannot understand why the Government cannot apply the same principle to the poll tax. We have heard much about TESSA, but one particular poll tax phenomenon could be called JASPER--joint assessment of pensions eliminate rebates.

I quote the example of a couple in my constituency ; the husband is severely mentally impaired and is exempted from paying the poll tax, but his wife must pay it in full because their joint incomes are taken into account in her assessment. She receives a state pension of £29 a week and a works pension of £43 a month. Her husband receives a state pension of £46 a week and a works pension of £115 a month. In assessing her liability for poll tax, the state has decided that those four small pensions should be joined and that therefore she must pay the poll tax in full, whereas if she had been a taxpayer she would have been in a different position. It is a severe injustice that she should

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have to pay a full poll tax from so low an income. I hope that one day the Government will address themselves to that problem. The Chancellor has had 24 hours to reflect on the problem of retrospection for pensioners in Scotland. So far, we have heard that it is irrelevant because pensioners paid rates in England, that is not too easy to do and is far too much trouble and that attention should not be paid to the excitable Scots. If Conservative Members think that Scots are excitable, they have seen nothing yet. There has been a massive reaction to this in Scotland, and it is a further example of how the Chancellor has failed to think about the problem, as was obvious when the question was asked yesterday.

That was irritating enough, but more irritating was the fact that it did not matter to the massed ranks on the Conservative Benches. They voted for the poll tax in Scotland a year before they did so for England and Wales. Once again, they were presented with sheer thoughtlessness by the Chancellor, but again they did not care tuppence. That fact is noted and resented in Scotland. If the Conservative party wants to hang on to its 10 seats in Scotland, it clearly has much to learn. Perhaps the Prime Minister should pay more attention to what she hears when she visits Scotland, instead of trying to play Lady Muck.

Another pensioner couple in my constituency are both on disability pension. The wife receives an industrial injury pension. Their total weekly income is only £130, but they are not eligible for poll tax rebates, whereas previously they were eligible for 100 per cent. rate rebates. We are always hearing about how those in poverty will receive poll tax rebates, but it does not seem to have dawned on Conservative Members that under the old rating system couples living in such impoverished circumstances rightly paid nothing in local taxes.

That couple, whose income is £130 a week, have no savings. Industrial injury benefit is supposed to be non-contributory and non-taxable, but it is counted for poll tax purposes. Such injustices are causing much resentment in Scotland. Hon. Members who voted for the poll tax in England and Wales will soon see the results of that in their surgeries when their constituents raise such problems with them. If they think that they will sail through and coast to another election victory, they have another think coming.

7.34 pm

Miss Emma Nicholson (Torridge and Devon, West) : My right hon. Friend the Chancellor offered us a minimalist Budget, which rests for its effectiveness on others' actions--a real Conservative effort which I commend to the House.

Let us consider the way that the Budget feeds covenants and voluntary giving. It is an excellent progression, because covenants have gone down from seven years to four years and we await new Inland Revenue guidance to simplify charitable giving, which must be welcome because it will enable charities to plan ahead. It is all very well relying on emergency appeals showing a giver-friendly photograph of a starving child, but most charitable efforts rest on long-term work. I offer the House the example of the sponsorship of children's education, which rests on

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covenanting and has been going on since 1921. Many millions of children worldwide have been educated as a result of British donations and the covenanting system. The new easement of covenanting is very welcome.

An even better present is the big gift campaign for charities, which so far has been confined to the United States of America. That will make a difference to the incomes of volunteer organisations. I only wish that it were being introduced sooner than 1 October so that my local church, the steeple of which fell through the roof and will cost thousands of pounds to repair, could regain the tax from my first gift.

There are 37,500 charities and, as my right hon. Friend the Chancellor said, social causes, the arts and other charitable efforts will benefit from the new tax system. A healthy and growing volunteer sector is a good indicator of the health of the economy and of the community. I fear that often it is not so popular with some Labour Members because it rests on individual initiative, but it epitomises the community spirit. I have experience of that from earlier days. The immense difficulty with charitable giving is broadening the base of donors. It is saddening to realise that only about 4 million households give to charity. Churchgoers are top of the pops, and the generosity of Jewish community members is greater than anyone else's. Generally, an orthodox donor will give to 25 different charities regularly throughout the year. The big gift tax relief announced by my right hon. Friend the Chancellor will give much scope to broaden the base of support.

Which volunteer carries out the work that is financed by individual donors? The classic volunteer in the United Kingdom--our old friend the married woman--is in shrinking supply. I share the concerns expressed by other hon. Members about married women but want to concentrate on the income and capital of the married woman and the married couple's allowance under the new independent taxation system.

Without wishing to appear ungrateful, I believe that the married couple's allowance is an unfair anomaly that should be scrapped. It gives higher net pay to a married man than to a married woman in equivalent circumstances. What justification is there for that? Even if a married couple wish to share the MCA, which is similar to the monetary compensation amounts in farming terms, they cannot do so unless the husband's income is too small to benefit, in which case it may be set against the wife's income. Why not give couples a free choice and then phase it out, distributing the takings equally? What is the point of identifying a woman as the lesser partner in a marriage? After all, real freedom is economic freedom, and one cannot compete equally in economic terms unless one is equal in terms of human dignity.

The tax system should be family-friendly. The most vulnerable member of society is the child, whose care and nurture is mostly undertaken by the mother, and her financial health is crucial to the child's stability and growth. From that base, we should move rapidly towards independent assessment of married women's income for income tax purposes. That should be matched now by independent assessment for rebate for the community charge. Although I welcome the Chancellor's doubling of the capital limit, a wife's capital should be assessed separately and the ceiling should be double that of a single person. I would impose a ceiling to avoid creating a new unfairness and giving big gifts to the 11 per cent. of women

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who do not work, who have no small children, sick people or elderly people at home and who are married to wealthy men.

I welcome the beginning of a vision of affordable quality child care. It will help working women immensely. I welcome the lifting of taxation on access to child care nurseries at workplaces. I hope that it will herald a move toward nursery places for all children in the United Kingdom. Most mothers do not want to take their children to work. Most mothers would prefer quality child care near home. At some point, this will have fiscal consequences for future Budgets. 7.40 pm

Mr. Graham Allen (Nottingham, North) : The object at fault was probably not the Budget but the job description. The Chancellor was clearly told how far he could go and told that the main planks of economic policy rested not with him but through the door that is never opened between No. 10 and No. 11 Downing street. He was told that he could tinker around the edges if he felt like it, which is what he did. As far as job description went, he did a reasonable job, but it is irrelevant to the main problems confronting the economy. On Friday, I went to the Nottinghamshire CBI to find out what it thought the problems were, although one may think that that was not necessarily a favourable audience for my political point of view. The chairman of the CBI asked a number of his colleagues in the audience--senior directors, managing directors, and executives--to state what they thought the problems were. The person from the textile training association said that the main problem was the lack of training and the increasing closures in the area. A person involved in a medium-sized engineering plant said that the main problems were basically skill shortages. He was unable to get the quality of people that he needed, especially with the Japanese company, Toyota, moving in just over the border in Derbyshire and sucking in skilled workers from local companies.

Another senior CBI member mentioned labour shortages. A person involved in heavy construction in the brick industry reported that the demand for bricks was down 50 per cent. and that he was running his plant at half capacity. Many of the problems that he encountered were due to interest rates. Someone from another engineering plant talked about the poaching of people who had gone through apprenticeships and then gone down the road to another company which was not prepared to train people but, because of the money thereby saved, could offer a marginally higher income. A local bank manager pointed out that lending had levelled out.

Not one of the problems identified at that meeting was tackled by the Chancellor in the Budget. The Budget was irrelevant to the main problems of this country--irrelevant to the highest trade deficit in the G7 countries, to the highest inflation rate compared with our industrial competitors and to the highest interest rates in Europe. It was totally pointless and worthless in terms of the major direction of economic policy.

Taxation is another matter that has not been dealt with in sufficient depth in this debate. A myth about taxation has developed under this Conservative Administration. It has been useful for the Government to reduce the level of income tax and to pretend that the taxation burden has fallen, but that is a myth. Because of the resources at their

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command, they have had the mastery to shuffle and reshuffle taxation. They have changed the pack without changing the basis and level of taxation. In terms of corporate and individual taxation, taxation is as near as dammit to the 1979 level.

One specific tax to which I should refer before going much further is the poll tax. We have heard of the need to counter the actions of spendthrift councils, but it is worth pointing out that local goverment spending in England and Wales rose by only 15 per cent. in real terms over the 10 years from 1979--less than the 25 per cent. growth in national income and a small increase by previous standards. The Sunday before last, an article by William Keegan in The Observer referred to non-domestic rates growing by 59 per cent. and domestic rates by 83 per cent. and explained why. The article stated : "They were not only financing the (relatively slow) growth of local government spending ; they were also filling the gap created by a fall of 18 per cent. (in real terms) in central Government grants to local authorities. In the current 1989-90 financial year domestic and non- domestic rates have together been financing 56 per cent. of local government current expenditure, against 38 per cent. 10 years ago". The proportion financed by central Government grants has fallen from 49 per cent. to 52 per cent. The Government have deliberately shifted the burden of total taxation towards the local ratepayer or the local poll tax payer. The extra burden on the rates has been equivalent to 3.5p in the pound on the rate of income tax, taken out of the 8p in the pound alleged reduction in the basic rate of income tax.

Labour Members must continue to expose that sleight of hand, despite the central position given in people's minds to income tax. We must examine the income tax structure and reform it drastically. We need to legislate to do away with the effects of fiscal drag and to have an honest, clear debate each year on real taxation levels. The allowances and all the other factors associated with tax should be linked and increased automatically--perhaps in line with growth in the economy.

If we wanted to reduce or increase taxation, there would be an honest debate on the level. Matters would be clearer if the tax system were structured into not two bands but many bands from zero to the top rate of tax, whether it is 50 or 60 per cent., in a series of 1 per cent. increases. In that way, income tax would be removed from its central place in the equation of our national spending. We need to restore our central objective in the economy. It must be a clear redefinition of our desire to invest more of our national wealth in our national well-being, forgetting our obsession with indicators and returning to the real economy. Our major and most successful competitors--Japan and Germany--pursued domestic growth and a reinvigorated domestic economy. We must do nothing less. There is a growing alliance in favour of that objective, which takes in the trade unions, the CBI and all the opposition parties. With that alliance in favour of manufacturing--an alliance for the real economy--we shall begin to crack some of our major problems. We shall also need--I am sure that my hon. Friends the Members for Brent, South (Mr. Boateng) and for Newcastle upon Tyne, East (Mr. Brown) will think this increasingly--to make an impact on the massive flows of hot money round the globe. We now have nearly $1 trillion floating round looking for a home. Now that interest rates in Japan are likely to increase, it is likely that much of that

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money will no longer go to subsidise our economy and that of the United States. We are staying alive on short-term foreign capital. We need to tackle that major problem and to reinvest in, and reinvigorate, our own economy. That will not be done by this Government ; it will have to be done by a Labour Government. 7.50 pm

Mr. Michael Jack (Fylde) : On Saturday evening I had the pleasure of watching my right hon. Friend the Chancellor of the Exchequer being probed by a young lady on "Jim'll Fix It" on the subject of her pocket money. She asked a lot of searching questions and I now know where the principles of the Budget came from. She talked about thrift, budgeting and the care of one's money. Having examined the proposals in this, the first televised Budget, I think that this is a case of John having fixed it. I congratulate my right hon. Friend on having found a way of giving so much to so many when he had so few resources to deal with.

The most important thing that my right hon. Friend did in the Budget was to rekindle the savings habit. That is especially important for children. Budgets are as much about short-term economic activity as about laying the foundations for the future. Having said that, I asked my right hon. Friend to consider the role of the national savings movement in the new world of saving. Many will look to national savings as the ultimate safe haven for their money. Savings may still be clouded by the taint of the Barlow Clowes affair.

My hon. Friend the Financial Secretary will know that in my own constituency, and in the adjoining constituency of Blackpool, South, many thousands of workers do vital jobs in the savings movement. National savings sometimes provides the Treasury with much-needed smoothing finance to enable the Government to pay their bills. I ask my hon. Friend the Financial Secretary to look again at the range of products and the rates of return, in spite of the announcements made in the Budget, and to ensure that the national savings movement can play a full part in the new world of savings.

In particular, I ask my hon. Friend to view premium savings bonds sympathetically. Last year, for reasons of administration and cost, Treasury Ministers raised to £100 the limit on entry to this very good savings scheme. I ask my hon. Friend to consider lowering the figure to £50. If he cannot do that, I ask him at least to consider introducing a savings stamps scheme to enable people to save to enter premium savings bonds as they represent an attractive form of savings for the unsophisticated, and as many of my constituents make their living by administering them I would be much reassured if my hon. Friend the Financial Secretary agreed to do that.

The Budget is good for pensioners' savings. Many pensioners have saved throughout their lifetime, and at last the Government have answered the plea of many of us that they should stop penalising thrift. I congratulate my right hon. Friend the Chancellor on that. I have referred to children and to savings. I also have a query about my right hon. Friend's excellent announcement on nursery places and the exemption from tax. What happens if a company that does not have a workplace nursery issues vouchers to employees? Will they be

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included in the schemes that my right hon. Friend announced? Will such vouchers be encashable, for example, against pre-school playgroup activities? Many people find pre-school playgroups an adequate source of child care, and I feel that my right hon. Friend may come under pressure to grant such a concession. We seek clarification on that point.

I also have a question about children and value added tax. I have two sons, both of whom seem to be growing at an alarming rate. My wife tells me that already my 10-year-old is moving into adult-size clothing and shoes. It was in the early 1970s that the size of children's clothing was first established for the purposes of the VAT regime. Will Ministers look again at the sizes of children's clothes because the information available from the retail trade and other sources suggests that children are wearing larger sizes for their age than they were when the regulations were first framed? If the Budget has anything to do with children, Treasury Ministers should reconsider that. At a time when my right hon. Friend the Chancellor- -perhaps for good reasons--has had to freeze child benefit, he could help children and their mothers greatly by changing the regulations in respect of the sizes exempt from VAT.

I express some disappointment that the sum total of the environmental content of the Budget was to widen the differential between leaded and unleaded petrol. In my constituency, energy saving is an important industry in its own right. We have a company that has pioneered many techniques in the contract energy field. Surprisingly, the company accounts of Emstar--a subsidiary of Shell which is not in my constituency but which is dedicated to energy-saving techniques--show that that company has recorded a loss. The sales of energy-saving equipment are also declining.

Such investment may well be affected by world energy prices, which have fallen in real terms, and may be marginalised by current high rates of interest. I accept that those high rates are vital if we are to fight inflation, but I believe that the wider environmental issues--for example, dealing with the greenhouse effect--cannot be left entirely to the operation of market forces. I therefore ask my hon. Friend the Financial Secretary to consider changing the capital allowances for those expenditures that save energy and contribute to the reduction of the greenhouse effect, and thus to help environmental investment.

Let me deal with the question of investment in industry. I am sad that the hon. Member for Manchester, Central, (Mr. Litherland) is not in his place. I am fed up with Opposition Members denigrating investment in the north- west of England. To talk about Manchester as he did is to undermine the investment that has taken place in Salford Quays, in Trafford Park, in Preston, in my own constituency and throughout the north-west. We have had massive investment in aerospace. We have had investment in traction plants such as GEC Alstone in Preston. We have had £14.5 million-worth of investment in Foxe's Biscuits in my own constituency. I see my hon. Friend the Minister for Roads and Traffic in his place. In his constituency of South Ribble, too, investment has taken place in aerospace. Those investments were made not with failure in mind but with success in mind.

If the Chancellor has achieved one thing in the Budget, it is that, by underlining his target of 5 per cent. inflation by 1991, he has given confidence to those who are investing in the economy. Our present difficulties will have a satisfactory resolution. Now is not the time to stop

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investing ; now is the time to invest, to take advantage of a more competitive currency and of the export opportunities and to help Britain--particularly the north-west--to continue the economic growth that my examples have underlined.

I was delighted that my right hon. Friend the Chancellor took time in his Budget speech to highlight the growth in local government expenditure. The hon. Member for Nottingham, North (Mr. Allen) should compare the national pay and prices index with local government expenditure on pay and prices. He would find a picture very different from the one that he painted for the House this evening. Many local authorities have been profligate over the past few years, encouraged by the inadequacies of the grant-related expenditure system. One advantage of the community charge is that it will help them to curb their expenditure by bringing discipline in that area.

Finally, I congratulate my right hon. Friend the Chancellor on the changes that he made in the capital allowances relevant for help with the community charge. His measure will enable more people to gain income support and to be passported to other benefits, such as free prescriptions, vouchers for glasses and free dental care. That will be of great value to the elderly. However, much as I applaud the increase of the capital allowance to £16,000 for community charge benefit eligibility, I ask him to listen sympathetically to the Secretary of State for the Environment, because there are other ways in which the rebate scheme will require modification and they will cost money.

Above all, the Budget has underlined our commitment to fighting inflation. It shows that that can be achieved. I congratulate my right hon. Friend the Chancellor on his efforts.

Madam Deputy Speaker : The Standing Order that limits speeches to 10 minutes has now been lifted.

8 pm

Mr. Thomas McAvoy (Glasgow, Rutherglen) : Thank you for that, Madam Deputy Speaker.

After listening to the hon. Member for Fylde (Mr. Jack) and having ascertained that his majority is not all that big, I look forward to seeing his photograph flashed across the television at the next general election with the words "Labour gain" above it-- [Interruption.] I am advised that the hon. Gentleman's majority is 18,000. Perhaps we should ask him on Friday morning about Mid-Staffordshire's previous majority and about whether he expects his seat also to be a Labour gain.

The problem with speaking after four and half hours of debate is that many of my hon. Friends have scored off subject after subject, leaving me with only a few subjects on which to speak. I shall concentrate on only two areas that have not been mentioned previously, but first I reiterate the point about interest rates.

Hoover has a factory in my constituency. Indeed, I used to work there. About 50 years ago that factory employed 5,800 people, but in October or November last year, the company announced that it had only 1,000 workers. In that announcement, the company specifically mentioned interest rates as the direct cause of the latest round of cuts and redundancies. Hoover is an important manufacturer in this country, with a plant in Wales as well as a factory in Scotland. It has been affected by the high interest rates,

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which have directly caused a fall in sales, which has resulted in a downward spiral of employment in my constituency and in Wales. High interest rates also contribute in bringing imports into the country. If we look to the Government to deal with that problem and to reduce interest rates, we are looking in vain. There was nothing in the Chancellor's speech yesterday to help with that problem. Indeed, at the risk of upsetting the Financial Secretary to the Treasury, who gets upset if he is mentioned, I did not hear anything from him today to suggest that there is any hope that the Government will give any consideration to the plight of manufacturing industry. In the past 11 years, the Government have run down manufacturing industry and seem to have a guilty conscience. Perhaps that is what seemed to upset the Chief Secretary earlier when he responded so immoderately to the speech of my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington).

Although Conservative Members will not like this, I remind the House of the way in which the Government have treated Scotland as a nation since 1979. It is interesting that the hon. Member for Londonderry, East (Mr. Ross) noted that nothing has been said from the Dispatch Box about how any of the Budget changes will affect Northern Ireland. That is typical of the Government's approach. The Government are simply election-minded. They consider those who vote for them ; those who do not vote for them do not count. That is a disgraceful attitude from a party that has trumpeted for years that it is the party of empire and of nation.

Let us consider the way in which the Government have treated Scotland and the attitude shown by yesterday's poll tax announcement. I do not agree with the conspiracy approach that suggests that the Government deliberately snubbed Scotland and planned to be vindictive towards it, although that seems a usual enough course for them to follow. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) put her finger on it when she said that the Government did not realise what they were doing--they neither appreciated nor cared. Although there are still 10 Conservative Members representing Scottish seats, we in Scotland do not count.

That attitude causes strains and tensions within the United Kingdom. When even a moderate person such as the hon. Member for Gordon (Mr. Bruce), reacting to yesterday's announcement, said that it called into question the Act of Union between England and Scotland, surely that flags before the Government the fact that they are creating tensions within the United Kingdom that no Government, of any party, should cause.

My party has not advocated disruption or non-payment of the poll tax, although we recognise the right of individual conscience. However, the Government do not seem to realise--the Chancellor certainly did not seem to realise this yesterday--that yesterday's announcement will contribute to a heightened atmosphere of injustice and insult in Scotland and a feeling that the Government here are alien and do not have a sovereign right to govern in Scotland. I do not normally support that point of view, but I warn the Government that the Chancellor's reaction yesterday will result in a social movement in Scotland which, in turn, will result in opposition to the Act of Union.

The Tory party takes the view--we rightly hear it from the Chair--that this is a United Kingdom Parliament. As a Member of Parliament and a former councillor, I take

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the view that I was elected on a certain political platform and I expect to live up to it. I also take the view that, once elected, I represent all my electorate on matters of social justice. If anybody comes to me with a problem, it is my job and my duty to ensure that I represent that person, irrespective of party. In the best traditions of the Labour movement, I have always been told that I should represent all my electorate on matters of social justice. Although we welcome yesterday's announcement about capital allowances and the poll tax, because any relief for anybody is welcome, there is no doubt that that measure was achieved only because of the backlash from English and Welsh Conservative Back Benchers who have been pressured by their constituencies. We hear many confessions from Conservative Members who say, "I voted against the poll tax," but time after time when we look back at their individual records, we see that they voted for the poll tax for Scotland. That is hypocrisy. They may have voted against the poll tax for England and Wales, but they trooped through the Lobbies to impose it on Scotland. Therefore, I do not take kindly to crocodile tears from Conservative Members about the backlash in England and Wales. As the transitional payments in Scotland have not yet been paid, perhaps they could be backdated. It is reasonable that the £16,000 capital allowance increase should be applied retrospectively to Scotland. We have heard weak points about why that cannot be done. However, we keep hearing from the Prime Minister that if the political will exists, something can be achieved. It is clear that there is no political will to do that for Scotland. That is a social injustice and a disgrace. That demonstrates once again the folly of the tax being introduced initially in only part of the kingdom and introduced in England and Wales as a second stage.

Although I do not normally attack or criticise hon. Members who are not present, I must comment on the absence of Scottish nationalist Members from the debate. Yesterday, they sought to follow my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) who, uncharacteristically, rose to intervene in the Budget debate to try to gain an assurance for Scotland. I do not see why Scottish National party Members cannot sit in the Chamber for four and a half hours, as I have, to try to get five or 10 minutes in which to make Scotland's case. They are not here when there is any work to be done or any applications to be made on behalf of Scotland.

Only a Labour Government can bring social justice to the United Kingdom. In the past 10 years the Government have breached the convention that means that, once a Government are elected, they represent all the people. I remember the Government of Harold Macmillan. I never felt that I was living under a Government who oppressed me or who were vindictive towards me. I did not agree with that Government, but, as a British citizen, I never felt that the Government of my country were treating me as an alien. However, that is how people now feel in Scotland.

The Secretary of State for Scotland did not see fit to show his face in the Chamber yesterday and, as far as I am aware, he has still not chosen to appear in the Chamber. On Monday, when I attended the Scottish Grand Committee, I referred to the Secretary of State as toom tabard. That is a Scottish term that goes back to the

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Edwardian wars when mediaeval England was trying to make Scotland a vassal state. The Scottish people were so contemptuous of the then Scottish king that they nicknamed him toom tabard, which meant that the suit of armour was empty and that the man who represented Scotland was empty. The Secretary of State for Scotland is exactly the same.

According to press reports, the right hon. and learned Gentleman sat through the Cabinet meeting, heard the Budget, but did not see fit to stick up for Scotland when it came to backdating the capital tax allowance. Where was the voice of Scotland? That man is supposed to represent all the Scottish people at the Cabinet table, but he did not speak up for them. He has abdicated his responsibilities and he should resign. According to press reports he followed the Budget speech from his office in Whitehall--and no wonder. He knew full well what the reaction and resentment of Scottish Labour Members, as well as his right hon. Friend the Member for Kincardine and Deeside (Mr. Buchanan-Smith), would be to the announcement.

It is interesting to contrast the allegedly powerful position in Cabinet of the Secretary of State for Wales with that of the Secretary of State for Scotland. We can speculate as to why the Secretary of State for Scotland remained silent at the Cabinet table. Perhaps it was due to lack of courage or lack of weight, as he knows that he is not really considered "one of us" by the Prime Minister. Perhaps he was scared to speak up, pure and simple, because he knew what the reaction of the Prime Minister would be. Whatever the reason, he was a toom tabard and he is not fit to hold office. He should resign.

When the announcement about the capital allowance was made yesterday, I watched the reaction of the Secretary of State for Wales. He took great delight at sneering, denigrating and laughing at the anger and resentment expressed by Scottish Labour Members. That was the reaction of a so-called "wet" who is supposed to speak for all the bleeding hearts on the Back Benches of the Tory Party. Yesterday he demonstrated the vindictiveness of a true Conservative of the present mould by his reaction to the anger of Labour Members. My right hon. Friend the Leader of the Opposition has described the Budget as a "bits and pieces Budget" and I agree with him. If anyone on the Conservative Benches thinks that our anger yesterday was fabricated and that it did not amount to anything, they are in for a shock. That anger will be maintained. At present there are 10 Tory seats left in Scotland. Before yesterday I would have said that the Tories would hold on to four or five of them, but, after yesterday, they are heading for a complete whitewash.

8.13 pm

Mr. Graham Riddick (Colne Valley) : It is always interesting to follow a Scottish Labour Member, and it is always somewhat amusing to Conservative Members to note the continual squabble between the Labour party and the Scottish National party.

The hon. Member for Glasgow, Rutherglen (Mr. McAvoy) referred to Conservative Members voting in favour of the community charge for Scotland. I did not vote for its introduction in Scotland as I was not in the House at that time.

Scottish Labour Members have some cause to feel slightly aggrieved that the Chancellor made the concession

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on capital limits yesterday and that that concession was not made this time last year. Let us be brutally honest about why that did not happen. The Chancellor made that concession because a sufficient number of English and Welsh Members of Parliament urged him to make it. He took their request on board and conceded to the pressure. The problem for Scotland is that the Scottish people failed to vote in sufficient Tory Members to carry enough weight within the Conservative party. If there were more Scottish Tory Members, the views of Scotland would be heard more loudly. That is a purely personal view, but I believe that there is a strong element of truth in it. If there were more Scottish Tory Members, Scotland would have more influence with the Conservative Government. I hope that the Scottish people will take that on board as a lesson to be learnt. They should send more Conservatives to this House so that Scotland has more influence on this Conservative Government.

I add my congratulations to my right hon. Friend the Chancellor on the relaxed, confident style of his Budget. His room for manoeuvre was, of course, limited. It was a neutral to toughish Budget, which made it crystal clear that the defeat of inflation was the Government's No. 1 objective. Within the confines of the current economic scenario my right hon. Friend was able to provide real help to savers, charities, small businesses, blind people, working mothers, and, last but by no means least, football fans. This Budget has pitched the Conservatives firmly into the middle ground of British politics.

Some analysts have suggested that the Budget should have been tougher. I do not believe that the Budget could possibly be described as soft when its net effect is to take some £500 million out of the economy. To have made a significant impact on the wider economy the Chancellor needed to take billions of pounds--perhaps as much as £10 billion--out of the economy. To raise taxes along those lines, however, would have been indefensible on fiscal and moral grounds at a time when we have a budget surplus. If monetary policy was to be tightened--I believe it is tight enough now--interest rates would have to rise once more. I sincerely hope that that does not happen. Some people, particularly Labour Members, have suggested that the explosion of credit that occurred in the past two years was caused by the reduction in taxes announced in the 1988 Budget. That Budget put some £4.5 billion into the economy. I contend that it was the unnecessarily steep reduction in interest rates in the first six months of 1988, which put some £44 billion into the economy, which caused the problem. The sum of £4.5 billion pales into insignificance when compared with £44 billion. It was loose monetary policy, not loose fiscal policy, which led to the current problem of inflation. With interest rates at their current high level, no one could possibly claim that we are following a loose money policy. I applaud the straightforward approach adopted by my right hon. Friend the Chancellor. He had to raise some money, and he did so by openly raising excise duties and not by craftily extending the net of capital gains tax or extending the composite rate tax to personal bank accounts--quite the reverse. My right hon. Friend now intends to abolish one of the most sneaky and immoral taxes, the composite rate tax, which is paid by millions of non-taxpayers who see building societies and banks as safe havens for their savings. They probably know no other form of savings vehicle and many of them probably do not

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realise that the income from those savings is taxed. I commend my right hon. Friend the Chancellor of the Exchequer for that brave and thoroughly correct decision.

On behalf of salesmen, sales managers, district nurses and thousands of others who could not do their jobs without company cars, I thank my right hon. Friend for not hammering company car drivers. The 20 per cent. increase in company car taxation is quite enough, but certainly nothing like as bad as many people predicted. I speak from personal experience, because before I came to the House I was a sales manager at the sharp end of industry. I travelled many thousands of miles in my company car, and there is no way that I could have carried out my job without that vehicle. I used to resent the fact that company car tax was being increased when I had absolutely no choice in the matter because I had to have a company car. I know many people who drive 20,000 30,000 or 40,000 miles a year in pursuit of their careers. The Government should be careful before hitting such people. By all means, they should hit hard directors who do little mileage in their company cars and for whom they are a perk.

I shall touch on one other aspect of the Budget relating to cars. I commend my right hon. Friend the Chancellor's decision not to raise vehicle excise duty, but to raise the excise duty on petrol, DERV and unleaded petrol by more than the inflation rate. That provides an element of choice, whereas if the vehicle licence is raised by £10 or £20, regardless of the mileage done in the car, drivers have to pay that extra amount. If the extra cost is put on petrol, the more mileage is done, the more is paid in excise duty, and that is only fair.

I thank my right hon. Friend the Chancellor for significantly relaxing the savings rules relating to community charge rebate. With many colleagues including my hon. Friend the Member for High Peak (Mr. Hawkins), I have been pushing the Government to increase the savings limit of £8,000 above which a married couple do not qualify for rebate. My right hon. Friend the Chancellor doubled the limit to £16,000 not only for married couples but also for single people. Therefore, ironically, the anomaly still exists. There could well be a case for saying that, for a married couple, the savings limit should be raised to £24,000 and should be £16,000 for a single person.

The new higher savings limit is most definitely a step in the right direction. However, much more will have to be done to alleviate the introduction of the community charge. For any tax to work, there has to be general public acceptance of it. One does not have to be a brilliant political strategist or analyst to acknowledge that the community charge does not enjoy such public acceptance at present. When I talk to my constituents and meet members of the public, I find that people accept that everyone should make a contribution to local services. The community charge ensures that that happens and will certainly, in future, make local councils more accountable to their electors.

However, public acceptance does not exist at present because the community charge levels are simply too high. We know that the major reason for that is that many councils, mainly Labour councils, have taken the opportunity of the changeover to the new system of local government finance to jack up their budgets and spending. It is immoral for councils to take advantage of many thousands of ordinary people by increasing their budgets

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and thereby levying unnecessarily high community charges. However, that is happening, and the Government have a responsibility to try to alleviate the problems associated with high community charge bills. The Government must make two moves. First, they must disregard savings when calculating whether someone qualifies for community charge rebate. Qualification for rebate should depend entirely on income. That will ensure that the disincentive to save no longer exists and those on low to modest incomes will be properly helped. In response to a parliamentary question which I tabled about 10 days ago, the Department of Social Security estimated that such a move would cost the Exchequer between £250 million and £300 million per annum. In the mysterious and discouraging way of departmental answers, that one ignored the income from savings, so the figure would actually have been substantially lower. Some people say that such a move would benefit rich people, who could then qualify for rebate. I do not believe that that will happen. There is clearly a relationship between the amount of savings people have and the income they receive from them. If someone has £30,000, £40,000 or £50,000 of savings, the income from them will take him or her above the income threshold below which he or she qualifies for rebate. Therefore, to help many people on modest incomes, particularly pensioners, we must examine the possibility of doing away with the savings limit altogether.

The second move will cost the Exchequer a great deal more. Public acceptance of the community charge will come when the bills arrive later this month only if community charge levels are significantly lower than those proposed. We shall have to use any money available for tax cuts next year to reduce this tax, the community charge. We shall have to use more Government money to reduce the community charge level. Whatever pretext we use, be it taking a portion of education spending, the police or the fire service away from local authority control or simply increasing the revenue support grant, the Government will have to act.

A good starting point would be to provide the same level of Government grant in England and Scotland as is enjoyed in Wales. My right hon. Friend the Secretary of State for Wales has boasted in the House that community charge bills in the Principality will be £100 per person lower than they will be in England. That will do for me for starters. In a debate on 18 December 1989--about three months ago--my right hon. Friend the Secretary of State for Wales boasted that people would be paying £100 less in Wales than in Scotland and England. He also said that 85 per cent. of local government expenditure in Wales is met by the business community and the Government. I believe that the figure in England and Scotland is about 75 per cent. We shall have to come in line with Wales. I congratulate my right hon. Friend the Chancellor of the Exchequer on an interesting and imaginative Budget and on making the most of the few resources available to him. I fear that his most difficult task lies ahead. I hope that he will be able to alleviate most of the problems that many constituents are suffering due to the introduction of the community charge.

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8.29 pm

Mr. William O'Brien (Normanton) : I am very disappointed that the hon. Member for Colne Valley (Mr. Riddick), a Member from west Yorkshire, an area that I too represent, could talk about company cars and about giving up local influence in education, the police force or the fire service but found no reason to refer to the problems of industry in west Yorkshire, particularly the textile industry. Neither the Chancellor nor the Financial Secretary has mentioned this at any time, yet west Yorkshire has significant problems. The hon. Member for Colne Valley must have constituents who work in textiles, so I am disappointed that he talked about company cars but could think of nothing to say about local industry. The hon. Member also gave us some reasons why the Treasury should reconsider the poll tax next year--but he voted for the introduction of the poll tax at the very beginning. How hypocritical can people be? The hon. Member for Colne Valley goes through the Lobby supporting the introduction of the poll tax, yet when the wrath of the people is felt he and others shy away and now want to introduce alternatives to ease the burden. Why did not the hon. Member join Labour Members in opposing the poll tax in the very beginning? The hon. Member for Colne Valley should have thought of this when Opposition Members were warning of the likely results of the poll tax.

Nor has the hon. Member for Colne Valley found anything to say about housing in west Yorkshire. In his constituency, as in mine, there is a shortage of rented accommodation. Throughout west Yorkshire there is a shortage of affordable housing. Yet the hon. Member appeared to see no reason to refer to the problem in his speech tonight.

The hon. Member for Colne Valley referred to our Scottish colleagues. He said that more people should vote Tory in Scotland so as to have better representation. The same principle applies in west Yorkshire, only there we need more people to vote Labour so that a Labour Member could properly represent the constituents of the hon. Member for Colne Valley. If the principle applies to Scotland, it must also apply to west Yorkshire.

Mr. Riddick : The hon. Member for Normanton (Mr. O'Brien) clearly has nothing to say of his own ; he is just waffling on, trying to waste some of the time available before 9 o'clock. His attack on me is smutty, wholly unnecessary and wholly out of place. As regards the community charge, I voted against my Government on a three-line whip : I voted for the Mates amendment which would have improved the community charge markedly in relating it to people's ability to pay. Although we did not win that vote, I did my bit.

Mr. Martlew : On a point of order, Mr. Deputy Speaker. Is the hon. Member in order to speak in this way?

Mr. Deputy Speaker (Sir Paul Dean) : Order. It would be helpful if the hon. Member for Colne Valley would conclude his intervention.

Mr. Riddick : Thank you, Mr. Deputy Speaker. I am surprised that the hon. Member for Carlisle (Mr. Martlew) does not believe that I should have an opportunity to reply to a wholly scurrilous attack. May I make two brief points before I sit down? Inflation is the biggest concern facing industry in my constituency. Unemployment has come down by 50 per cent. in the past two years.

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Mr. O'Brien : Was the hon. Member for Colne Valley trying to extend his speech? My points must have been relevant or he would not have risen to the bait as he did. He told the House that he voted for the poll tax. He cannot have voted against it because he told us that he had voted for the Mates amendment. The amendment was still in favour of a poll tax although trying to find a different formula. Yet tonight the hon. Member says that changes should be made. My point was that if it was right for the hon. Gentleman to address his remarks to my Scottish colleagues as he did, he cannot object to my addressing remarks in a similar vein to him.

Mr. Lilley : Will the hon. Member for Normanton (Mr. O'Brien) confirm to his constituents that he will have the courage, should the unlikely time ever come when there is a Labour Government, to vote against a three-line Whip on a Bill to impose a roof tax on those constituents?

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