House of Commons Hansard Debates for 8 Jun 1990

Mr. Deputy Speaker : Order. It seems to me that the hon. Member is talking much more about the electoral system than about the burden of taxation to which the motion refers. I hope that he will address his remarks more closely to the terms of the motion.

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Mr. Barnes : I think that I have said enough to make my argument about electoral representation. I believe that my comments have been relevant to the motion, which refers to the objectionable nature of the taxation burden that has been introduced by the Government, about the shifts that have occurred in the burden of taxation and about the consequences of the poll tax. My argument is that those consequences are not simply of a social and economic nature, but are also of a democratic and constitutional nature.

Twenty Labour authorities have been poll tax capped. The system has been manipulated to enable that to happen because, in terms of expenditure levels, many Conservative authorities--in Oxfordshire, Bedfordshire and elsewhere--should have received the same treatment. There was no reference in the Conservative manifesto to poll tax capping, for it was held that people would be able to decide the levels locally.

The leader of the Conservative party in Doncaster was ousted, but he is haunting the local people, as it were, by the actions of the Secretary of State, who has poll tax capped the area. That, in turn, has led to the destruction of local education and other services which are essential

Mr. Deputy Speaker : Order. The motion refers to public services, but it is not about public services. I hope that the hon. Member will recognise that other hon. Members are waiting to speak to the motion. Will he please address his remarks to the motion or resume his seat?

Mr. Barnes : A constituent of mine wrote a letter which appeared in the local paper on 25 April of this year. John E. Thurley pointed out that on the poll tax form he received, it listed the different amounts available from Government grant, business rates and the amounts that were expected to be raised by the poll tax. He then calculated correctly that those amounts meant that the Government grant amounted to 13.5 per cent., the business rate to 33.4 per cent. and the poll tax payer was expected to pay 53.1 per cent. Those are the figures that the Government oblige councils to publish on the forms that are sent out.

The Government have operated the most nonsensical formula to ensure that certain areas of the country would have to bear that great burden. The formula that they used for the standard spending assessments means that an authority would not get a full grant if people worked outside the area seeking to raise money. The Government made some small argument of the fact that the authority would not need as many food inspectors or as much street cleaning if people left the area. If people go into an area the authority can raise money from car parking facilities and other provisions but the authority loses out if people leave the area. An authority will also lose out if it contains an intermix of middle class and working class areas--

Mr. Quentin Davies : Is the hon. Gentleman's obvious desire to filibuster his hon. Friend's motion a reflection of a confession of hopelessness at the possibility of developing a coherent argument in favour of the motion from a Labour point of view?

Mr. Barnes : When I saw that the motion had been tabled in the name of my hon. Friend I said, "Eureka" because I have been trying for some considerable time to

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get a debate in the House--an Adjournment debate, or come lucky in the ballot--so that I could discuss the democratic and constitutional implications of the operation of the poll tax. I have taken this opportunity to do that. You, Mr. Deputy Speaker, have held me in line.

Mr Deputy Speaker : Order. That is quite clearly what is causing some resentment in the House. I must remind the hon. Gentleman again that no matter how strong his desire to debate those matters, that is not what the motion is about.

I hope that he will address himself to the motion that is before the House, and not one that he might have hoped was before the House.

Mr. Barnes : I am addressing the motion before the House, although my arguments could have been produced in favour of a different motion. The motion before us talks about the poll tax, the taxation burden and the consequences and evils of that Government legislation and I was seeking to conclude--

Mr. Deputy Speaker : Order. There are a number of other nouns in the motion but that does not mean that it would be in order to have a full debate on any of those other nouns. I hope very much that the hon. Gentleman will respond to the sense of the motion--the burden of taxation. Otherwise I hope that he will resume his seat and let another hon. Member speak.

Mr. Barnes : As I said in conclusion, Mr. Deputy Speaker, I was making a point about the unfairness of the burden that has been placed on local authorities and poll tax payers in particular areas because of the Government's peculiar policy and their manipulation of the operation of standard spending assessments. That has led to a silly formula for catching particular areas. My district authority in Derbyshire, North-East, in representations to the Minister, showed the inequities of the system being used, which means that if the areas are a mix of rural and urban areas--

Ms. Diane Abbott (Hackney, North and Stoke Newington) : Does my hon. Friend agree that it would be absurd to talk about the weight of taxation on the people of Britain without discussing the poll tax, which is the newest and most onerous burden on our people--

Mr Deputy Speaker : Order. I hope that the hon. Lady is not encouraging her hon. Friend to defy my ruling, and I hope that the hon. Gentleman will observe what I have said to him.

Mr. Barnes : I was making the point that if people live in an area which is both rural and urban they lose out on the grant for sparsity of population and on a grant for concentration of population. That has affected my constituency in particular, and Derbyshire county council, which is one of the poll tax capped authorities. Also, if an area is mixed in class terms, with middle and working-class areas, working-class people in the area will suffer. Because of that mix they will miss out on various grants. On the social deprivation index there will not be a sufficient percentage of the socially deprived from working-class areas to get a grant. For example, in my constituency the eastern section is identical to that of my hon. Friend the Member for Bolsover (Mr. Skinner), yet the grant provision to the district council in Bolsover is more generous. The people in the eastern section of my

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constituency--and others in the western section--cannot get such a reduction. Any formula that is based on such odd priorities, and which hits specific types of authority, especially those in the north of England, is terribly biased and unjust, and that is relevant to the nature of the evils of the tax that I am discussing.

I could go on to develop discussions about some of the other elements mentioned in the motion, such as the unfairness of value added tax, but, given that there is certain impatience with my contribution--not from Opposition Members but from Mr. Deputy Speaker--I feel that I have made my point about the economic, social, constitutional and democratic consequences of what we are discussing. It is time that the House faced up to those democratic and constitutional considerations because the poll tax is the most monstrous measure of taxation--among many of the other horrors that my hon. Friend the Member for Makerfield has talked about and that we could go on about--that the Government have introduced. The poll tax is by far the worst. I hope that Conservative Members who are now ready to jump up will tell us that they have seen the light and that we will get rid of this obnoxious measure.

11.37 am

Mr. Ian Gow (Eastbourne) : I congratulate the hon. Member for Makerfield (Mr. McCartney) on coming top in the ballot and on the subject that he has chosen for debate. A debate on taxation, especially when initiated by the Opposition, is always riveting. Today marks the 75th birthday of my hon. Friend the Member for Harwich (Sir J. Ridsdale) and the 64th birthday of my right hon. Friend the Member for Woking (Mr. Onslow). It is a matter of regret to the House, as it is to the Financial Secretary to the Treasury, that neither my hon. Friend nor my right hon. Friend can be here to contribute to the debate. They are in their constituencies toiling away on their constituents' behalf.

I want to draw the attention of the House to crucial words in the motion of the hon. Member for Makerfield

"the growing burden of less fair taxes".

I begin by saying something that will not be welcome to my hon. Friend the Financial Secretary. The most unfair tax invented is that which is called inflation. That tax has been unauthorised by Parliament.

Mr. McCartney : What about income tax?

Mr. Gow : I am coming to that. I hope that I shall carry the hon. Gentleman with me during part of my speech. I shall give way to him, or to one or more of his hon. Friends, if they wish to intervene. Only Governments can cause inflation ; only Governments can cure it. There has been one occasion in your lifetime, Mr. Deputy Speaker--you will remember it well, since you were a member of the Administration at the time--when the recorded rate of inflation was 26.9 per cent. Today it is 9 per cent. plus, and probably rising. In my opinion, the Labour party was not responsible for, although it was in office, the rise in the rate of inflation to 26.9 per cent. It was my belief at the time, and it remains my belief today, that responsibility for that inflation figure of 26.9 per cent. rests with my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and my noble Friend Lord Barber. They were, respectively, the First Lord of the Treasury and Chancellor of the

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Exchequer during the period of between 18 months and two years which preceded that inflation figure, which occurred in 1975-76. Since I blame my right hon. Friend the Member for Old Bexley and Sidcup and my noble friend Lord Barber for causing that inflation, I also assert that the cause of the inflation in 1975-76 was an increase in the growth of money supply at a rate far greater than the increase in the supply of goods and services. Inflation of 9 per cent. plus--and possibly 9 per cent. rising--is the direct cause and the inevitable consequence of the fact that somewhere between 18 months and two years ago the growth of money supply was much greater than the rate of growth in the supply of goods and services. If the hon. Gentleman's motion that he has enabled us to debate today has rendered any service, it is, I hope, this : that when the Financial Secretary replies to the debate he will renew the Treasury's acknowledgment that excessive monetary growth is the inevitable cause of inflation. The inflation from which we are suffering today, and which is in prospect, could have been avoided. I remind my hon. Friend of the manifesto upon which he and I, the Chancellor of the Exchequer and my right hon. Friend the First Lord of the Treasury fought the June 1983 election. For the sake of accuracy, I have the precise words :

"In the next Parliament, we shall endeavour to bring inflation lower still. Our ultimate goal should be a society with stable prices."

In 1987--almost exactly three years ago to the day--my hon. Friend the Financial Secretary went before the people of St. Albans and my right hon. Friend the First Lord of the Treasury went before the people of Finchley and said, according to the election manifesto : "The Conservative Government will continue to put the conquest of inflation as our first objective."

It was not the second or third objective ; it was the first. The manifesto continued :

"We will not be content until we have stable prices, with inflation eradicated altogether."

I want my hon. Friend to repeat in your hearing, Mr. Deputy Speaker, and in the hearing of the mover of the motion that the Government remain committed to achieving stable prices, with inflation eradicated altogether.

We are allowed to remind ourselves about that commitment this morning because we are talking about fair taxes. The most unfair tax of all is inflation. It is a major source of envy, jealousy and malice ; it is the unauthorised robber of those who have saved ; it is a major disincentive to investment--notably to investment from overseas. Inflation is also the principle parent of unemployment. If we are talking about fairness--it was the hon. Member for Makerfield who chose to put the word "fair" on the Order Paper--let us have from the Financial Secretary his reaffirmation of the commitment to end the unfairness of inflation.

I shall now cease to carry the Opposition with me and will cause no further embarrassment to my hon. Friend the Financial Secretary. We can be certain that the words which my hon. Friend intends to utter will satisfy me. He and I hold identical views on this matter. I know that I shall be wholly reassured by what he will say. I do not blame him for what happened ; he was not at the Treasury at the time. A fascinating exercise for the House, and relevant when a motion such as this is moved by a Labour Back-Bencher, is to ask what would be the consequences of electing a Labour Government.

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My hon. Friend the Member for Epping Forest (Mr. Norris) told the House that the previous Labour Government borrowed when they dared not tax and printed what they could not borrow. He was right. The motion contains a reference to levels of taxation and spending, but we can be absolutely certain that if there were ever another Labour Governent there would be a massive increase in spending and borrowing. A Labour Government would be unable to borrow enough to finance their extra spending, so the printing presses would inevitably be set to work.

One consequence of the policies that my right hon. and hon. Friends on the Treasury Bench have followed, with my warm approval--to repay debt instead of to borrow--is an overall increase in the proportion of gross domestic product that is used to finance public expenditure. My hon. Friend will correct me if I am wrong, but in present day money the borrowing of the previous Labour Government was about £40 billion.

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

Mr. Gow : Of course, I shall give way. I gave an undertaking to give way and I shall fulfil that undertaking.

Mr. Allen : I thank the hon. Gentleman for his typical generosity. It may be prudent to borrow less, given the policy that the Government have pursued in raising interest rates. If one borrows less one has less to repay. The hon. Gentleman will accept the logic of that. Will he go on to the next stage and acept that the Government are no longer repaying debts but are starting to borrow again. Public sector borrowing is increasing. Should not the hon. Gentleman look a little further than the straightforward monetarism he has put forward so far?

Mr. Gow : I should not have given way to the hon. Gentleman because he is not correct. For the past three years and for the present financial year we shall be repaying debt. There is no longer any justification in drinking a White Lady to achieve a reduction in the public sector borrowing requirement. The consequence of drinking a White Lady today is to increase public sector debt repayment, and that is a very good thing.

The present policy of high interest rates will result in the abatement of inflation. I am pleased that we are debating this motion today because the inevitable consequence of a future Labour Government will be higher taxes and, using the words of the motion, the terrible unfairness of higher inflation and the rising unemployment which will follow any inflationary policy.

11.51 am

Mr. Stuart Bell (Middlesbrough) : I am grateful for the opportunity to follow the hon. Member for Eastbourne (Mr. Gow). I have followed him on many occasions in debates on Northern Ireland, and it is a pleasant and refreshing change to follow him in this debate. May I say how much I welcomed his refreshing and objective remarks. He said that the inflation figure of 26.9 per cent. was a direct consequence of the policy followed by the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) and the former Chancellor, Lord Barber. I recall 17 December 1973--the date is engraved on my heart--when the credit expansion

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that had been introduced by Lord Barber came to an end. The vast credit expansion that led to an unprecedented boom in property and property development ended when the Government imposed restrictions, and, because inflation takes two years to work its way through the system, there was massive inflation in 1975.

Mr. Allen : Although the scenario that the hon. Member for Eastbourne (Mr. Gow) painted was most seductive, I warn my hon. Friend not to go too far in saying that inflation is entirely the product of national Governments printing money. There are many other important factors, notably the actions pursued by other national Governments. While I do not wish to detract from my hon. Friend's attack on the hon. Member for Old Bexley and Sidcup (Mr. Heath) and Lord Barber, we should remember the shock of oil price increases which fed into the high inflation figures under the last Labour Government.

Mr. Bell : I am grateful to my hon. Friend for anticipating my speech. The next point in my notes refers to the oil price rise, but my hon. Friend is certainly right to refer to the actions of other governments. I remember Mr. Giscard D'Estaing, who became President of France, saying that the American war in Vietnam led to the exporting of inflation from the United States into Europe. My hon. Friend is perfectly right to say that there is a clear connection between our inflation and what happens in other countries. The great oil price shock in 1973 after the Yom Kippur war, when the price of a barrel of oil rose from $3 to $11, was mirrored in 1979 when the price of oil quadrupled, leading to an inflation rate of 21 per cent. in 1981 under a Conservative Government.

One of the reasons why there has been a reasonably stable inflation rate in the 1980s, leading to stability in Governments throughout the western world, has been the fact that the prices of oil and other raw materials have been relatively stable. On the back of that stability we have been able to maintain the inflation rate reasonably well. To add to the refreshing comments of the hon. Member for Eastbourne, of course, there have been other factors since 1974. Lord Barnett wrote an excellent book called "Inside the Treasury" and I hope that my hon. Friends on the Labour Front Bench and the Treasury Ministers have read it with great interest and understand the absolute importance of keeping a strong control on expenditure commitments that may appear in a manifesto.

I disagree with the final remarks of the hon. Member for Eastbourne when he prophetically referred to what he envisages as the consequences of a future Labour Government. There is not the slightest prospect of a future Labour Government borrowing to the extent that the hon. Gentleman suggested. At the very first Labour party conference I attended in 1976, Lord Callaghan, the then Prime Minister, said that the days when Governments could borrow or spend their way out of an economic crisis were over. The Labour party has learnt those lessons and there is not the slightest prospect of a future Labour Government entering the money markets to the extent that the hon. Member for Eastbourne has suggested and borrowing money. Nor is there the prospect that a future Labour Government would print money. All Governments throughout the western world understand perfectly well what happens when Governments resort to

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the printing press. The hon. Gentleman was perspicacious in his references to the consequences of inflation. Inflation destroys savings and the principle that one should even try to save or put money aside, as it is eaten away by inflation. So inflation will be a paramount consideration to any future Labour Government and in my modest capacity as a Back-Bench spokesman, I give a commitment that a future Labour Government will not borrow to the extent that the hon. Gentleman suggests and certainly will not print money.

Mr. Allen : I hope that I do not anticipate my hon. Friend's remarks once again, but I invite him to allude to current Government borrowing, particularly in the past three months. The hon. Member for Eastbourne appeared not to be aware of the situation. Having been a net repayer of debt, with a general election approaching we are now starting to borrow again in ever greater amounts.

Mr. Deputy Speaker : Order. Once again the debate is moving away from the motion before the House. It is a debate not about the general economic financial situation but about the burden of taxation.

Mr. Bell : The hon. Member for Eastbourne said that inflation was the greatest tax that we could impose on future generations and he was perfectly right.

Mr. Deputy Speaker : The hon. Gentleman was being invited to discuss the potential borrowing of a future Labour Government.

Mr. Bell : The hon. Member for Eastbourne was warned when he said that the Government are not borrowing money that the Government have dipped into the money markets of late to balance their books, but I shall leave it at that.

The motion mentions

"savage cuts in the quality of public services".

We all remember the early 1980s when the Government used the prices of gas, electricity and water, which were all nationalised industries, as indirect taxation. They increased the charges for those services and telecommunications. That was indirect taxation used by the Government to pave the way for reductions in the rate of income tax. One of the great tragedies of the past 10 years under this Government and under the United States Government is the view that has crept into our thinking that high taxation is wrong. I believed in 1970 that it was a great pity that Mr. Wilson as he then was lost the election. He tried to persuade the people that they should accept high taxation for the high standard of services that could be rendered. Unfortunately, that battle was lost in 1970. In the 1980s, we have lost ground still further, because the concept in the public's mind is that they do not really want increased taxation. I am aware that, if people are interviewed for an opinion poll, they may say that they would like increased taxation and would like to pay more for better services, but that is not the reality, as is shown in this country and elsewhere.

Many years ago, Hugh Gaitskell said that the Labour party was the party of high taxation, but we have evolved over the years. To use the words of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), Labour is now the party of fair taxation. We fully accept the concepts of fair taxation, of value for money and of paying our way in the world. We will not return to

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a situation when the Government tried to persuade the British public that they should pay high taxes. We fully accept that the country wants a fair taxation system and value for money. The hon. Member for Eastbourne talked about the inflation rate. One of the great tragedies of our time in economic terms was the Chancellor's decision to reduce the highest income tax rate from 60 to 40 per cent. Financially, that could be said to be a small change, but overall it gave a signal to the public that the good times were here and that we could spend more than we were earning. It resulted in a boom which created our present financial difficulties. We all remember the shift under the Conservative Government from direct taxation to indirect taxation. We will never forget the shameless promise in 1979 not to increase VAT, and then it doubled. That sleight of hand created a framework for lower direct taxes. When referring to previous Labour Governments and taxation rates we should remember that under a Labour Government the taxation rate was 25 per cent. for those on lower incomes. We have not moved far from the view of taxation in those years. Taxation levels overall under the Conservative Government are higher than they were under a Labour Government and the consequences are felt by every family. Families know the taxation burden that they face and they will not accept the sleight of hand so often shown by those on the Treasury Bench. 12.3 pm

Sir Trevor Skeet (Bedfordshire, North) : We have heard some interesting speeches, including a thoughtful one by the hon. Member for Middlesbrough (Mr. Bell). My hon. Friend the Member for Eastbourne (Mr. Gow) said that inflation was the killer and the primary tax. One point that distinguishes this country from others in western Europe is that mortgage interest in not included in the retail prices index in those countries. Inflation in the United Kingdom might be assumed to be 9.5 per cent. but it is really about 2 per cent. below that. That is a long call from the 26.9 per cent. to which my hon. Friend referred.

Mr. McCartney : Surely the hon. Gentleman is not suggesting that the crippling monthly repayments that most people are suffering under the Government should be removed from the RPI calculation. Whether it is in or out of that calculation, there is still growing debt among mortgagors and still a problem of trying to meet growing demands. People are having great difficulty meeting the higher burdens imposed by the Government's economic policies.

Sir Trevor Skeet : The hon. Gentleman makes his point. We are now in Europe and I suggest that we should conform to European standards. As mortgage interest is not included there--and the hon. Gentleman is very much in favour of that sort of thing--perhaps my proposal should be investigated.

The Conservatives have a good taxation record. They have been cutting borrowing, paying off debt--£25 billion in three years--and saving £2.5 billion in interest payments, which could provide for the running of 150 hospitals for a considerable time. The hon. Member for Newcastle upon Tyne, East (Mr. Brown) referred to the prospects of some of our prosperous companies such as Glaxo and made a point which I think he will regret in future. It is a big exporter for the United Kingdom and a

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producer of many new drugs. It is a wealth creator, not a wealth consumer. There have been three Labour Governments since the war, for terms of roughly four to six years. They were the wealth destroyers. The Labour party came into office after the Conservative Government had built up wealth, and then the Labour Government distributed it. There have been 13 years of previous Conservative Governments, the present Government have been in office for 10 years, and the term is likely to be extended further. Wealth creation can be brought about only by having appropriate incentives, not denigrating some of our best companies.

Mr. Nicholas Brown : I am grateful to the hon. Gentleman for letting the wealth destroyer intervene. It is not my intention to denigrate Glaxo as a company. Of course, it plays an important part in the British economy. I said nothing that could have possibly been taken by anyone to be a denigration of Glaxo. I raised the issue of the desirability, or the necessity, of paying its chairman £500,000 a year. That seems a lot of money, even for someone as hard working as the chairman.

Sir Trevor Skeet : The hon. Gentleman has made his point, and we shall read it carefully in Hansard. It is a matter of interpretation, and that is not my interpretation.

If the Labour party ever assumed the leadership of this country, high salaries would be the first things to be removed, and some of the people who have been producing this country's wealth would be affected. We have seen some of Labour's party pieces and it has suggested its programme. We must take account of the taxation required to meet those commitments which has been assessed at roughly 33p in the pound, instead of the current 25p in the pound. We would return to the conditions of previous years.

To take one item, it will be extraordinarily expensive to deal with the roof tax. Is the hon. Member for Newcastle upon Tyne, East prepared to tell us how he will operate that tax? It is a property tax plus a local income tax. I assume that the hon. Gentleman would prefer to leave that answer to some other occasion, and perhaps that might be a good idea.

Mr. McCartney : May I take the hon. Gentleman back to the issue of Glaxo? My point was not the pay that that gentleman receives but the fact that he had a 51 per cent. increase. If workers at Glaxo or elsewhere asked for even one quarter of that, Conservative Members would be the first to be up on their hind legs attacking the consequences of inflationary wage demands.

I remind the hon. Member for Bedfordshire, North (Sir T. Skeet) that during Prime Minister's Question Time a few weeks ago the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) prompted the Prime Minister on the issue of high wage rises feeding through from the boardroom downwards. In response, the Prime Minister distanced herself from that and attacked the way in which company chairmen and others were giving themselves huge pay rises of between 50 and 110 per cent. because they gave the wrong impression and the wrong image to the rest of the workers in the economy.

Sir Trevor Skeet : Yes, I can see envy entering the matter again. It seems that people must not be allowed to earn too

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much, even though they pay a substantial element of tax. Envy creeps out from every corner and it eventually formulates policy. We do not want to drive company chairmen from the United Kingdom. If they can earn more in Europe or the United States, they will go there and we will be the poorer.

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

Sir Trevor Skeet : No, I want to make only a comparatively short speech.

The hon. Member for Derbyshire, North-East (Mr. Barnes) referred to the community charge. On that, I must depart from the generality of feeling in the House which is totally in support of the Government. There are nearly 11.2 million married women in the United Kingdom, of whom 3.9 million have no paid employment and 3.4 million are termed economically inactive. Of them, 2.4 million state that their main reason for staying at home is to look after their husbands and families. That is a very creditable motive with which many people would agree. If we argue that those non-earning married women should have a considerable rebate on their community charge payments--as much as 80 per cent.--it will cost the Government a great deal of money. However, I do not argue for an exemption because I think that it would be unqualified. The community charge is a good tax--if it may be termed a tax. Formerly only 18 million people paid rates out of a total of 36 million. Therefore, the community charge is a good tax in the sense that its coverage is wide and accountability is there for all to see.

I predict that in future the Labour party will throw aside its roof tax and adopt the existing tax on the statute book. However, the community charge has some ragged edges. Although reform may be expensive for the Government- -in one scenario the cost would be £1.8 billion--the problem could be abated because many people involved are eligible to receive rebates anyway and it would be unfair to suggest that if women had considerable investment income or had large capital funds of their own, they would qualify for rebate. Of course, they would have to pay the full sum.

Many people are caught between Scylla and Charybdis. Some have minuscule earnings. On the one hand they face the rapacity of local authorities, which seem to have little desire to control expenditure, and on the other an absurd structure for local government which accommodates too many tiers of administration. We must overcome that problem. I am trying to help the Government, who are going to review the community charge shortly. I hope that they will consider that problem very carefully.

Why do I argue that the non-working married woman should qualify for rebates under the community charge? Those women are now taxed separately under section 32 of the Finance Act 1988. If they are separately taxed, the burden should be distributed equally between the parties and they should be accountable for their share. If they are accountable for their share, but cannot pay it, some compensation must be paid in the form of a rebate. I suggest that they should pay only 20 per cent. of the charge unless they fall within exceptional circumstances.

Another of my arguments why non-working women should qualify for rebates is that many wives do not wish to approach their husbands for money because relations in

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marriage as a consequence might prove difficult. We must recognise that 35 per cent. of marriages break down. Some are very shaky and asking for money is a real problem.

Another argument is that those women have no legal right to a specific part of their husband's salary. He may be irritated at having to bear the legal responsibility for her charge. That is very significant and the further one travels north, the more powerful that point becomes until it is very powerful in Scotland. In England we are trying to be a little more reasonable.

Another argument is that most married women have no savings. Of a total of 13 million women, 65 per cent. have under £3,000 in savings, 30 per cent. have between £3,000 and £10,000 and 5 per cent. have more. It is obvious that most married women have no money from which to pay the charge except through the leverage from their husband and the law that stands behind him. It is unreasonable not to modify the law in that regard.

Another argument relates to the difficult position of widows and single parents who look after children. It might be helpful to the Goverment, as they are reviewing the community charge, if I offer a few suggestions. I am certain that the review will be successful and when it is successful people will say to themselves, "Why didn't we think of that?"

The hon. Member for Derbyshire, North-East made one good point. Under the Rating (Disabled Persons) Act 1978 all severely handicapped persons were entitled to a rates rebate. However, under the community charge, relief is allowed only for the mentally disabled. I see no reason for that restriction. Perhaps the relief could be extended.

Mr. McCartney : The hon. Gentleman has made an important point. I have two disabled constituents who, as a consequence of the poll tax, must find just under £800, but they cannot meet the bill. The legislation failed to take account of amendments pursued by hon. Members on both sides of the House from the Front and Back Benches. The Government were intransigent and refused to look after that group of severely disabled people.

Sir Trevor Skeet : Yes, the Government have a problem. They must weigh up what concessions are practicable in the circumstances. One would not want to thrust on the Government an impossible condition. However, that anomaly could be rectified.

We must also consider the second house anomaly. That provision is so absurd that people are trying to find a way round it. I received a letter from my hon. Friend the Minister for Local Government and Inner Cities in response to a constituent's letter which I believe was very helpful. My hon. Friend the Minister wrote :

"If it appears that local authorities have not made sufficient use of their discretion we will certainly consider whether we ought to alter the provisions relating to this type of property. Indeed the Department have just issued a Press Release which expresses our concern that in some cases local authorities appear not to have made responsible use of their discretion."

I can see the light at the end of the tunnel. I believe that the Government will come up with some good ideas. The responsibility lies not with the Government, but with the interpretation of the principles laid down by local authorities. Unfortunately, they assess a person as earning over 20 per cent. on his or her investment when it is quite impossible to reach that figure. Most people's investments return about 10 per cent. If they are to be charged a high

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amount against the possibility of securing a rebate, one is taking away with one hand what one is granting with the other.

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

Sir Trevor Skeet : No. I should proceed because other hon. Members wish to speak. I want to make some important points as the review will be held shortly.

Overall, the Government have been very successful. The proportion of GDP taken by income tax fell from 11.1 per cent. in 1978-79 to an estimated 9.5 per cent. in 1989-90, which is a reduction of 14 per cent. The spending power of higher salaries is important. The Labour Government were in favour of a displacement of direct taxation in favour of indirect taxation. That is precisely what has been happening in the United Kingdom. One has control over one's indirect taxation because one need not buy a certain product. One may be tempted--

Mr. Allen : What about gas and electricity?

Sir Trevor Skeet : Gas and electricity are not subject to VAT, and nor is the food that we buy. We have kept them on a zero rate, and it is right that we should maintain that policy. I agree that most foods are not subject to VAT, but one or two are. The system is fair and it should be extended.

It was said that many people are concerned about the amount of money that could be provided to build health services. The Labour Government spent about £8 billion in their last year. We now spend about £30 billion on health services, which is a big contribution. It is absurd to suggest that we are conducting an unfair system of taxation.

There are one or two ways in which I should like modifications to be made, particularly to help people who are in a fix. Let us bring about a change. Let us make a fair system even fairer. Let us bear in mind that inflation is the biggest tax for the investor and for the man who lives in a small house anywhere in the United Kingdom. After all, we are one nation, but we are looking at the problem from only two sides.

12.22 pm

The Financial Secretary to the Treasury (Mr. Peter Lilley) : I am glad to have the opportunity to congratulate the hon. Member for Makerfield (Mr. McCartney) on securing the debate, on choosing the subject, and on a first-rate speech that built an impressive edifice on a slender foundation. Unfortunately, his speech was undermined by his descent into personal attacks on able and successful people, including right hon. and hon. Members. None the less, the hon. Gentleman's speech served a useful purpose --I am sure that he will learn his lesson because he clearly lost the support of the House when he descended into personal attacks--because he illustrated that the mainspring of Labour tax policy is not a desire for fairness, but envy, and not a desire to help, but malice. That point was made clear and it is always helpful for it to be pointed out to the House and to the nation. I shall refer to the constructive aspects of the hon. Gentleman's contribution and his motion after I have dealt with some of the points that were made by other hon. Members.

We heard a sparkling contribution from my hon. Friend the Member for Epping Forest (Mr. Norris),

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