House of Commons Hansard Debates for 5 Jul 1990

Mr. Dalyell : On public company gifts for scientific research, would a Treasury Minister be prepared to meet David Baldwin, chairman of Hewlett- Packard in Britain, who says that if the arrangements were more generous-- as they are in the Federal Republic of Germany and the United States--his company would be prepared to give significantly more to universities such as Edinburgh, Strathclyde, Bristol and Cambridge? Would such a meeting be possible?

Mr. Lilley : It might indeed--if we received any such request. When I was responsible for these matters, as Economic Secretary, I was in correspondence with the gentleman to whom the hon. Gentleman has referred and I believe that I asked him for any evidence that there was more favourable treatment in the federal republic. I do not know whether my successor ever received it, but I certainly did not.

Sir Ian Lloyd : Does my hon. Friend accept the important and significant conclusion of the Select Committee on Science and Technology in the other place that as a nation we are spending too little on civil research and development and that the situation is getting worse?

Mr. Lilley : I would certainly not agree that the situation is getting worse. Over the past five years, spending by British industry on research and development has risen by 46 per cent. and companies now spend some £5 billion per year on research and development. We all welcome that trend.

Mr. Cryer : Is not it true that our enormous and growing balance of trade deficit--currently more than £20,000 million--has risen at least in part because of the lack of scientific-based research and development, which has helped to diminish our manufacturing base? Is not it true that we are not catching up with Japan and West Germany and that under this Government we are becoming a nation of assemblers, without proper or adequate manufacturing research and development?

Mr. Lilley : There were so many mis-statements in the hon. Gentleman's question that I cannot put him right on all of them. It is simply not true that things are getting worse--they are getting decidely better. During the 1980s

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manufacturing industry's productivity increased--not least because of research and development--faster than in any other G7 country. That is good news for the future.

Mr. Rathbone : Does my hon. Friend accept that, in spite of his answers to previous questions, the majority of the money to which he referred is in fact spent on development rather than research? Will he consider how the Government can help to encourage more research, particularly among manufacturing companies?

Mr. Lilley : As I said in response to the main question, there is already more generous tax treatment for research than for any other kind of investment. We also have the lowest level of corporation tax on profits earned of almost any country in western Europe. That is beneficial to industry and leaves more money in industry's hands for investment in such activities, and I welcome the fact that that is increasingly happening.

Excise Duty (Petrol)

9. Mrs. Fyfe : To ask the Chansellor of the Exchequer how much revenue was raised in excise duty on (a) unleaded and (b) leaded petrol (i) in the three months prior to 20 March and (ii) subsequently.

Mr. Ryder : In the three months to mid-March, £417 million worth of duty was collected on unleaded petrol and £1,128 million on leaded petrol. In the two months to mid-May--the latest period for which figures are available--the figures were £347 million for unleaded and £847 million for leaded.

Mrs. Fyfe : I expect that the Minister is aware that the Society of Motor Manufacturers and Traders estimates that sales of unleaded petrol represent about 34 per cent. of the whole. Does the Department have a target figure for sales of unleaded petrol, and what steps is it taking to achieve it?

Mr. Ryder : Last year we set ourselves a target of 30 per cent., and we have reached that. This year we set ourselves a target of 40 per cent., which we hope to achieve by next March's Budget. We have reached 33 per cent. already, so I have high hopes that we can reach this year's target.

Mr. Madel : New cars fitted with three-way catalytic converters have to run on unleaded fuel. Will my hon. Friend therefore consider removing the 10 per cent. car tax on such new cars? How much longer must cars have two taxes imposed on them--VAT and the 10 per cent. car tax?

Mr. Ryder : As my hon. Friend knows, catalytic converters will have to be fitted to all new cars by 1 January 1993. For that reason, my hon. Friend's points are not relevant in the context of our European obligations.

Mr. Boateng : Does the Treasury have a mechanism for assessing the impact of fiscal policy on the environment? If so, when will the Minister report to the House the impact of the Budget in that respect? If he will not do that, will he explain why?

Mr. Ryder : I have already described the impact of the Budget in increasing the use of unleaded petrol. With regard to wider environmental considerations, the hon. Gentleman, like the rest of us, will have to wait for the

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publication of the White Paper from my right hon. Friend the Secretary of State for the Environment which is due in the early autumn.

Mr. Hanley : Do not those figures show that our Government are prepared to make fiscal changes for environmental purposes when there is proper scientific evidence and when the fiscal studies show that that would be constructive? Does not my hon. Friend therefore believe that other fiscal changes might help the environmental cause? Does he believe that a differential road tax might also help and lead to savings for the environment?

Mr. Ryder : Road tax has remained the same for five years. That is designed to encourage people who travel less to pay less. The differential was the subject of an amendment tabled by the Labour party during the Committee stage of the Finance Bill. We turned that down on the basis that if we had that kind of differential there is no reason to believe that people's decisions about the sort of car that they may purchase would depend on a differential which any Government might introduce.

Inflation

12. Mrs. Dunwoody : To ask the Chancellor of the Exchequer what is the tax and price index rate of inflation.

Mr. Ryder : The tax and price index rose by 8.1 per cent. in the 12 months to May.

Mrs. Dunwoody : Is not it remarkable that no matter how the Government seek to change the method of calculation, our rate of inflation is still among the worst of all manufacturing countries? Would the Chancellor of the Exchequer like to tell us when his miracle is going to start so that our inflation will drop and our manufacturing deficit be eliminated?

Mr. Ryder : Before the election.

Mr. Gow : What is the cause of the present inflation rate?

Mr. Ryder : Excessive demand.

Mr. Win Griffiths : Will the Minister tell us which measurement of inflation the Treasury intend to use in estimating when we enter the exchange rate mechanism? Will he guarantee to tell us that now, so that we can judge exactly when the Government are likely to meet that average rate of inflation which will bring us into the exchange rate mechanism?

Mr. Ryder : As we have said before, it will be a proximate rate of inflation.

Mr. Oppenheim : What would be the effect on the underlying rate of inflation of a massive increase in public expenditure in addition to an immediate cut in interest rates, both of which are Opposition policies? How could any Government implementing such policies and committed to immediate entry to the exchange rate mechanism, however vague the conditions, hope to maintain the pound's parity within the ERM system?

Mr. Ryder : That is a question for the hon. Member for Derby, South (Mrs. Beckett), the shadow Chief Secretary.

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If the Labour party were ever returned to office, she would be the Minister responsible for ensuring that all the gravy trains arrived on time.

Mr. John Smith : The Minister told his hon. Friend the Member for Eastbourne (Mr. Gow) that the cause of inflation was excessive demand. Will he say who caused that excessive demand?

Mr. Ryder : It was caused by over-confidence among consumers, especially in the wake of the Wall street crash of 1987. I notice that the Leader of the Opposition is whispering advice to his right hon. and learned Friend. Perhaps they are correcting each other. The shadow Chancellor did not advise the then Chancellor, my right hon. Friend the Member for Blaby (Mr. Lawson), to deflate after the Wall street crash of 1987.

Charities (Tax Relief)

13. Mr. Ian Taylor : To ask the Chancellor of the Exchequer what representations he has received from charitable organisations on the decision to introduce new tax reliefs for single gifts to charity ; and when he proposes to issue detailed guidance for donors and charities on the arrangements for claiming relief.

Mr. Major : Charitable organisations are enthusiastic about gift aid, the new tax relief for single gifts to charity. Detailed guidance will be made available in good time for the start of the scheme.

Mr. Taylor : Does my right hon. Friend agree that the Charities Aid Foundation and other organisations have welcomed the Budget as the best news ever for charities? That is also shown by the fact that in the past few years the income of the 200 major charities has more than doubled. The Government have shown that we wish to restore the generosity of spirit of our people, who give to charities in which they feel most involved. Does my right hon. Friend agree that the negative, carping attitude of Opposition Members, who think that the work of voluntary organisations should be taken on by the Government, shows the lack of generosity of spirit on the Opposition Benches?

Mr. Major : My hon. Friend puts his point extremely well. The Charities Aid Foundation was gracious about the budgetary elements that I announced earlier in the year. I hope that a large number of people will take the opportunity of the new tax relief to give generously.

Mr. Campbell-Savours : Does the Chancellor really believe that The Adam Smith Institute should be treated in charity law in the same way as Barnardos, the Save the Children Fund and Oxfam, when all that The Adam Smith Institute does is to pump out irrelevant, right-wing nonsense and rubbish?

Mr. Major : Perhaps The Adam Smith Institute should be treated in precisely the same way as the Fabian Society, as indeed it is.

Income Tax

14. Mr. Neale : To ask the Chancellor of the Exchequer if he has any plans for further reforms of the income tax system.

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Mr. Lilley : My right hon. Friend the Chancellor of the Exchequer intends to continue to reform, simplify and prune the tax system, and to reduce the basic rate of income tax to 20p in the pound when it is prudent to do so.

Mr. Neale : Does my hon. Friend accept that the actions of the Chancellor's two immediate predecessors to reduce the rate of income tax led to an increase in the incentive to work and an increase in the income tax take? Does he agree that it must be beneficial to go on reducing the rates of income tax as soon as it is prudent to do so?

Mr. Lilley : I entirely agree with my hon. Friend. There is no doubt that lower marginal rates of tax improve incentive and the supply side performance of the economy. Sadly, that is a lesson the Opposition have not learnt--hence their plans to increase marginal tax rates, especially for the more successful members of society.

Mr. Tony Banks : Are not the Government perpetrating a monstrous fraud on the British people by reducing the level of direct income tax but heaping up indirect taxation levels, so that people are more heavily taxed under the present Government than under any previous Government? Does the Minister not accept that most people, given the choice of improvements to provide decent services in this country, would vote for an increase in income tax?

Mr. Lilley : There is a small element of consistency in the hon. Gentleman's position. Like the rest of the Opposition, he has voted against every cut in income tax that we have introduced, but at least he has been honest enough to admit that he favours a higher rate of income tax, which the policies of the Opposition would clearly require if they were honest enough to cost them.

Central Unit on Purchasing

18. Mr. Knapman : To ask the Chancellor of the Exchequer when he expects the new head of the Treasury's central unit on purchasing to take up his post.

Mr. Lilley : The new head of the Treasury's central unit on purchasing is expected to be in post on 1 October 1990.

Mr. Knapman : I am obliged to my hon. Friend for that reply. Does he accept that, assuming that public money must be spent as carefully as we would spend our own, all the spending Ministries should take full advantage of the activities of the central unit on purchasing?

Mr. Lilley : My hon. Friend is absolutely right. The unit has played a very valuable part. Since it was established, cumulative savings have amounted to about £1 billion, and that is very welcome. We expect an even higher rate of savings in the coming year, amounting to something like 6 per cent. of the expenditures covered.

Mr. Allen : Will the Minister ensure that the central unit on purchasing and every member of the Treasury Bench receives a free copy of Sir Alan Walter's new book--or will they be given complimentary copies because, as I understand it, some of them are friends of the family?

Mr. Lilley : Is that the best that the hon. Gentleman can do?

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European Currency

19. Mrs. Maureen Hicks : To ask the Chancellor of the Exchequer if he will make a statement on his proposals for a European currency unit.

Mr. Lilley : I refer my hon. Friend to the answer that my right hon. Friend the Chancellor gave my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) on 21 June.

Mrs. Hicks : By proposing the hard ecu, is not my right hon. Friend the Chancellor offering the best of both worlds in that we should retain control over our national currency and monetary policy while at the same time adopting a common European currency for use when appropriate? As we actively prepare for 1992, the removal of trade barriers to our European partners, and easier travel throughout Europe, is not that the most logical and flexible approach that we can take at this stage?

Mr. Lilley : My hon. Friend puts the advantages clearly and well. A common currency would be valuable to people travelling, working and trading in Europe. The whole of Europe can unite around our proposals. They are not divisive or exclusive, as are some other projects before the Community.

PRIME MINISTER

Engagements

Q1. Mr. Ian Bruce : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe) : I have been asked to reply--[ Hon. Members :-- "Why?"] My right hon. Friend the Prime Minister is hosting the NATO summit meeting. This evening, she will be attending a dinner for NATO given by Her Majesty the Queen.

Mr. Skinner : Gallivanting again.

Mr. Tony Banks : Drag her back here.

Mr. Speaker : Order. The Leader of the House has every right to answer questions for the Prime Minister.

Mr. Bruce : Speaking as one Welshman to another, does my right hon. and learned Friend share with me--and, I hope, the whole House--a feeling of pride at the way in which the English football team conducted itself over the past three weeks? Does he agree that it deserves the warmest congratulations and good wishes of the whole House for its next game on Saturday?

Sir Geoffrey Howe : I am sure that right hon. and hon. Members in all parts of the House share the sense of pride expressed by my hon. Friend. The English team has got further in this contest than ever before on foreign soil. Even more important is that the team's quality of play and behaviour has been a great credit to the nation. We are proud of that as well. We certainly wish the team well in the match on Saturday.

Mr. Kinnock : I at least agree with the right hon. and learned Gentleman in saying that the lads done magnificent.

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Will yesterday's decision by the Cabinet mean that people will pay lower poll taxes next year?

Sir Geoffrey Howe : There has been no consideration by the Cabinet of the matter raised by the right hon. Gentleman. The review of the operation of the community charge is well advanced. As the Prime Minister has made clear, the outcome of the review will be announced at the end of the month. It is a great deal further advanced than any review undertaken by the Labour party of its proposals. The Opposition have gone through every gamut in the book--one tax, two taxes, local income taxes and capital valuation taxes--and have finally arrived back where they started, with rating system of the type that they used to condemn as discredited, as we condemn it now. We look forward to hearing the Opposition's proposals in a year's time. Our own proposals will be brought forward at the proper time and in the proper way.

Mr. Kinnock : I rather believe that the right hon. and learned Gentleman is being kept in the dark on this subject, as he is on others. Perhaps he can answer a question from his fellow Conservatives. Is he aware that senior Conservative councillors have said, through their associations and very publicly, that next year in order to be

"realistic and reflect the true costs of providing local services",

the Government's grant should be at least £2.9 billion higher simply to meet inflation? Can he tell them how £2.5 billion will do the job? Which set of Tories have got it wrong--the Tories in local government who have to deal with the realities, or the Tories in the Cabinet who have to deal with the Prime Minister?

Sir Geoffrey Howe : A huge range of speculative figures are being published in the press. The figures on which the Government decide will be vouchsafed to the House in due course in the ordinary way when the grant proposals are announced in the ordinary way. The country continues to wait for an answer from the Labour party as to what it proposes to put in place of the rating system.

Mr. Kinnock : Perhaps the deputy Prime Minister at least knows this much--that the poll tax is of itself regressive, unfair, very expensive and incapable of reform. Can he tell us whether anything decided by the Cabinet yesterday changes anything in that?

Sir Geoffrey Howe : The review, which is still taking place, is of the operation and not the structure of the tax. What the country is still waiting to know is what the Opposition propose in relation to the rating system. If the Opposition still agree, as they originally did, that domestic rates are unfair and discredited, why do they propose to return to them?

Q2. Mr. Andrew MacKay : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

Sir Geoffrey Howe : I have been asked to reply.

I refer my hon. Friend to the reply that I gave some moments ago.

Mr. MacKay : Does my right hon. and learned Friend share my view that the commendable performance of Mr. Bobby Robson and his team in showing that we are at least the third or fourth most successful footballing nation in the world has been severely tarnished by the behaviour of

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many so-called supporters in Brighton and elsewhere yesterday? Does he agree that they should be severely punished, with prison sentences?

Sir Geoffrey Howe : Once again, the whole House is bound to agree with my hon. Friend that the disappointment of yesterday's result cannot afford any justification for the kind of wanton violence and hooliganism that took place in Brighton and elsewhere last night. Especially regrettable was the willingness to damage cars because they had been made in Germany. We welcome the prompt police action in relation to such misconduct. It should certainly be dealt with effectively.

Q3. Mr. Alton : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

Sir Geoffrey Howe : I have been asked to reply.

I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Alton : Will the Leader of the House take this opportunity to emphasise his support for the commitment of all the parties in Northern Ireland represented in the House to dialogue and partnership in the moves toward genuine power-sharing in Northern Ireland? Will he tell the House what new road blocks have been erected today, who is responsible for erecting them and what he is doing to remove those obstacles so as to ensure that that partnership can continue?

Sir Geoffrey Howe : The hon. Gentleman will appreciate that that topic is to be debated within a few minutes of the conclusion of business questions. The whole House wishes to see progress along the lines that he described at the beginning of his question. My right hon. Friend the Secretary of State for Northern Ireland will be addressing himself to the matter later in the afternoon.

Mr. Robert G. Hughes : Does my right hon. and learned Friend agree that it is entirely fitting that the Prime Minister should be hosting today's NATO summit, as it was her resolution which ensured that, when the Soviet Union increased its armaments in Europe, they were matched armament for armament? Does he further agree that the only people who do not understand that that is why the Soviet Union came to the negotiating table are the Campaign for Nuclear Disarmament and the parliamentary Labour party?

Sir Geoffrey Howe : I entirely agree with my hon. Friend. I am astonished that even one member of the Labour party expressed astonishment or dismay at the fact that my right hon. Friend the Prime Minister was hosting the meeting. It is an entirely appropriate place for the Prime Minister of this nation at a time of such importance.

Q4. Mrs. Fyfe : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

Sir Geoffrey Howe : I have been asked to reply.

I refer the hon. Lady to the reply that I gave some moments ago.

Mrs. Fyfe : If there is a ballot on whether a hospital should acquire self-governing status, and if the majority say no, is there any chance that the people who voted will get their way and be able to exercise that choice?

Sir Geoffrey Howe : Hospitals which are to achieve self-governing status will achieve that status in line with

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arrangements approved by the House and designed to improve standards of performance in those hospitals for the sake of those who work there and the patients who go there.

Q5. Mr. Fishburn : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

Sir Geoffrey Howe : I have been asked to reply.

I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Fishburn : Does my right hon. and learned Friend agree that leasehold reform in this country is long overdue--especially reform that would allow individual flats to carry their own freehold rather than be tied to a leasehold? Does my right hon. and learned Friend accept that such a reform would complete the home ownership revolution which has occurred under this Government by permitting people in inner cities to own their own homes?

Sir Geoffrey Howe : I entirely agree with my hon. Friend about the merit in extending opportunities for home ownership. He will know that the leasehold system has been the subject of many proposals over many years. We are about to undertake a detailed evaluation of the working of the Landlord and Tenant Act 1987. It would be premature to contemplate any particular changes until that study is completed.

Mr. Trimble : Irrespective of any welcome devolution to an assembly in Ulster, this House will still have some legislative powers with respect to Ulster. Will the deputy Prime Minister therefore ensure that all such legislation is made properly by a Bill, thus ending the temporary, contingent and offhand manner in which the House has handled Northern Ireland affairs? It would also end the grotesque mistake that I discovered this morning, whereby a person moving from London to Belfast was refused income support because

"England pays under Act of Parliament whereas Northern Ireland pays under Order in Council."

Sir Geoffrey Howe : As the hon. Gentleman knows, the system for legislation in respect of Northern Ireland has been in its present form for some time. The question that he raised has been asked on a number of previous occasions. The hon. Gentleman will have an opportunity to address it during this afternoon's debate.

Q6. Mr. Gorst : To ask the Prime Minister if she will list her official engagements for Thursday 5 July.

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