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certain matters in which Conservative Members had either an expert or a particular interest. I assure him that he has kept his friends on the Committee, and the compromises accepted by the Government were most welcome.The Opposition Front-Bench spokesmen were noted for, more than anything, their breadth of knowledge and of selection of individuals. It was one of the largest Front-Bench teams of any Committee. They are a most attractive bunch of people--
Mr. Ian Taylor (Esher) : That is not how I would describe them.
Mr. Hanley : I think that their variety was attractive. In the main, the Opposition Front-Bench spokesmen were well humoured and there was only one occasion on which we sat until 2 am. The hon. Member for Wrexham (Dr. Marek) served his party's interests well. He is respected on both sides of the House. However, one man's brief introduction is another man's filibuster. After he had spoken for many hours, Conservative Members had the feeling that it was just the beginning of a much longer speech. The Opposition were almost cheating in employing him on their team because he could always be called upon to give a speech that Conservative Members would take a fortnight to prepare and at least a week to deliver.
Mr. Ian Taylor : Does my hon. Friend recall those vivid moments, which lasted for some six hours, when just one amendment from me provoked three and a half hours of debate? That shows the reticence and the skill of Conservative Members in taking three or four minutes to propose an amendment. It also shows the flowery language of Opposition Members.
Mr. Hanley : I suggest that my hon. Friend watches his back as he walks home tonight. Many of us had forgotten that it was his fault that the debate lasted for so long that evening. I am amazed at his honesty. I was wondering who the swine was. That might be unparliamentary language, Mr. Deputy Speaker, but had you been there on that occasion I am sure that you would share my vocabulary. My hon. Friend was brief in introducing his measure, just as many of us were because we had to get through the business.
I hope that the Opposition will not blame me for picking out one hon. Member, but I particularly enjoyed the maiden performances on the Labour Front Bench by the hon. Member for Brent, South (Mr. Boateng), who worked hard on what was clearly a most unfamiliar brief. We must welcome also the hon. Member for Newcastle upon Tyne, East (Mr. Brown), whose Geordie twang rang regularly round the Committee Room with great good humour.
I should like to refer to some of the milestones in the Bill. It is consistent with the Government's policy that we should create an economy in which individuals have a greater choice over the use of most of their income. They should choose how to spend their money and should be guided in spending it responsibly. There are two ends to that. First, we should not encourage people to borrow money. I believe that the current interest rate policy, although unfortunate and difficult for many, is necessary. Secondly, we should encourage people to give if they have a surplus. There is no doubt that the growing spirit of charitable giving, which is welcome, has been well rewarded by the Government.
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The move to increase payroll giving from £480 to £600 a year is extremely constructive. It is disgraceful that Members of Parliament who so regularly castigate the Government for not giving enough to charity, for whatever cause they espouse, set a miserable example. Hon. Members will say that Members of Parliament must meet many expenses out of their meagre incomes-- [Interruption.] There are no flies on me--well, there is one near me at present. There are 650 Members of Parliament who receive a regular salary for their work in the House. Fewer than 50 make deductions under the payroll giving scheme. It is not difficult to make such deductions. If Members of Parliament made deductions, they would benefit many charities of their choice, and there is a rich variety to which they could give. They could take advantage of the taxation savings by giving and they would set an example to people outside. Payroll giving is one of the most hopeful aspects of recent Budgets, but hon. Members should set an example.Gift aid is hopeful for charities. In The Independent on 21 March, after the Budget, the Charities Aid Foundation said that the Budget was "a major breakthrough" and "a charities bonanza". It is a charities bonanza only if people take up the inspiration that the Government have given and if they give. That gift aid amounts to £600 or more up to a total of £5 million per donor. I hope that a new spirit of giving will result from the Government's contribution to the taxation system. I welcome the extension with respect to corporation tax.
This is a savings Budget, not just a giving Budget. Surely savings must be the main focus for it. The tax-exempt special savings accounts are a good way of encouraging people to save money in the medium term. An even better measure was the announcement that composite rate tax would go. There is always something miserable about a taxation system that is so inflexible that it makes those who should not under any normal system pay tax have to suffer a deduction. The fact that children who saved their pocket money and elderly people who saved a few pence and pounds suffered by saving safely was a miserable part of our previous taxation system. It has taken a Government of vision and generosity to get rid of composite rate tax so that those on low incomes and those with small savings can make the most of their deposits. The Government's move came as a surprise to the House, but it was totally consistent with the Budget's savings angle.
Personal equity plans have not always been a tremendous success because of the downturn in the market, with Black Monday just two short years ago.
Mr. Tim Smith (Beaconsfield) : My hon. Friend speaks from personal experience.
Mr. Hanley : I speak from personal experience. It is one thing to have tax-free income and tax-free gains, but it can be a disadvantage to find that one has losses against which one cannot claim. No one ever said that investments always go up. Personal equity plans are a sensible way of saving money. They help to introduce the stock exchange and its ways to the smaller saver and to spread risk. I believe that this is an extremely good scheme. I know of
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the personal interest of my right hon. Friend the Chief Secretary in the creation of PEPs, and I pay him full credit for that. The annual limit on investment in qualifying unit and investment trusts will be increased from £2,400 to £3,000 and the limit for non-qualifying unit and investment trusts will be increased from £750 to £900. That is sensible and will help to reduce the risk in these investments. PEPs are not for everyone--there is no doubt about that. That is why the abolition of composite rate tax is such a wise move. I disagree with some parts of the Budget. The threshold for inheritance tax has been increased in line with statutory indexation from £118,000 to £128,000. Most people who think of inheritance tax believe that it is right to tax wealth when a person dies. There is, however, one item which does not make one say that a family is wealthy but which on a death may give rise to a high payment of inheritance tax--the family home-- [Interruption.] I wonder whether the fly has now departed.Mr. Boateng : No, it is going towards the hon. Gentleman.
Mr. Hanley : As I am talking about inheritance tax, this may be relevant. What happens to a family which has lived in a home for some time and in which the children may be of adult age but not earning? It is a great tragedy that, as a result of the death of the second parent, the family should have to sell the family home. The value of homes now is often higher than £128,000, which is the maximum for inheritance tax. I know that there are ways of giving the house inter vivos, but an exemption should be introduced to allow children, while remaining in a home, to be exempt from the payment of inheritance tax, not only by paying by instalments, but by being wholly exempt for at least a time.
I regret the taxation of actors. We are, of course, talking not about actors in general, as so many hon. Members seem to think, but about the taxation of new actors in the theatre only. I am talking not about people who act in films or on television, or those who have been acting for more than the past three years. The Bill affects the newest and lowest paid in the lowest-paid part of the profession. I regret the introduction of this tax, although I understand the general trend in the Inland Revenue for calculating schedule E rather than schedule D in certain cases. I sympathise with the feeling of my right hon. Friend the Economic Secretary that such a tax had to be introduced this year and I am pleased that a genuine and major concession was introduced thanks to the new clause tabled by my hon. Friend the Member for Beaconsfield (Mr. Smith), supported by many colleagues.
It is typical of their approach to the Bill that the Government listened carefully to the arguments for many of the new clauses and amendments. I tabled a number of amendments, some of them on behalf of the Institute of Chartered Accountants in England and Wales. There was no blanket rejection of any amendment. The vast majority of them were picked up by the Government, considered carefully and sometimes reintroduced in words that were more acceptable.
The Government gave way on a number of Opposition amendments and accepted the Opposition's suggestions. I pay tribute to the research that has been afforded to the Labour party. Many of the Opposition's amendments
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were non-political. Let us be fair : they were technical amendments and showed the depth of the research available to the Labour party. It is only right that Conservative Members should pay tribute where errors have been corrected and where a Bill has basically been improved by work, from wherever that work has been funded or from whatever source it has been derived.The blind person's allowance will double to £1,080 at an annual cost of only about £2 million. That may seem a small amount, but it is a large improvement for people who deserve even more generous treatment. I am grateful for that.
We have had the final confirmation of the introduction of separate taxation for women. That is a milestone in the history of taxation. The fact that married women can now have total privacy in taxation affairs is very important. It is the only decent step for a Government to take and the fact that it has been introduced and carried through by this Government is a matter of pride to me. The independent taxation of women represents the removal of one of the last shackles on women. A married man, for example, was entitled to receive a tax rebate on money that had been paid by his wife through her PAYE if she had made an overpayment of tax, and there was nothing in law to make the husband pay that money back to her. That is how we treat chattels. It is only right that the party that first created a woman as its leader-- [Laughter.] --that first created a woman as its leader and first gave a woman the opportunity to be Prime Minister was the first to give women true independence in taxation affairs. That is a great tribute to this party and to this Government. 9.2 pm
Mr. Harry Cohen (Leyton) : It was a great revelation to hear that the Conservatives created women.
Mr. John Home Robertson (East Lothian) : Just one.
Mr. Home Robertson : And they got it wrong.
Mr. Cohen : Yes, they got it wrong in that instance.
I am sorry that I cannot join in the camaraderie which has pervaded this debate. One of the main reasons is that I was not a member of the Committee on the Bill--which has certain benefits--although I pay tribute to my hon. Friends and to Conservative Members who were. I know that they carry out an arduous chore. The other reason why I cannot join the general camaraderie is the nature of the Bill itself. There is almost nothing in the Bill that is relevant to our main economic problems. There is a lack of investment in the future, despite the continuing North sea oil boom--about £83 billion over the past 11 years. There is a lack of skills training, a continuing rundown of our welfare state and national health service, and growing public squalor in transport, education and environment. The Bill does nothing to address those problems and is a consequence of a peculiarly poor Budget.
The Chief Secretary mentioned wider share ownership. There are more individual share owners but there is a greater concentration of shares within the major companies--a greater concentration of power in fewer hands. It is significant that the Chief Secretary did not talk about wider home ownership. The Bill does nothing to help hard-pressed mortgage payers. The list of headings in the Bill does not even mention the subject despite the rising
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number of arrears and repossessions. The Government's interest rates policy has caused the problem. That has been the main Government club with which they have bashed the economic crisis caused by the consumer credit boom which was let loose as an election bribe. The £20 billion per annum balance of payments deficit is a consequence of the rundown of manufacturing investment.As I said, the Government's high interest rates policy has been their club to bash the economic crisis. However, they are bashing new mortgage payers. There has been a rapid rise in interest rates--about 50 per cent. over the past 18 months. They have increased from about 10 per cent. to about 15.5 per cent. The Government claim to favour private home ownership and encourage people, particularly the young, to take out mortgages. They then leave them trapped by the rapidly rising mortgage rate. For example, in London, the average mortgage has increased by about £250 a month. That has contributed to inflation. I have seen a recent table showing that inflation in London increased by 14.9 per cent. from April 1989 to April 1990 and that was before the poll tax. That is 50 per cent. higher than the national average inflation rate. Increases in transport fares have been one contributory factor, but mortgage rates were the main factor. The Government are taking no action.
On Tuesday I introduced my Mortgage Assistance Bill but it received no response from the Government. That is why I am raising the issue again. This is an opportunity for the Government to respond. My Bill would have provided some options other than repossession for hard-pressed mortgage payers in the form of part ownership and shared ownership. It showed that something can be done witout too great a cost. There would have been some capital cost involved, but, in exchange, there would have been revenue income and considerable savings from not having to deal with so much homelessness. The Treasury is to blame. High interest rates is the Treasury's policy and there is nothing in the Finance Bill--the main fiscal and economic policy of the year--to mitigate the problems that policy has caused.
The Budget was in March and it has been in Committee since then. We have had two days on the Floor of the House, yesterday and today. We have heard nothing--not a word--from the Government, who keep insisting that mortgage interest rates are not a problem. They have kept them off the agenda and turned a blind eye. When will they do something about the problem? When will they stop being complacent and take responsibility for the effects of their policy?
9.10 pm
Mr. John Bowis (Battersea) : I served on the Finance Bill Committee for the first time this year--unlike other hon. Members who have spoken, most of whom seem to be aficianados of many years' standing--but I can vouch for the fact that it is a civilised Committee on which to serve.
Mr. Brian Sedgemore (Hackney, South and Shoreditch) : Surely not.
Mr. Bowis : It is a civilised Committee and the atmosphere is contributed to by hon. Members of all parties and by the Chairmen of the Committee, to whom I join hon. Members in paying tribute.
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Mr. Bowis : Does the hon. Gentleman wish to intervene?Mr. Sedgemore : I remember serving on four Finance Bill Committees one year. It was the year in which there was an emergency every three months and we used to sit through the night. Our sittings were bitter, nasty, unpleasant occasions. What is all this syrup that I keep hearing about?
Mr. Bowis : I, too, remember the days when the right hon. Member for Leeds, East (Mr. Healey) was Chancellor of the Exchequer. Nowadays we have more cross-party agreement on the wisdom of the measures introduced by the Chancellor of the Exchequer to enable Britain to progress from the position in which the hon. Gentleman rightly confesses that his party left it.
We had in the Committee a mixture of common sense and imagination, as well as a degree of technical detail. I have often admired my colleagues' ability to grasp and to enlighten us on such detail. As has been pointed out, we have had the bankers' drafts in some of our debates. I am glad to see my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) here- -no doubt to complete the speeches that he made in Committee one evening, which served only to convince me that I was wise to by-pass banking as a career. But I jest. It was a good Committee which supported a good Finance Bill based on a good Budget.
The hon. Member for Leyton (Mr. Cohen) referred to home ownership, and I welcome his conversion to that cause. No doubt he will soon be coming across to support the party that created woman in its image. I am sure that the hon. Gentleman would accept that, as my hon. Friend the Member for Eastbourne (Mr. Gow) said, the best gift that we can give to homeowners is to get inflation under control. That is what the Conservative party's policy is all about and that is the background against which this year's Finance Bill should be seen. Others have said before now that there are many mothers and fathers of inflation--not least, excessive pay demands and spending beyond one's means--but no one has accused savings of contributing to inflation. That is why the savings element in the Finance Bill has been so important. My hon. Friends have rightly paid tribute to the Bill's contribution towards encouraging savings. That is especially true of TESSAs and the announcement about the end of composite rate tax as well as the disappearance of stamp duty on shares. To coin a well-worn phrase, we are beginning to move towards a level playing field in savings, which many of us have supported. We welcome the move towards level playing fields, specifically the level playing fields of the football clubs and the health- -in every sense--and safety of our football grounds. It is an imaginative and unexpected step that the Chancellor has taken : it is all very well for hon. Members to say now that they would have liked him to go further, but I welcome what he has done.
One item that I especially welcomed was the continued downward pressure on the company car perk--not that the Government are opposed to cars, to motorists or to all perks, but in constituencies such as mine we feel that more people should be using public transport to get to work. When we are trying to ensure that we have a good public transport infrastructure, it makes good sense to discourage people from using company cars.
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The Bill also contributes to health. At last we have taken a step back up the tax ladder for tobacco products and, to a lesser extent, alcoholic products. That must be right. It is a great pity that in the last few Budgets it has been missed out. Those who support Parents Against Tobacco and other such organisations believe that ultimately the only way to deter young people from starting to smoke is to do so through prices. I hope that Treasury Ministers will continue that process in future years. I repeat the plea that I made in Committee for the committee that advises on the retail prices index to examine seriously the possibility of taking those items out of the index so that they are not seen as an inflationary item. I welcome one item that is not in the Budget. The Government have wisely kept the structures and extent of value added tax as they are. I welcome the fact that they did not bow to some of the pressures from across the channel to impose VAT on the written word--books and magazines. It is wise of the Government to resist that, especially at a time when we are seeking to encourage education through the Education Reform Act 1988 and the national curriculum.Like my hon. Friend the Member for Richmond and Barnes (Mr. Hanley), I warmly welcome the concession that was made for actors. I declared an interest in Committee as an unpaid director of an actors' touring company, the London Actors Theatre Company. I see at first hand young actors struggling to enter the profession and often living in scruffy surroundings such as mobile homes, cars and vans. They are the people who will be helped by the Government's concession, which will at least enable them to set off against tax the fees of their agents who will ultimately enable them, if they have the ability, to make their way in the profession. It is churlish of the Opposition to be critical of that measure, or of the welcome that the Conservative party has given to it. It is a genuine step forward for the acting profession, and especially for young actors.
I must also express my gratitude for the steps forward that have been taken for those with disabilities, especially the blind. It is parallel to a decision made elsewhere on deaf students, which is also to be welcomed. Although that may not have been included in the Bill, I am sure that my right hon. Friend the Chief Secretary authorised the expenditure. As we create wealth in this country, we should bear the vulnerable in mind. We need to create that wealth and to spend it where appropriate, and it is certainly appropriate to spend it on people with disabilities.
I welcome the Bill. It is a Bill for savings, for sport, for the environment, for health, for education, for charity, for arts, and for disability, but it will work only if we get the background of our policy against inflation right--and that will work through our interest rate policy. We are creating wealth. As we create wealth and reduce tax rates so that the tax take rises, we shall have money to spend. Through measures such as the Bill, we shall encourage people to save and to invest, and we shall enable service Departments to spend on areas of need, some of which I have highlighted. This is a wise Bill by a wise Government as part of a wide strategy to promote the well-being of our economy and our people.
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9.20 pmMr. Christopher Gill (Ludlow) : My hon. Friend the Member for Eastbourne (Mr. Gow) alluded to the fact that the process that was set in motion on 20 March will soon be brought to a conclusion. Perhaps this is an appropriate time to look towards the deliberations that will soon be set in motion for the next Budget. I should like to help future members of the Standing Committee by suggesting how their deliberations could be made simpler.
I draw the attention of my right hon. Friend the Chief Secretary to the Treasury to table 1.2 on page 6 of the Red Book, which was published in March. He will see that, according to the latest estimate for 1989-90, receipts by the Inland Revenue from the six main taxes--income tax, corporation tax, petroleum revenue tax, capital gains tax, inheritance tax and stamp duty--will total £76.4 billion. That figure is somewhat exceeded by the total figure given in appendix F of Command Paper 1021 for the comparable year, when no fewer than 88 reliefs and allowances against those six same Inland Revenue taxes cost £80.3 billion. In other words, reliefs and allowances exceed the amount of receipts by £4 billion.
I do not think that that is a party political point, but it is one to which my right hon. Friend could usefully turn his attention. That position exists because all politicians love to say to the electorate, "We shall give you so much against this and so much against that." Of course, we are sometimes in danger of losing sight of the fact that neither this place nor the Government have any money of their own to give away, save that which they took from the taxpayer in the first place. To counteract that, I must commend to my right hon. Friend the continuation of the shift of the burden of taxation from a direct to an indirect basis.
Mr. Tim Smith : My hon. Friend will agree that the allowances to which he referred are mainly made up by personal tax allowances, tax relief on mortgage interest and tax relief for pension schemes. I have much sympathy with his view that we should broaden the tax base and cut allowances. Which of those should we tackle first?
Mr. Gill : My hon. Friend asked me a direct question. Being a fairly blunt hon. Member, I tell him that the allowance that should be addressed is mortgage interest relief. I am convinced that, far from helping the overall longer-term position of people who want to get their feet on the first rung of the housing ladder, the effect of mortgage interest relief has been to accelerate the price of houses. Bricks and mortar are an attractive proposition to anybody, not least because of the substantial allowances also given under the capital gains tax regulations, which again are an accelerator in persuading and encouraging people to invest in bricks and mortar, thereby making bricks and mortar far and away the most attractive investment as against traditional savings, investing in stocks and shares or other means of disposing of one's income.
In answer to a parliamentary question earlier this year, I was told that 70 per cent. of the Exchequer's revenue came from taxes which, broadly speaking, were raised upon production and that the balance--30 per cent.-- emanated from taxes which, broadly speaking, were placed on consumption. As a nation, we should look towards reversing that equation. Initially, we should seek to equalise it. That shift of emphasis would have several
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significant advantages. First, if we were to tax consumption more than production, we should be making a valuable contribution towards conserving the world's finite resources. My hon. Friend the Member for Eastbourne said that he regretted that we had not been harder in increasing duties in the Budget. By increasing duties on those resources which are finite, we would be very much in tune with the spirit of the age, which is towards conservation and the ecology. Another benefit from continuing the shift towards indirect taxation and away from direct taxation would be to stimulate investment still further. That is important to us as an industrial nation. We need to invest as much as we possibly can.A further advantage of a move towards indirect taxation and away from direct taxation would be to encourage spontaneous saving. Although I warmly welcome the introduction of tax-exempt special savings accounts in this Finance Bill, it would be preferable to create a situation in which a man's or a woman's disposable income had outlets that stood on all fours. In other words, the decision to save and to invest to buy a home, or to take out a pension scheme, would stand on all fours equally.
If we reduced direct taxation--at the same time it would be necessary to increase indirect taxation--it would be an enormous psychological fillip to all wage and salary earners who, let us face it, like to take home as much of the fruits of their labour as possible.
Finally, in my catalogue of the benefits of shifting the burden of taxation, much more importance would be given to that old fashioned word "thrift". I am sure that many hon. Members would welcome that. This is a good Finance Bill. I welcome it, especially for the help that it gives to companies, to savers and to the environment. Like my hon. Friend the Member for Eastbourne, I shall vote for its Third Reading with enthusiasm.
9.27 pm
Mr. Brian Sedgemore (Hackney, South and Shoreditch) : I rise to speak only briefly because I know that many other hon. Members wish to participate. I wish to speak against the Finance Bill for three reasons.
First, the Bill does nothing to bring down inflation. Indeed, it shows that the Conservative party is the party of high and continuing inflation. A few years ago, inflation blipped at 3 per cent. Since then, the Government have embarked on a course which has debauched the currency, debased the coinage and depreciated the pound in everyone's pocket. Inflation is now exactly 9.8 per cent. higher than the Government's objective of zero inflation--a lamentable performance by any standards. Let there be no doubt about the fact that the Government are depreciating the pound in our pockets. The Labour party will be the Government of low inflation-- [Interruption.] I shall come to the technical economic reasons for that in a moment. Secondly, the Budget leaves the Conservative party as the party of high and continuing taxation. We have had the argument before. I see the Red Book on the Bench beside the Minister. If he cares to open it and look at the relevant tables, he will find that taxation as a proportion of gross domestic product is higher under the present Government than ever it was under a Labour
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Government. If he looks into the far distant future and all the figures for the years ahead--I await the jeers of Conservative Members, but they too should read the Red Book--for 1991, 1992 and 1993, taxation will still be higher under the Conservative Government's own plans as a percentage of GDP than it ever was under a Labour Government. It is our money, as the Prime Minister says, that the Conservative Government for ever take away. That is a scandal, so let us hear no more about the Conservative party being the party of low taxation. The Labour party is the party of low taxation.Mr. Normant Lamont : Why has the party of low taxation voted against all the tax cuts that we have introduced? Why did the shadow Chancellor of the Exchequer say that he did not expect that a Labour Government could reduce the tax burden?
Mr. Sedgemore : I could come to the global plans if I had more time. I could set out the macro--[ Hon. Members :-- "Answer the question."] I did not serve on the Committee. I did not discuss the reasons for the various amendments. If the Minister wants me to set out a macro-economic policy to provide lower taxation and set it against the background of how much we can and cannot borrow, I shall do so, but I fear that no other hon. Member would have the chance to speak before 10 o'clock.
The third reason why I oppose the Finance Bill is that it contains nothing to suggest that the Government have a coherent exchange rate policy. I remember a couple of years ago when we shadowed the deutschmark. The pound rose to DM3.25. That was a disaster, and it started a recession which was part of the lunacy of the previous Chancellor of the Exchequer, from whom we have had apologies for that. The Minister has said that he, too, was partly to blame. The Governor of the Bank of England has also said that he was partly to blame. From then on, we saw a rapid depreciation of the pound. I should call it a devaluation, but I understand that if the market and not the Government causes it, it is called depreciation.
Then the pound fell to about DM2.8. Now the policy is in reverse. The Government systematically leak that we are about to join the exchange rate mechanism, so the pound is rising. It has risen to DM2.9 and it looks as though it may rise to DM3. What is this swings and roundabouts policy? The pound goes up to DM3.25, down to DM2.8 and back up to DM3. It is beginning to look as though the Government will join the ERM with an exchange rate of DM3 at the lower end. That is a deflationary policy. We shall enter the ERM throwing people out of work and losing economic growth. That is an absolute scandal. I am sure that the Minister has read the report of the debate that I initiated in the House a few weeks ago. I suggested that a proper exchange rate at which the pound should enter the ERM would be DM2.6 in the middle of the band. I understand that the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who usually sits below the Gangway, has said that there should be a huge
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devaluation. He talked about DM2.4. It certainly cannot be DM3. If that happens, I forecast with absolute certainty and confidence that either there will be a grave recession in Britain or within 12 months the Government will return to a policy of devaluation.On the grounds that the Government have a silly inflationary policy, a silly high taxation policy and a lunatic exchange rate policy, we should all oppose the Government in the Lobby tonight.
9.33 pm
Mr. Tim Smith (Beaconsfield) : After that rather tiresome tirade from the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), which had more to do with a modern version of "Through the Looking Glass" than anything else, I shall return to the Finance Bill.
My hon. Friend the Member for Eastbourne (Mr. Gow) said that, as we dealt with the Third Reading, we were approaching the end of the annual ritual which had started on Budget day. In fact, it starts much earlier than that because, soon, someone senior in the Inland Revenue will send out an internal memorandum asking members of staff to put forward suggestions for next year's Finance Bill. When my right hon. Friend the Chief Secretary has completed his difficult task of sorting out next year's public spending round, he will, in November, turn his attention to next year's Finance Bill. It is right to pay tribute to the work done by the Inland Revenue on the Finance Bill throughout the year and to my right hon. and hon. Friends on the Front Bench. A great deal of work goes into preparing the Finance Bill before the Budget sees the light of day. When the Finance Bill was published it had 107 clauses, 16 schedules and ran to 156 pages. I was rather encouraged by that because, a few weeks previously, I had raised on the Adjournment the subject of tax simplification when I complained about the size of recent Finance Bills. This year's Bill is one of the smallest for some years, but since its publication it has, unfortunately, grown to 132 clauses, 19 schedules and 189 pages. I am sorry to say that, as a result of my efforts, we even added another clause yesterday on entertainers' expenses.
I do not for one moment suggest that the Government are entirely responsible for all the growth in tax legislation, but we should hold an inquiry into simplifying that legislation. Given its complicated nature, the time has now come to consider that. Complaints were rightly made in Committee about one of the schedules which was almost unintelligible.
I agree with my hon. Friend the Member for Ludlow (Mr. Gill) that we should be sceptical about introducing new tax reliefs because we should try all the time to broaden the tax base. I am glad that the number of new tax reliefs in the Bill is relatively insignificant. We should be aware that one man's tax relief is another man's tax increase. We should always be sceptical about introducing new reliefs.
The provisions that have been introduced in VAT will be of enormous help and will result in a much fairer system for VAT traders, especially because of the new arrangements for registration and bad debts. Previously I suggested that Customs and Excise had not done enough to publicise cash accounting to VAT traders and
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I was glad to discover that a note was included in the VAT returns sent out recently to VAT traders to draw to their attention that if they notified Customs and Excise they could switch to cash accounting, which could be to their benefit.I also welcome the provisions for charities, to which my hon. Friends have already drawn attention. The increase in allowances for payroll giving from £480 to £600 and the important changes made to encourage donations by individuals and companies are welcome. It is sometimes said that by introducing a new tax relief the Government suggest to people what they believe to be the right thing to do. Mortgage interest relief, for example, is designed to encourage owner-occupation. After all the changes that the Government have introduced in relation to charities no one need be in any doubt about what the Government hope to achieve. They should achieve their goal asa result of the substantial increases in charitablegiving. In the past 10 years there have been similar substantial increases, but, by any standards, the changes introduced in the Bill are major and should greatly benefit charities.
I also welcome the changes designed to encourage further personal savings and the fact that TESSAs are designed to encourage those with the smallest amount to save. The abolition of composite rate tax will also help those people. Personal equity plans have been improved and I hope that my right hon. and hon. Friends will listen to some recent pleas to allow individuals to operate their own personal equity plan rather than having to go through a plan manager. If one truly believes in individual direct ownership of equities, that option should be available.
I also greatly welcome the increase in the premiums allowable for tax- exempt policies to friendly societies from £100 to £150 a year. That may not sound very much, but the policies are designed for the benefit of small savers--friendly societies have always helped such savers. In the next Session I hope that the Treasury will introduce a friendly societies Bill based upon the Green Paper that it published recently.
Clause 80 is also welcome because, in future, it will be possible for institutional investors to deal on the London International Financial Futures Exchange without fear of being taxed. That should lead to a large increase in business and ensure that LIFFE retains its predominant position as the leading market in Europe for futures and options.
Another change which will ensure that London remains an attractive place in which to do business is the abolition of stamp duty, which will ultimately benefit individuals whether their investments are made directly or through the institutions. I also welcome the undertaking that I received in Committee on the question of stamp duty on secondary market sovereign debt. I am glad that a new clause will be introduced next year to ensure that not just that business is done in London but the paperwork is done in London. At present, the business is done in London but all the paperwork is done in New York because of the fear that stamp duty may apply.
I welcome the change in the taxation of actors and the new clause that was agreed to yesterday. As I explained then, it is a satisfactory compromise, although we shall want to keep an eye on how it works out.
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Any Budget is a package, and this one has been an attractive package. Reference has been made to the groups to which it has been attractive. The House should support the Bill with enthusiasm. 9.41 pmMr. Gerald Howarth (Cannock and Burntwood) : My hon. Friends have alluded to the cordial atmosphere that prevailed in Committee. It was broken on only one occasion, when I committed the folly of imagining that it was an occasion when a Back Bencher could address himself to some of the issues. Accordingly, I delivered myself of what I would describe not as a speech of extreme length but as one of modest length. I welcome this opportunity to carry on where I left off, but I shall not seize the opportunity, although I remain sceptical about the Government's view of clause 66, dealing with the restriction of tax relief on bad and doubtful sovereign risk debt.
For the benefit of the hon. Member for Newcastle upon Tyne, East (Mr. Brown), who was uncertain about the matter, and for the avoidance of doubt, I declare my interest as a consultant and a former employee of Standard Chartered bank. I hope that that will prevent him from having any more sleepless nights--as occurred on at least one occasion in Committee--on my account. Having been bitten once, I stayed away from the Committee for a while, and I shall not delay the House unduly today.
My hon. Friends have paid tribute to the Chancellor for the skilful way in which he introduced the Budget. It has not been an easy backdrop against which to introduce his first Budget, but he has managed in the circumstances to produce some attractive, innovative and interesting features which have appealed to hon. Members in all parts of the House.
The United Kingdom economy simply will not lie down. I see that in my constituency, in the manufacturing heartland of Britain, where there are companies manufacturing, among other things, sports boats, garden slides, and so on. Most of them tell me that they cannot push the stuff out of their doors fast enough. The economy is not in recession, and that in some ways is making the Chancellor's task more difficult. All that is needed to get the British economy going again is an indication that interest rates are just tipping downwards. That will lead to a burst of entrepreneurial enthusiasm--it is building up in the British economy--which will get things under way again. Many features of the Budget have been welcomed by my hon. Friends, and I will not add to what they have said. It is only fair to say, however, that the Chancellor dealt with the question of capital limits, and the generous increase--from £8,000 to £16,000--has been widely welcomed, particularly by elderly people who put money aside during their working lives.
In terms of basic rate tax, it was a mark-time Budget. Over the years, we have achieved a steady reduction in the basic rate of taxation--not by great leaps and bounds, but by steady progress towards the present rates. I hope that my right hon. Friends will be able to resume the onward and downward march of taxation in the coming year.
If the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) wishes to pretend that the Labour party
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is the party of low taxation, he will have to do something about his spending policies and those of his hon. Friends, who wish to burden the British taxpayer with a vast increase in taxation that will be unsustainable by the British people. My hon. Friends warmly welcome the conversion of at least one Opposition Member to the idea of low taxation. It shows that Conservative Members have been able to penetrate the thick skulls of at least some Opposition Members. I wish to add my voice to those who have welcomed the abolition of stamp duty on share transactions. I should like there to be a system in this country such as that in Hong Kong, where one can look in the banks and see shares being traded in the window. I should like our banks to offer a similar facility in the United Kingdom so that we can have an easy share dealing operation here.I am sorry that my amendment dealing with value added tax on gold was not accepted by the Government. It would have greatly benefited the United Kingdom and the gold bullion trade and our Britannia coin if we had been able to zero-rate gold coins. Some 18 months after VAT on gold coins was introduced in 1982, sales of those coins in the United Kingdom declined virtually to nil, and London has lost business to other financial centres, which is unfortunate. I appreciate the arguments that have been advanced by my hon. Friends in the Treasury, but I should like the Britannia coin to be tax free once more, so that something called the ecu and produced by the Belgians does not become more popular than the Britannia coin. An excellent advertisement in the 25 June edition of The House Magazine headed "Rule Britannia" demonstrated beyond peradventure why we should zero-rate our own excellent Britannia coin. With that message, I warmly endorse the Bill.
9.47 pm
Mr. Ian Taylor : One of the great annual pleasures of Parliament is membership of the Finance Bill Committee. The highlight of that--which you, Mr. Speaker, will unfortunately be unable to share--is to take part in a Committee sitting opposite the Hale and Pace of the Labour party, the hon. Members for Islington, South and Finsbury (Mr. Smith) and for Newcastle upon Tyne, East (Mr. Brown). Year after year they come up with chirpy common sense. One of them has a good deal of Newcastle meat--or should I say, muscle--and the other often goes into flights of poetry and academic resonance, and remembers the massive tome--the 24 pages of Cornford in Microcosmographica Academica--in which he and I share a devout interest. It is the longest book that I have ever read and is, certainly, one that the hon. Member for Islington, South and Finsbury reads every night.
The highlights of the Finance Bill Committee are those evenings when, as the twilight descends on us, we know that we have some amusement ahead of us when the hon. Member for Newcastle upon Tyne, East still has another amendment to propose. I do not want to cause any problems for my two hon. Friends--I shall call them that and break tradition on this one occasion. They are so good in Finance Bill Committees that they should continue to
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lead for the Opposition for many more years to come. I am sure that the electorate will endorse that at the next general election. There is absolutely no doubt that the Bill has been part of a consistent strategy pursued by the Government. It is important to pay tribute to the ministerial team, particularly the Chief Secretary, who has combined, often behind the scenes, muscle and guidance to the Committee.I must also mention the former Financial Secretary, whose performance in Committee obviously destined him for his subsequent stardom. The Economic Secretary took us through some highly technical points. There was no question but that they composed a formidable team, well capable of standing up to the Opposition spokesmen and their colleagues who are not present now.
I am particularly pleased about the main thrust of the Government's policy- -their attempt to enable the enterprise society to create wealth, which gives this country more revenues which can be used to help those most in need. There are many elements in that process, and not all of them have to be done by the Government. Several hon. Members have referred to a range of policies designed to assist charitable giving. Too often we neglect the importance of the personal link between the donor of charitable aid and the voluntary organisation to which it is given. That often represents a personal commitment not only of a financial kind but to service to the community.
The Government are right to be proud of their record over several years of assisting charities. The largest 200 charities have doubled their income in recent years, and the Charities Aid Foundation and many other such bodies were delighted with the latest Budget initiatives. Perhaps this area of policy distinguishes us from Opposition Members, who still have a hankering for the state to do all the work. The voluntary organisations are important and we show our belief in their work by ensuring that people are helped and encouraged to give to charities, to covenant and to give as they earn. I am sorry that more hon. Members do not appear to take advantage of this last method of helping charities.
The release of entrepreneurial skills into the economy is the secret of this Government's success in transforming our country. We have created a vast new area of enterprise for many people in this country--that of small businesses. Despite high interest rates, there is a net growth in the number of small businesses of more than 1,000 a week. That says much for what we have achieved, and this Bill has contributed to small businesses' growth by simplyfing tax levels for them and giving them more encouragement. Many people throughout the country will be grateful for that ; it underlines what the Government are trying to do--to enable people to have greater control over their own lives in the commercial and other sectors.
I pause to pay tribute to the Under-Secretary of State for Trade and Industry who has recently made several speeches in the City about the need for wider share ownership. The ownership of property is important to everyone, which is why, under successive Governments, the tax system has encouraged people to buy their own homes. It may be argued that that is a distorting element in the economy, but behind it lies a justifiable social desire to see people invest in houses, which gives them confidence, stability and a role in society. I believe that we should extend that principle to ownership of shares
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