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fourpenn'orth now--to assist those women, and I strongly recommend such a change. Today the Labour party threatened us with the idea of a Ministry for women, should Labour ever be elected. Such a Ministry would be the kiss of death for women.To see whether a Ministry has ever done us any good, we have only to consider existing Ministries. We have a Ministry of education and large numbers of illiterate and innumerate children ; we have a Ministry of housing and people sleeping on the streets ; we have a Ministry of Agriculture and the farmers are fed up to the back teeth with it ; we have a Ministry of Transport, but trains do not run on time and tubes are packed.
All the evidence points to the fact that a Ministry is not the way to proceed. The only people who would be pleased at the Labour party suggestion are misogynists. That does not mean that women's votes are not extremely important to us, and we should include measures in our financial strategy that will appeal to those people--not just because they are women, but because they form a significant part of our work force and play a dual role.
Overall, the Budget has been well received in my constituency. Short of reducing the tax base rate to 10 per cent., which I know is coming in the not too distant future, I am sure that the feeling in my constituency is that the Government are continuing to run a strong, healthy economy and that, in Billericay, things have not only got better throughout the period of the Conservative Government, but continue to do so.
I promised my constituents that I would come back to give that message to the Treasury spokesmen today. We are not the gloom and doom organisation that people would believe us to be if they listened to what Labour Members have to say about our economy and our country, which they are always rubbishing.
Several hon. Members rose --
Mr. Deputy Speaker (Sir Paul Dean) : Order. The Chair is grateful to hon. Members for observing the 10-minute limit. As a number of hon. Members who were hoping to speak are not now in the Chamber, it is possible for me to relax the limit. However, that does not mean that we should have very long speeches.
7.52 pm
Mr. Eric Martlew (Carlisle) : I am sorry that the hon. Member for Bromsgrove (Sir H. Miller) is not in the Chamber, but I believe that there is still an hon. Member from the west midlands who has a car constituency. The hon. Member for Bromsgrove said that Tories in the west midlands have failed to protect the car industry. The Budget was disastrous for the car industry and the west midlands.
Although cars are not made in Carlisle, we have a large tyre factory and a seat belt factory, both of which are foreign-owned--one American, the other Italian. We are grateful to those countries. We are also grateful that the Japanese have opened a car factory in the north-east and are to open another one in Derbyshire. Ironically, the Japanese have decided to do so in two good Labour districts in Derbyshire and the north-east, not in Essex. As my hon. Friend the Member for Durham, North (Mr. Radice) said, success in the car industry will come when Rover opens a car factory in Japan. I want British industry
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to be the best in the world, but the problem is that the Tories are content for it to be third-rate, which is what the Budget will make it.It is only six days ago that the Chancellor made his Budget statement, but it is easy to forget what he said, not because of the way he said it, but because of its content
Mr. Hoyle : It was also the way he said it.
Mr. Martlew : Yes, but I was trying to be nice.
The Budget speech was irrelevant until the last four minutes out of 70. The rest of it will have been forgotten and put in the dustbin. The fact that the right hon. Gentleman decided to increase VAT to 17.5 per cent. as a means to get rid of the poll tax has ensured that the Budget will be a footnote in history. That is what the Budget was about ; it was not about helping industry or women, or improving training standards : it was all about trying to fix the poll tax. Conservative Members left the Chamber as happy as sandboys last Tuesday. They were whistling and jumping, and on the telephone to the papers telling them how great the Budget was. I did not realise that they were the same people when they came through Central Lobby today. They were as miserable as sin ; they must have been back to their constituencies and seen the Daily Express . The Budget was about fixing the poll tax, but the Chancellor blew it ; the people of this country cannot be bought that easily. They are not fooled ; they saw the reversal of policies that have been going since 1979--discrediting the rates by pulling away what used to be called the rate support grant. In my constituency in the late 1970s, that grant was nearly 70 per cent. of total spend, but recently, until the Budget change, it was only 40 per cent. The Conservative Government pulled away that grant and gave it to people in income tax cuts. One Conservative Budget contained a correlation between the 2p taken off income tax and the amount taken from the rate support grant.
Up and down the country, in Labour and Conservative authorities, people saw services deteriorating, cuts being made and the rates going up. In this Chamber, Conservative Members have made some disgraceful comments about local councillors--one would not think that they were members of the same party. They have not had a good word for them. I have spent 18 years in local government and, believe me, we run the county council better than the Government run the country--they are a shambles, and should resign. We have had a "quick fix" Budget, which was all about trying to fix the poll tax-- and it did not work.
We have heard people talk about a Budget for business--what nonsense. The Chancellor decided to take 1 per cent. off corporation tax. The Government have done a grand job of reducing the tax bills of companies. Some of those bills have been reduced by 50 per cent. or even 90 per cent. in the past year. Some companies do not pay any tax. That is not due to fiscal policies, but because of how the Government have run the economy. The recession is reducing the tax bills of companies up and down Britain because they have not made profits due to the way the Government run the economy.
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I do not believe that those business men who have gone bankrupt will have thought a great deal about the Budget, which will have been academic for them. People who lost their jobs during the last recession under this Government were conned into the enterprise culture by smart advertising by the Department of Trade and Industry, but then interest rates suddenly went up, the Government abandoned them and they went bankrupt.Such business men not only lost the business, and often the status that goes with it, but many of them lost their houses. As I mentioned in a previous speech, in the local paper I see births, deaths and bankruptcies. The paper lists a former builder who used to live in a nice district of my constituency, who has been rehoused by the local authority. That is the measure of what the Government's recession is doing.
However, the real blow to business did not come in the Budget, which did not really matter. Business men were looking for a substantial cut in interest rates. What did the Government do? As they had another performance to give on Thursday, they held back on the reduction in interest rates until Friday, when they took them down half a per cent., which had already been discounted. That will not bring down the mortgage rate or save the bankruptcies. That is an absolute disgrace, the Government know it, and this weekend local business men told them that it was a disgrace.
I do not believe that the only thing that they jumped up and down about in Billericay was mobile telephones. The hon. Member for Billericay (Mrs. Gorman) must have talked to strange people if that was the only problem they had with the Budget. That was not what I was hearing from my local business people in Carlisle, who were asking, "When will the penal interest rates come down? When will the Government stop playing cat and mouse with people's jobs?" That is what they are doing ; they have brought down interest rates by half a per cent. and will probably bring them down by another half a per cent. before the local elections, just as they brought them down when we entered the ERM. They did so for political reasons that have nothing to do with the economy, and that is a disgrace. [Laughter.]
I hope that the Financial Secretary to the Treasury will stop laughing when I start talking about unemployment. It is not funny, and the sooner he is unemployed, the better for the country. There are 2 million unemployed now, and Government statistics, drawn up by independent experts, show that the number is heading for 3 million next year. The Government have not even introduced any decent training schemes.
I visited a local training scheme on Friday in a company that had come out of the public sector--where it worked for the county council--and was now in the private sector. It is being severely hit by the recession. Employment training is dead in the water. We never appreciated the scheme, because it was compulsory, with only a £10 supplement for those on it. The Government have not raised that £10 in two years, but the present inflation rate means that it must be raised. As I said, employment training is dead in the water. The Government have abandoned it--it is another wasted scheme. Unfortunately, many people will suffer.
The Government's cynical logic is that, if we are to have 3 million unemployed, there will be no jobs anyhow, so we should not waste money on training. The Government should have taken the opportunity to provide real training
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for real skills. The least we asked for was the reintroduction of a community project to give some hope to some people in the short term until the recession is over. They have been abandoned by the Government in an effort to fix the poll tax.The Tory Government have abandoned everything. They abandoned their former leader and the poll tax. I now hear rumours that they are not too happy with their present leader ; but we are very happy with him.
Mr. Campbell-Savours : We backed the "No Turning Back" group.
Mr. Martlew : It is not the "No Turning Back" group ; it is the "Don't Know Which Way to Turn" group. Why do we not have emergency measures to reduce unemployment? The Government promised to build a hospital in my constituency in 1979. The plans were drawn up, and a bypass could have gone around the outskirts of Carlisle and done some major good. However, the Government are not prepared to spend money to achieve a substantial reduction in unemployment.
We all know that the first part of the economy to recover is the construction sector. Hon. Members have heard the hon. Member for Kingswood (Mr. Hayward) talk about unemployment in the construction industry. A commitment to build a better infrastructure and more national health service hospitals would be beneficial. I realise that other hon. Members wish to speak.
Mr. Campbell-Savours : You are doing very well, Eric.
Mr. Martlew : I am grateful to my hon. Friend the Member for Workington (Mr. Campbell-Savours) for asking me to continue. I should not want to get in his way. I know that he has the same problem in his constituency.
In Cumbria, for example, we have problems with Barrow and Vickers. That town exists because 14,000 people were employed in the shipyards. It was obvious that there would be a decline in Barrow when the Trident programme came to an end. The Government did nothing. They did not improve the infrastructure. I discussed the matter with the hon. Member for Barrow and Furness (Mr. Franks) yesterday. He said that they had been waiting for a bypass in Dalton since 1936.
The problem with attracting industry to Barrow and Furness is that communications are difficult. We must improve the infrastructure. The work force in Barrow are second to none--they have built some fine submarines. However, there has been no commitment to spend public money, because the Government do not believe in spending public money. Believe me, the private sector will not build a decent road into Barrow and Furness.
We in Cumbria also have problems with Sellafield. Construction of the thermal oxide reprocessing plant is near completion. Thousands of people in the construction industry will become unemployed because construction of that plant is nearing completion. Becoming unemployed in the middle of the worst recession that the Tories have created will be a major problem for those people. We need public investment and public commitment. The Parliamentary Under-Secretary of State for Industry and Consumer Affairs, the hon. Member for Gainsborough and Horncastle (Mr. Leigh) will not solve their problems.
What did the Budget do for people in Barrow and for those on THORP who are to be made redundant? They
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did nothing at all ; in fact, they made matters worse. Unless there is a Labour Government, and I am convinced that there will be a Labour Government--Mr. Campbell-Savours : One of the key issues that have been raised by our constituents is interest rates. In my office, we have been doing some interesting research on these matters, which shows that, if general elections are called when interest rates are high, as happened in 1974 and 1979, the Government lose. The Conservative Government lost in 1974, when interest rates were nearly 13 per cent. The Labour Government lost in 1979, when interest rates were nearly 13 per cent. However, when they fall, as they fell in 1983 and 1987 and were in a trough, the Government of the day won. It is significant that, immediately after those general elections, interest rates soared. Many lessons are to be drawn from that, and one of them may be a sign of when the next general election might be called.
Mr. Martlew : I accept that. Obviously, my hon. Friend has done much deep thinking. It is a pity that Ministers are not capable of such deep thought. [Interruption.] I take a more political view than my hon. Friend. I have looked at the opinion polls, and I have noticed that the June election date has disappeared. [Interruption.] My hon. Friend the Member for Workington will have an opportunity to speak later.
I am convinced that we shall have a June election, but it will be in 1992 and the Conservatives will lose. I was convinced that the Government would lose the election when I heard a senior Conservative Member tell a Lobby correspondent that the Government will fight the next general election on their record. If they do, the Labour party will win by 300 seats.
8.6 pm
Mr. David Atkinson (Bournemouth, East) : I, too, congratulate my right hon. Friend the Chancellor of the Exchequer on his bold and ingenious Budget and, in particular, on the dramatic reduction in the community charge that he has been able to achieve. I have never had any difficulty defending the principle of the community charge-- [Interruption.] I said the principle of the community charge, which is that most adults, as opposed to the minority of ratepayers, are asked to make a contribution to the cost of local council services. Very few people oppose that principle. There are certainly no grounds for apologising for seeking to introduce the principle into local government finance. As my right hon. Friend acknowledged in his Budget statement, the main problem was that the community charge was far too high and far higher than we were led to believe during the general election campaign in 1987.
I was one of the 100-odd Conservative Members who advocated the removal of the cost of education to halve the community charge. In so doing, we accepted that it was bound to mean a delay in implementing our long- standing commitment to reduce income tax still further to 20p in the pound. As my right hon. Friend the Chancellor has paid for the reduction of the community charge out of VAT, implementation of that commitment can now take place sooner rather than later, and I congratulate him on that.
I congratulate my right hon. Friend also on the fact that inflation is also to fall faster as a result of shifting the main burden of the community charge on to VAT. However, I
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appreciate, as several Opposition Members have said, that the underlying rate of inflation will fall more slowly. Hence I welcome recent press reports that the retail prices index is to be reviewed and perhaps reformed. I look forward to receiving confirmation of that when my right hon. Friend the Chancellor replies to the debate. I hope that that will result in an index calculated in line with those in the rest of the European Community. It is clearly unfair for any party in government in this country to be criticised for inflation rates that appear higher than the inflation rates of our European competitors simply because our inflation rates include factors which theirs ignore.Because VAT has been increased in the Budget, most businesses must decide whether to pass on the rise in the form of higher prices or to absorb the rise in order to encourage the good will of their customers. For tourism in particular, on which so many jobs, livelihoods and businesses depend in my constituency, it is not quite as easy as that. For example, tour and holiday operators will have to reissue invoices and confirmations to their clients who have already booked holidays. That will undoubtedly be a costly exercise for an industry that is already facing a difficult time. In addition, I have been told that the industry's code of conduct recommended by the Association of British Travel Agents discourages those businesses from passing on such an increase on holidays here in the United Kingdom--in anticipation, I understand, of the single European market in 1992.
Similar circumstances apply to hotels and guest houses which have quoted tariffs for this year, and perhaps even next year, upon which advance bookings have been made. Few of them will want to break their contracts on the prices that they have already quoted. They will have no choice but to absorb the 2.5 per cent. increase in VAT unless, of course, the Treasury accepts the price originally agreed including VAT at 15 per cent. in the quarterly VAT returns of those companies. No doubt my right hon. Friend the Chancellor and his colleagues will be receiving representations from the industry on that point.
Mr. Campbell-Savours : The hon. Gentleman said that, if people had already bought their tickets, the tour operator would have to reinvoice them.
Mr. Atkinson : I did not say that. I referred to people who had already booked holidays and paid a deposit. I was referring to the cost of catering and accommodation.
One announcement in my right hon. Friend's Budget which has been warmly welcomed by small businesses in my constituency, particularly in tourism, in the hard-hit building industry and elsewhere, was of the increase in the VAT threshold to £35,000. That will relieve a great many of those businesses from VAT and the burden of its administration.
I have consistently stressed the futility of imposing that burden on smaller businesses, particularly when the cost of collection is more than the amount which is collected from those businesses. That cannot be right. I appreciate that that burden is imposed on us by the Community through the sixth directive on VAT. I have always understood that successive Treasury Ministers have tried to negotiate what my right hon. Friend the Chancellor has now achieved, but they failed while he succeeded. I was delighted at my right hon. Friend's announcement in that regard.
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I wish to press for further progress and urge my right hon. Friend to consider a much higher threshold of £100,000 turnover. If he can achieve that, he will be the toast of millions of small businesses throughout the Community, because he will relieve them of the burden of VAT.I appreciate that my right hon. Friend the Chancellor was under considerable restraint this year with little to give away. He was seeking a broadly neutral Budget. However, I was particularly disappointed that he responded only very marginally to
representations made to him for VAT relief on charitable activities supported by voluntary fund raising.
I have a particular case in mind concerning a hospital project in the Wessex region. Thanks to her own initiative and enterprise, a constituent of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), Mrs. Mahrou Brown, who tragically lost her son through cancer, has, with her colleagues, raised £865,000 for her Pian Brown child cancer fund for a new children's cancer ward and child benefit unit at Southampton general hospital. However, because from last April health authorities ceased to be eligible for refunds on VAT paid on contractors' contracts, an additional £100,000 must now be raised to pay for that VAT. That cannot be right.
Dame Jill Knight (Birmingham, Edgbaston) : I assure my hon. Friend that the pain of that problem is not confined to Bournemouth. The Convent of the Little Sisters of the Poor in my constituency cares for a large number of elderly people on a residential basis. The nuns work selflessly without pay to look after those people. After an enormous amount of effort, they recently raised funds for necessary alterations, but they have told me that they must now find another £50,000. That is a disaster for them. Will my hon. Friend press his point to my right hon. Friend the Chancellor of the Exchequer and his colleagues?
Mr. Atkinson : My hon. Friend the Minister has heard what my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) said. No doubt he will pass on her comments to my right hon. Friend the Chancellor of the Exchequer, so that he can take account of our representations when he replies. I hope that next year my right hon. Friend the Chancellor will be able to respond more positively to the representations made to him this year by the charities' tax relief group even to the extent of negotiating with the European Commission if that were appropriate for VAT relief on charities.
When I and some of my local colleagues, including my hon. Friend the Member for Dorset, North (Mr. Baker), met the Dorset chamber of trade and industry recently to discuss the effects of the recession, we were told that interest rates, inflation and commercial debts represented the principal problems facing its members, together with the uniform business rate and the community charge for those who live over shops.
In his Budget statement, my right hon. Friend the Chancellor responded positively to each of those problems and I am grateful to him for his courage and imagination. The effect, I believe, will be to bring forward that so-called golden scenario of a 5 per cent. or lower inflation rate and a 10 per cent. or lower interest rate which, it is frequently
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suggested, is essential for a Conservative election victory and which the previous Labour Government did not achieve.8.18 pm
Mr. Alex Salmond (Banff and Buchan) : I shall not have to obey the 10-minute rule to respect injuctions to be brief. I intend to make only three points : the first about the poll tax battle, the second about the general shape of the Budget and the third on a specific point about privatisation proceeds.
With regard to the £140 "giveaway" planned this week, I do not mind if there is chaos surrounding the Tories' retreat from the poll tax. I would much rather have chaos surrounding a retreat from the poll tax than have the chaos that would inevitably result from its continuation. Nor do I mind the fact that the Tory party is indulging in a quick fix over the poll tax. The Conservatives have certainly chosen the wrong quick fix. It would be infinitely preferable to shift the short-term burden on to income tax, which would have been much fairer and progressive, than to have it shifted on to VAT. Nevertheless, although regressive, VAT is fairer than the poll tax. I urge the Government even at this late stage to consider a suitable amendment to the Community Charges (General Reduction) Bill and to make the £140 rebate the minimum discount on the poll tax for each person this year. To do that, rather than deduct the sum from the total poll tax bill and then divide it by whatever rebate percentage to which the individual is entitled, would remove at a stroke the iniquitous 20 per cent. rule which hounds the poor, the unemployed, the disabled and students, all of whom have no capacity to earn, in an attempt to make them pay the iniquitous poll tax. Even at this late stage, with the Government performing not so much a U-turn as a zig-zag that varies from spokesperson to spokesperson and from Chancellor of the Exchequer to the Secretary of State for the Environment, I urge members of the Treasury Bench at least to consider an amendment which would at last introduce some sense of parity and justice for the poor who have suffered most from the poll tax.
I say to the few Labour Members present that there is no doubt in my mind, and I think that there is no serious doubt among the Scottish people, that, if the tax had been meekly accepted, particularly in Scotland which was used as the guinea pig and testing ground for it, we would not be witnessing the complete humiliation of the Conservative party which will extend in the next few weeks and months.
I tend to agree with the hon. Member for Glasgow, Hillhead (Mr. Galloway), who said :
"Now that the poll tax law has been seen to be an ass, can the Secretary of State find it within himself to congratulate the people of Scotland, who showed more wisdom than the politicians? Some of them argued that the only way to get rid of the poll tax was to have a general election, and that nothing could be done until there was a general election. Those Scots who marched, petitioned and protested, and some of whom withheld their tax in an act of civil disobedience, are the people who have destroyed the poll tax mark 1, as has been announced this evening."--[ Official Report, 21 March 1991 ; Vol. 188, c. 474.]
The Labour party would do well to heed those words with considerable care. In the light of the events of the past two years the explanation offered by the hon. Member for Hillhead and myself has undoubtedly proved to be better
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than the advice given by the hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Cunninghame, North (Mr. Wilson). They argued that people should stump up and pay up. We said, "Stand up and fight." It is that persistence which has destroyed the iniquitous poll tax. Much of the controversy which has surrounded the long retreat from the poll tax has tended to overshadow the fact that this is a deflationary Budget. The Conservative party, having effectively surrendered mon-etary policy to the Bundesbank, is pursuing a passive approach to fiscal policy. That passive approach is probably preferable to the action of the Chancellor's predecessor but two who, in 1981, committed the ultimate mistake of deflating in the teeth of a severe recession. It is better to have no approach than to pursue the exactly opposite remedy. It would be much better and, certainly, would pull us out of the recession more quickly if, instead of relying on the automatic stabilisers on taxation and fiscal policy, the Government tried to lift the economy out of the recession which they themselves have engendered.It is bad enough for those who live, often not through choice, in the formerly overheated economy of the south-east of England--the area at which the current economic policy has been solely directed--to take the consequences of the Government's mistakes in 1987 and 1988 in the form of the penal interest rate policies of the past two years. It adds substantial insult to considerable injury for the people of Scotland to have to suffer the medicine of high interest rates without ever having had the economic disease in the first place. I have found it extraordinary over the past year to be told by successive Secretaries of State for Scotland that we should somehow be glad that the high interest rate policy is not biting on the Scottish economy as severely as it is hurting the people of the south- east of England--as though we should have some perverse satisfaction that suffering is being applied elsewhere. The main point is that the economic policy being pursued has never been appropriate for the Scottish economy.
Moreover, to judge from the figures, rather than the Government's fantasy, the Scottish economy is not weathering the recession. During the past five years, the Scottish figures for industrial production to the latest quarter are up 10.7 per cent. compared with 11.2 per cent. for the United Kingdom as a whole. Even more significantly, when one deducts the substantial surge in activity in North sea oil and gas, the increase in Scotland is a full eight points less than the overall United Kingdom average. For an economy which was never overheated in the first place, it has been intolerable to have to suffer the monetary squeeze of the past two years and now to endure a merely passive fiscal policy which has no relevance whatever to economic conditions in Scotland.
When we consider the severe localised economic problems in Scotland, such as the future of Rosyth naval base and the substantial problems of the steel and fishing industries caused by the Government's policy or lack of policy towards them, which immediately affect 60,000 jobs, we have no reason whatever to be satisfied even with the Government's modest forecast of economic recovery which they hope might come at some stage over the next year. If the forecasts of economic recovery are as accurate as those of the recession, which was not predicted in the first place, it would not be entirely surprising if the economic recovery failed to materialise.
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It used to be said of the imbalance in economic policy between Scotland and the rest of the United Kingdom that compensation for this inappropriate macro-economic policy was made through regional policy. For the past 12 years, the Government have destroyed regional policy, and not just in the United Kingdom. They have done their level best to destroy or impede any development in regional policy throughout the European Community. Now we have a regional policy in reverse, as was shown comprehensively by the Scottish Television programme, "Scotching the Myth", broadcast suitable enough on St. Andrew's night in Scotland. It detailed point by point the enormous subsidies that pour into the south-east corner of the United Kingdom--the billions that pour into docklands, the hundreds of millions on civil service weightings and the enormous transport subsidies.In his four months as Secretary of State for Transport, the present incumbent has spent 10 times what he managed to spend in four years as Secretary of State for Scotland--to mention nothing of the more than £1,000 million of additional relief in house mortgage subsidy which, once again, flows into the south-east corner. The additional relief on house mortgage subsidy to the south-east of England is greater than the regional policy budget for the whole of the rest of the United Kingdom put together. Such is the imbalance when the Tory party looks after its voters in the south of the United Kingdom. Finally, I turn to yet another scandal which is about to be unleashed upon the Scottish people. Tomorrow, amid considerable fanfare, the Government intend to introduce the flotation of the Scottish electricity companies. That involves a substantial sum--no less than £1.5 billion of the £5.5 billion of privatisation proceeds estimated in the Budget.
I have information that the Scottish Office and the two financial advisers overseeing the flotation, the merchant banks Barclays de Zoete Wedd and British Linen, have agreed, as an official estimate, that the maximum take- up of shares for individual Scottish investors will be 25 per cent. That means that, at the very time of flotation, what has been heralded as an attempt to revive the Scottish private sector will result immediately in two of the largest companies in Scotland falling into the hands of those furth of Scotland. The privatised Scottish electricity companies will be in external ownership from the very point of flotation.
We have had some rare battles in Scotland during the past 10 years, on, for example, the Royal Bank of Scotland, when we were successful, and on other issues such as the Guinness-Distillers affair, when, unfortunately, the campaign to prevent a takeover was not successful ; but this must be the first time that we shall have had a takeover by external interests on the very day of the privatisation. I do not know whether the Financial Secretary to the Treasury is an expert on such matters or whether he has any familiarity with them or with the future of the hydro-electric company and Scottish Power, but perhaps either he or the Chancellor will confirm or deny the official estimates of the Scottish Office and the two merchant banks that are advising on the privatisation and say whether it is true that no more than 25 per cent. of the
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shares are meant to fall into the hands of individual Scottish investors. No doubt the institutional holdings will quickly reduce that percentage even further.I understand from The Daily Telegraph, which must be an impeccable source on these matters--
The Financial Secretary to the Treasury (Mr. Francis Maude) : I can tell the hon. Gentleman straight that we should be delighted if a very much larger percentage of the equity of those companies went into the hands of Scottish individuals, and I am confident that it will.
Mr. Salmond : I am glad to hear it, but the Minister carefully avoided answering my question--whether from lack of knowledge or out of habit, I do not know. My question was, is it or is it not the official estimate--the working estimate--of the Scottish Office that no more than 25 per cent. of the shares will remain in Scottish hands ? It is a simple question, and I hope that it will be answered this evening.
Incidentally, perhaps the Minister could explain why so much of the advertising of that privatisation has been on TVS and London Weekend television. Are the Government looking to sell as many shares as possible in the south of England ?
I was going to say that The Daily Telegraph, that impeccable source, has suggested that there will be a substantial "spin-off" from the privatisation for the Conservatives' fortunes in Scotland. I must advise those Conservative Members who are present that, once the people of Scotland understand that the control and ownership of those companies will be removed from the Scottish people and taken furth of Scotland, there will not be a spin-off from the privatisations ; there will be a substantial fallout for the already much diminished fortunes of the Scottish Conservative party.
Perhaps the only excuse for the Budget is that the Chancellor was so preoccupied with trying to fix the poll tax that he forgot entirely about the substantive economic problems facing the country. This is a standstill Budget, which is bad enough for an economy that is deep into recession, as is happening in the United Kingdom as a whole, but it is totally irrelevant for the Scottish economy which needs a substantial economic injection to pull it out of a recession engendered by economic policies designed to counter an inflationary disease in the south-east of England, which Scotland did not even experience in the first place.
8.33 pm
Mr. Andrew Hargreaves (Birmingham, Hall Green) : I add my congratulations to my right hon. Friend the Chancellor on his excellent neutral Budget which is ideal for the times in which we live. I believe that he got the Budget judgment just about right. I particularly support his cautious but none the less relentless downward pressure on interest rates, giving due deference to the foreign exchange markets and to the way in which that will be interpreted there. At the same time, he has given confidence to business and to those markets themselves. The proof of the pudding with regard to this policy is that on each of the past two or three occasions when he has taken a 0.5 per cent. move downwards, the pound has strengthened against the deutschmark. That proves that his policy is giving confidence to the markets. Having spoken recently to some midlands industrialists, I know
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that he is giving them confidence too. His policy shows that the Government mean business. The policy is working, and I urge him to continue in that line.I shall be brief, because I know that my hon. Friend the Member for Birmingham, Northfield (Mr. King) hopes to catch your eye later, Mr. Speaker, and as he and I share one particular concern, I shall pass over it briefly because my hon. Friend wishes to say more about it. I refer to the fact that, like my hon. Friend the Member for Bromsgrove (Sir H. Miller), I am a little concerned about the Budget's effect on the motor industry, which is of critical importance to the west midlands. The industry is suffering at present, not merely from the effects of the recession, but also from the way in which we have chosen to raise taxation. I hope that something will be said about the motor industry in the reply to this debate for the benefit of those hon. Members who have raised that subject, but I shall say no more about that because my hon. Friend the Member for Northfield will develop that point further.
I very much welcome the help for small businesses that was announced by my right hon. Friend the Chancellor, which shows a genuine sensitivity to their needs. However, like my hon. Friend the Member for Bridlington (Mr. Townend), who is no longer in his place, I urge my right hon. and hon. Friends at the Treasury to continue their efforts to press our European partners for a meaningful threshold for VAT for small businesses. I totally concur that the figure should now be about £100,000.
The present level is ridiculous. It places a huge burden of responsibility on small businesses and, in most cases, is not worth collecting. It also places undue pressure on small businesses, especially in the difficult times that they are experiencing at present. Raising the VAT threshold would make a major difference to such companies and to our ability to develop and sustain our small businesses so that they become bigger and more profitable businesses for our enterprise economy of the future.
I come now to savings. The hon. Member for Warrington, North (Mr. Hoyle) and most of the Labour Front Bench have dwelt on the question of training. The hon. Gentleman said that the key to the success of the German and Japanese economies was their training. The Germans may well have an excellent training system--mostly financed from private industry rather than from direct Government sources or taxation--but having worked intimately with a well-known Japanese firm for three years, I can advise the hon. Gentleman that the principal success of the Japanese, German and Swiss economies lies in the fact that they are savings-based economies and not spending economies. In trying to grasp that fundamental point, it is a pity that my right hon. Friend the Chancellor did not have room for manoeuvre to continue the work begun by our right hon. Friend the Prime Minister when he was Chancellor in developing tax incentives and fiscal advantages to switch to a savings economy.
I am also concerned about the fiscal stance. Mention has been made of the need to spend a little more during a recession. The merit of the Government's policy over the past five or six years has been sound money, and I congratulate them on that. To have produced a balanced Budget and a Budget surplus from which debt repayment can be made was a masterly achievement, and my right hon. Friend the Member for Blaby (Mr. Lawson) deserves considerable accolades for having achieved that.
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Like others of my hon. Friends, however, I am concerned that we now seem to be moving into a Budget deficit. I would not normally be over-concerned about the size of a trade deficit while there was a balancing or countervailing Budget surplus, but I am concerned that we may be moving towards an envisaged public sector borrowing requirement and a Budget deficit at a time when the trade balance is still heftily in the red. We have seen a little improvement this month, but nevertheless it will remain heftily in the red. A trade deficit can be balanced by a Budget surplus, but to have both a trade deficit and a Budget deficit worries me a little. I say no more than that.I wish to say a few words about increasing VAT. I heartily congratulate my right hon. Friend the Chancellor of the Exchequer on his move to raise VAT by 2.5 per cent., thereby reducing the burden of local taxes. I entirely support the comments made by my hon. Friend the Member for Blaby and, indeed, my right hon. Friend the Member for Worthing (Mr. Higgins), when they suggested that after the continuous review or consultation period, as we are now calling it, we should extend the movement to central taxation and raise a significant portion, if not all of the money for local government services through VAT collected by central Government.
Where I take issue with my right hon. Friend the Member for Blaby, for example, is on the margin. I do not believe that it would be a good idea to change the margin from zero to, say, 5 per cent. It would make much more sense to raise the overall level to a level similar to that levied in some of our principal competitor countries in the European Community, perhaps to an overall rate of 20 per cent. or thereabouts.
A move to increase VAT is extremely sensible, in that it taxes spending rather than earning. If we once again adopt the idea that we tax spending and reduce taxation on saving, we shall make the balance more akin to the successful economies of the world, especially Japan and Germany. Furthermore, I disagree with those who say that VAT is regressive. Zero rating benefits those on the bottom rung of the ladder and those who buy fancy toys, cars, televisions and expensive items pay far more. VAT is a fair way to raise money for local government. I wish that the Government would complete the move and raise all local government finance by that method.
My right hon. Friend's Budget is an excellent Budget for the times. I hope that he will consider ways of extending certain moves that I have already mentioned. I recommend the Budget to the House. 8.42 pm
Mr. Frank Haynes (Ashfield) : What a destructive and wasteful Government we have serving this nation. Some of the things that have been poured out from the Government are absolutely disgusting. All they are trying to do is to save their skins. That is what it is all about. If they think that the people out there, the electorate, do not know what is going on, they have another think coming. People know what is going on, and they know that the Budget is a con trick. I remember when we had the new Secretary of State for Trade and Industry at the Dispatch Box for the first time to answer questions. I happened to have question 9 on that day. I suggested to the right hon. Gentleman that he had had an easy time in the Treasury. When he came along as Secretary of State for Trade and Industry I told him that
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he had some work to do. He had to get industry out of the rut and the mess that it was in, which had been created by his own Government. He had to sort out the balance of payments problem. The Government are not going to do that. The balance of payments problem will get worse.Mr. Julian Brazier (Canterbury) : We shall miss you, Frank.
Mr. Haynes : I shall miss the hon. Member for Canterbury (Mr. Brazier), too. The hon. Member for Birmingham, Northfield (Mr. King) will also be on his way after the next election--there is no need to worry about that lad.
I told the Secretary of State for Trade and Industry that if he did not sort out the problems he would have to buy a concrete suit and jump in the river just outside here. The Secretary of State has definitely failed the nation. I do not think that he knows what the job is about. He is wasting time in Parliament.
The hon. Member for Hall Green (Mr. Hargreaves) said that the right hon. Member for Blaby (Mr. Lawson) should be given an accolade. I ask you, Mr. Deputy Speaker. I remember when he was the Chancellor of the Exchequer. He took us into the mess that we are in now. But when it got so bad, he ducked out of the job. He did not want it any longer. He blamed the problems on a little blip. Some blip that was! And what a mess we are in now.
The Chancellor of the Exchequer can sit there--I have one or two things to say about him too. [Interruption.] It is no good him ducking out of the Chamber behind the Speaker's Chair. He has ducked out of his responsibilities by nipping out of the Chamber. In the Budget and at the Dispatch Box, we have heard it all before. Time has gone on and the Government have failed the nation time and again. I get the message loud and clear in my constituency about what people feel about what is in the Budget and how the ordinary working folk will be treated. I get around my constituency and talk to people in the pubs, clubs and elderly peoples' groups-- [Interruption.] The Minister may laugh, but the smile will be taken off his face at the next election. The people out there have had enough. They tell me clearly in my constituency what they think about the Budget. It is shameful that, since 1979, the Government have put more taxes on people than any other Government. It is shameful, shocking and wicked. The Government could not care less about the people at the lower end. They are looking after their own kind, as they do year after year whenever they get into office. The electorate are waking up because of what has happened in the Budget and on the poll tax. It is a real fiddle to knock off £140. Back home, people will still have the poll tax. The Government have not got rid of the poll tax yet, although they say they will.
God forbid that the Conservatives should win the election--I do not believe that they will. We shall win the next election and get rid of the poll tax, because we have said we will. We shall put something fairer in its place. [ Hon. Members :-- "What?"] Hon. Members can bawl and shout from their seats as much as they like, but they are going to sit there and listen. They will listen to my hon. Friend the Member for Derby, South (Mrs. Beckett) when she replies to the debate. They will be told a thing or two, as they were told when my hon. Friend the Member for
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