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House of Commons
Thursday 12 March 1992
The House met at half-past Two o'clock
PRAYERS
[Mr. Speaker-- in the Chair ]
PRIVATE BUSINESS
Midland Metro Bill
Midland Metro (
No. 2) Bill--
Lords amendments agreed to.
Mersey Docks and Harbour Bill
[Lords] (By Order) Order for Third Reading read.
To be read the Third time on Thursday 19 March.
Alliance and Leicester (Girobank) Bill
(By Order)
British Railways (No.
4) Bill-- (By Order)
Crossrail Bill
(By Order)
East Coast Main Line Safety Bill
(By Order)
King's Cross Railways (No.
2) Bill-- (By Order)
London Underground (Green Park) Bill
(By Order)
London Underground (Jubilee) Bill
(By Order) Orders for Second Reading read.
To be read a Second time on Thursday 19 March.
PRIVATE BILLS (SUSPENSION)
Ordered,
That--
(1) the Promoters of every Private Bill which has originated in this House or has been brought from the House of Lords in the present Session of Parliament shall have leave to suspend any further proceeding thereon in order to proceed with that Bill, if they think fit, in the next Session ;
(2) the Agent for the Promoters of any such Bill intending to suspend any further proceeding thereon shall give notice to the Clerks in the Private Bill Office not later than five o'clock on Monday next of their intention to suspend further proceeding thereon, or, if the Bill, having passed this House, is then pending in the House of Lords, of their intention to proceed with the same Bill in this House in the next Session : provided that all fees due upon any such Bill up to that day be paid ;
(3) a list of all such Bills, with a statement of the stage at which they have been suspended, shall be prepared by the Clerks in the Private Bill Office and printed ;
(4) every such Bill which has originated in this House shall be presented to the House not later than the third day on which the House sits after the next meeting of Parliament ;
(5) there shall be deposited with every Bill so presented a declaration signed by the Agent for the Bill, stating that the Bill is the same, in every respect, as the Bill with respect to which proceedings have been suspended at the last stage of its proceeding in this House in the present Session ;
(6) every Bill so presented shall be laid by one of the Clerks in the Private Bill Office on the Table of the House on the next
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meeting of the House after the day on which the causes of Her Majesty's calling the Parliament have been declared thereunto ; (7) every Bill so laid on the Table shall be deemed to have been read the first time and (if the Bill has been read a second time before its suspension) to have been read a second time and-- ((i) if such Bill has been referred to the Committee on Unopposed Bills in the present Session, it shall stand so referred ; (
(ii) if such Bill has been referred to a Committee during the present Session and not reported by that Committee to the House, the Bill shall be committed and--
(a) all Petitions against the Bill which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session ; and
(b) any minutes of evidence taken before the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session ;
(iii) if such Bill has been reported by any Committee, it shall be ordered to be read the third time unless it has been reported with Amendments in the present Session and has not been considered as so amended, in which case it shall be ordered to lie upon the Table ; (
(iv) if such Bill has been read the third time before its suspension, it shall be deemed to have been read the third time ; (8) paragraph (2) of Standing Order 166 relating to Private Business (First reading) shall not apply to any Bill brought from the House of Lords in the next Session and upon which the proceedings have been suspended in this House in the present Session ; (9) when any Bill which has been brought from the House of Lords in the present Session, and upon which the proceedings have been suspended in this House, is brought from the House of Lords in the next Session, the Agent for the Bill shall deposit in the Private Bill Office a declaration, signed by him, stating that the Bill is the same, in every respect, as the Bill which was brought from the House of Lords in the present Session and, as soon as a certificate by one of the Clerks in the Private Bill Office that such a declaration has been so deposited has been laid upon the Table of the House--
(i) unless the Examiner has reported pursuant to Standing Order 74 relating to Private Business (Examination of bills brought from the House of Lords, etc.), the Bill shall stand referred to the Examiners ;
(ii) if the Examiner has so reported, the Bill shall be ordered to be read a second time, or, if it has been read a second time, it shall be read a second time and committed ; but
(iii) if the Bill has been reported by a Committee with Amendments in the present Session it shall be committed to the Chairman of Ways and Means who shall make only such Amendments to the Bill as have been made thereto by the Committee in the present Session, and shall report the Bill to the House forthwith, and the Bill shall be ordered to lie upon the Table ;
(10) where a Bill has been brought from the House of Lords in the present Session and the period prescribed by paragraph (1) of Standing Order 171A relating to Private Busineses (Petitions against private bills) has not elapsed before Monday next, any Petition presented during the present Session in pursuance of that Standing Order shall be void, and the period of time prescribed by that Standing Order shall apply to any Bill brought from the Lords in the next Session in pursuance of this Order ;
(11) any Bill which under the provisions of this Order is deemed to have been read the first time, or the first and second time or the first, second and third time, shall be recorded in the Journal of the House as having been so read;
(12) without prejudice to the provisions of paragraph (7) of this Order, only those Petitions against any Bill which stood referred to the Committee on the Bill and which have not been withdrawn or have been deposited pursuant to paragraph (b)
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of Standing Order 126 relating to Private Business (Reference to committee of petitions against bill) shall stand referred to the Committee on the same Bill in the next Session ;(13) in relation to any Bill to which this Order applies Standing Order 127 relating to Private Business (Right of audience before committees on opposed bills) shall have effect as if the words "under Standing Order 126 (Reference to committee of petitions against bill)" were omitted;
(14) where any Standing Orders have been disposed with in respect of any private Bill in the present Session or in the last Session, those Standing Orders shall be deemed to have been ordered to be dispensed with in respect of any such Bill presented or brought from the Lords in pursuance of this Order ;
(15) any Standing Orders compiled with in respect of any Bill originating in the House of Lords upon which the proceedings have been suspended in that House shall be deemed to have been complied with in respect of such Bill if the same is brought from the House of Lords in the next Session, and any notices published or given and any deposits made in respect of such Bill for the present Session shall be held to have been published, given and made, respectively, for the Bill so brought from the House of Lords in the next Session ; (16) no further fees shall be charged in respect of proceedings on a Bill in respect of which fees have been incurred in the present Session.
That this Order be a Standing Order of the House.-- [The Chairman of Ways and Means.]
To be communicated to the Lords.
Oral Answers to Questions
NATIONAL FINANCE
Inflation
1. Sir David Mitchell : To ask the Chancellor of the Exchequer what is his latest forecast of United Kingdom inflation in 1992.
The Economic Secretary to the Treasury (Mr. John Maples) : The Budget forecast is for retail prices index inflation to be down to 3 per cent. in the fourth quarter of 1992 and 3 per cent. by mid-1993.
Sir David Mitchell : Can my hon. Friend say what the figure is likely to be next year and what it would become under the Labour party's spending plans?
Mr. Maples : My hon. Friend makes a good point. Anybody who listened to last week's debate on inflation will have realised that the Labour party has no policy on it. Labour Members do not believe in the exchange rate mechanism--they are always calling for low interest rates--and when Labour were in government average inflation was 15 per cent., whereas under the Conservative Government it has been 7 per cent. Labour's lowest rate was never as low as our average.
Manufacturing Industry
2. Mr. Nicholas Winterton : To ask the Chancellor of the Exchequer what representations he has had from manufacturing industry in respect of his Budget proposals.
The Financial Secretary to the Treasury (Mr. Francis Maude) : Businesses of all sizes have welcomed the reduction in the burden of business rates next year by £480 million. The car industry--at the heart of the
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manufacturing sector--has said that the Budget measures should boost sales by 70,000. The director general of the Confederation of British Industry has said :"This is a prudent and positive Budget".
Mr. Winterton : I warmly welcome the bringing forward of the benefit of the uniform business rate, and the measures announced in the Budget for small business and especially for the car industry. Does my hon. Friend accept that the two strongest economies in the world--Japan and Germany--are built on broad and substantial manufacturing bases? Will he consider sympathetically further measures to regenerate our manufacturing base, should such measures prove necessary?
Mr. Maude : One is always especially grateful for the steadfast support of my hon. Friend. I am familiar with his longstanding concern for the health of the manufacturing sector--the Government share that concern. My hon. Friend will be glad to note that the share of gross domestic product deriving from manufacturing is greater in this country than in even the United States and France. There have been substantial improvements in investment. Indeed, investment in plant and machinery in this country--the most important measure that there is--has risen dramatically over the past decade. Of course, we shall continue to consider carefully measures that could improve the lot of manufacturing industry. The one thing that manufacturers say that they want above all is a firm commitment to driving inflation down, so that they can continue to compete effectively in an ever more competitive world.
Mr. Pike : Although the Minister had the nerve to say what he just said, I do not think that he can really believe it. Many industrialists in key manufacturing regions such as the north-west and Lancashire believe that the Budget has done nothing to overcome the havoc that the Tory party has wrought on manufacturing industry over the past 13 years. They will be glad to see the back of this Tory Government.
Mr. Maude : Rather than relying on the hon. Gentleman's synthetic assertions, one ought to place more reliance on what business people say. They are the ones who really know. When a reputable City firm asked a number of finance directors of large and important companies what they thought of Labour's proposals, 5 per cent.--to give the good news first-- thought that a Labour victory would be good for the economy. The bad news is that 86 per cent. thought that a Labour victory would be bad for the economy.
Mr. John Townend : Is my hon. Friend aware that family-owned manufacturing businesses--indeed, all family-owned businesses--are delighted at his inheritance tax proposals? They will prevent businesses from being sold or closed because of debts--factors that are devastating the many family businesses in the north. Has my hon. Friend ascertained whether the Opposition support the proposals?
Mr. Maude : The House--indeed, the nation--is waiting on tenterhooks for Opposition Front-Bench Members to vouchsafe to the country whether they intend to support this important measure, which has been warmly welcomed, particularly by the small business sector.
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However, so far we have waited in vain. No doubt, the Opposition will let us know this afternoon what their attitude is, or perhaps they are still dithering.Manufacturing Investment
3. Mr. Alan W. Williams : To ask the Chancellor of the Exchequer what was the average level of manufacturing investment between 1974 and 1979 and between 1979 and 1991.
The Chief Secretary to the Treasury (Mr. David Mellor) : The average level was £9.8 billion at constant prices, in both periods. Between the same two periods, total plant and machinery investment at constant prices rose by more than 38 per cent.
Mr. Williams : As investment in manufacturing industry was slashed by 14 per cent. during the past year and as Britain is the only country in the European Community where investment is lower than it was in 1979, why did the Budget provide nothing to encourage investment, upon which industry could build, rather than bribing the electorate?
Mr. Mellor : There are two points to make about that. First, it would be more reliable as a criticism of the Budget, from the point of view of business, to listen to what representatives of business and industry have said rather than to the hon. Gentleman's somewhat partial account. They have been extremely supportive. Secondly, Labour always concentrates on manufacturing investment because it thinks that that is the one that allows it to see that figures are not so good. [Interruption.] Oh, yes.
If we look at total business investment in the economy, we find that in 1990 it was 55 per cent. higher, in real terms, than it was in 1979 and that, even in 1991, it was 37 per cent. higher. If we look at investment in plant and machinery, where the definition has not changed, as it has for manufacturing investment, we find that in 1990 the increase in real terms over 1979 was 65 per cent. and that even in 1991, a year of recession, the improvement in investment in our economy was such that it was nearly 50 per cent. higher than it was in 1979. That is the whole economy picture on which the hon. Gentleman should focus.
Mr. Beaumont-Dark : Does my right hon. and learned Friend accept that when setting up businesses in a capitalist society there will always be failures and that at a time of worldwide recession there will be more failures than usual? Is not it a fact, however, that there are still 1.2 million more people registered as VAT traders in industry and all commerce than there were when we came to office? Is not that what really matters-- people can still venture and they can still prosper?
Mr. Mellor : My hon. Friend is absolutely right. There are many more businesses in this country today than there were in 1979. There are over 1 million more jobs in the British economy today than there were in 1979. A greater proportion of adults in the United Kingdom are in employment than in any other European Community country, except Denmark. That is the reality of our position today.
Mr. John Smith : However the Chief Secretary handles the figures, is not it remarkable that investment in the
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manufacturing sector is less now than it was in 1979? [Hon. Members :-- "No."] Oh, I see ; it is not remarkable! If the Chief Secretary looks at the economy all around, can he explain why, in the past 13 years, with a growth record of 1.7 per cent. a year, this Administration has the worst growth record of any Government of any party since the war?Mr. Mellor : The right hon. and learned Gentleman's statistics are dodgy-- [Hon. Members :-- "No."] Oh, yes. He knows only too well that the proper comparison is with the growth in non-oil GDP, which has been substantially higher under this Government. [Interruption.] The right hon. and learned Gentleman now says GDP. When he is trying to make the point that the country has been in recession for six successive quarters, he says that one cannot include the oil industry when looking at economic growth. When he wants his growth statistics to be right, he thinks it is right to do the opposite and stand on his head. It does not work like that.
Mrs. Peacock : Is my right hon. and learned Friend aware that even in the past few years when there have been some problems, even in places such as Yorkshire, we still have entrepreneurs who are investing in manufacturing, new processes and new technology to equip them to have confidence in the future and to compete not only in this country and Europe but worldwide?
Mr. Mellor : The Labour party's constant belittling of the manufacturing sector will not do. The Labour party might like to bear in mind the massive investment from Britain in manufacturing as well as the massive investment from overseas. A total of 50 per cent. of the inward investment from the United States and Japan into the European Community comes to Britain. The Labour party might also like to know how much more effectively that investment is being used in the Britain of the 1990s than in the Britain of the 1970s. Manufacturing output since the election of the Conservative Government has increased by more than 25 per cent. Under Labour, it fell by 2 per cent.
Value Added Tax
4. Mr. Cox : To ask the Chancellor of the Exchequer what was the cash amount paid in value added tax by a family with two children on average earnings in 1979 ; and what is his latest estimate for the amount at the present time.
The Minister of State, Treasury (Mrs. Gillian Shephard) : At today's prices, such a family would have paid approximately £340 in VAT in the financial year 1978-79, compared with £985 in 1991-92. Over the same period, this family will have enjoyed a 35 per cent. rise in real take-home pay.
Mr. Cox : One can say only that that is a dodgy reply. There has been an increase of some £15 a week in VAT. Against that background and the background of other indirect taxes that ordinary families have had to experience, is not it clear that on 9 April the British people will not be taken in by promises but will be persuaded by the income tax and VAT changes which they have seen from the Government over the past 13 years?
Mrs. Shephard : What matters is real take-home pay and that is what people will take into account on 9 April.
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The 35 per cent. increase in real take-home pay amounts to £78 per week. That is what people will be concerned about. If the Labour party is so concerned about the tax burden, why is it proposing to vote against tax cuts twice in the next 24 hours?Mr. Watts : Will my hon. Friend tell the House how much of that £78 increase in take-home pay is attributable to the reduction in the basic rate of income tax from 33p to 25p and, now, the lower band of 20p and the over-indexation of personal allowances introduced by the Government?
Mrs. Shephard : Perhaps my hon. Friend would be interested in the fact that the indexation of allowances has taken 2 million people out of tax compared with what happened under the Labour Government's regime. The tax cuts announced by my right hon. Friend the Chancellor in his Budget on Tuesday, against which the Labour party will vote twice in the next 24 hours, will take a further 380,000 individuals out of tax.
Mrs. Beckett : Has not the Government's consistent record over the years been one of balancing cuts in taxes on income by increases in other taxes? Therefore, are not people eminently justified in fearing that the Government's long-term plan is to pay for the cuts in tax, of which the Government boast so proudly, by widening the scope of VAT and by increasing the other charges and taxes that people have to pay?
Mrs. Shephard : We have given categorical pledges that there will be no rise in the standard rate of value added tax either before or after the election. I wonder whether the hon. Lady would like to give such a categorical pledge. What is certain is that two parties are going into the election with pledges to increase taxation and one is going into the election with a pledge to decrease it--the Conservative party.
Mr. Summerson : Will my hon. Friend confirm that the Government have no intention whatever of increasing VAT on televisions to 25 per cent., as was done by the previous Labour Government?
Mrs. Shephard : I am happy to repeat the categorical pledges given by my right hon. Friends the Prime Minister and the Chancellor that there will be no increase in the standard rate of VAT either before or after the election. We have no need and have no plans to extend the standard rate or to put up other taxes.
Taxation
6. Sir John Hunt : To ask the Chancellor of the Exchequer how many people have been relieved of liability to direct taxation as a result of his recent Budget proposals.
The Chancellor of the Exchequer (Mr. Norman Lamont) : About 380,000, and nearly 4 million will pay tax at only 20 per cent.
Sir John Hunt : Is not it clear that for those lower-paid people and for those whose basic tax rate has been cut to 20p in the pound, only the threat of a Labour Government stands between them and the better deal that they can expect from a continuing Conservative Government?
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Mr. Lamont : The tax changes in the Budget, as my hon. Friend said, were worth £100 a year to 21 million taxpayers. A key point is that 75 per cent. of the benefit will go to those who receive below average earnings. One would have thought that the Labour party might welcome that. It is absolutely extraordinary that the Labour party is so determined to vote against that, given that it issued a policy document only a few weeks ago in February that said that that was its policy. What is also astonishing is that one would have thought that when the Leader of the Opposition rose to reply to the Budget he might know that that was his party's policy.
Mr. Beith : What leads the Chancellor of the Exchequer to believe that the prospect of £100 a year or less,which, in some cases, will be offset against family credit--will send everyone running to the shops to spend large amounts of money and bring about a consumer-led recovery? Does not he realise that £2 billion, if invested, could bring about the recovery more quickly?
Mr. Lamont : The tax cut was never presented and justified in the way that the hon. Gentleman seeks to put it. We believe in low taxes because they are good for incentives. It is good that people should keep money that they earn and right that they should have the choice. That logic should apply to low-paid people as much as to anyone else.
Mr. Nicholls : What does my right hon. Friend think that the working poor will make of Labour's plans to increase the tax on them? Is not this the message as far as the Labour party is concerned : one is never too poor to pay more tax?
Mr. Lamont : My hon. Friend might observe, however, that it is clear that the Labour party wants to increase taxes on those who earn above average earnings--anyone on more than £20,000--and on the poor and on savings.
Mr. Nicholas Brown : Will the Chancellor confirm that the past three Conservative party manifestos contain stern injunctions against borrowing, let alone borrowing billions to bribe millions with their own money? Will he also confirm that he justified that policy by saying :
"The objective of fiscal policy remains to balance the budget over the medium term"? [ Official Report, 10 March 1992 ; Vol. 205, c. 749.]
Will the right hon. Gentleman confirm that in the Red Book, for which he has some responsibility, on page 17 in table 2A.5 the Government confirm that not only will they not balance the public sector borrowing requirement over the cycle but that there is no scope for tax reductions either?
Mr. Lamont : I am afraid that the hon. Gentleman reads table 2A.5 wrongly, perhaps because he does not have a copy in front of him. If he looks at it, he will see a fiscal adjustment of £1 million in the past two years, so what he says is totally wrong. It is a bit rich for the hon. Gentleman to lecture us on borrowing. The fact is that the PSBR that we have projected for next year is well below the average for the entire period of the past Labour Government and it is half that which was reached in the peak year, when the right hon. Member for Leeds, East (Mr. Healey) had to go off to the International Monetary Fund and he had a PSBR of 9 per cent. of gross domestic product. I remind the hon. Gentleman that not so long ago the Leader of the
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Opposition used to say that he could not understand why we did not borrow more and that borrowing was not a sin. That used to be his attitude.Pensioners' Incomes
7. Mr. Jacques Arnold : To ask the Chancellor of the Exchequer if he will make a statement on the impact of tax on pensioners' incomes.
Mr. Maples : About three quarters of pensioners will pay no income tax at all in 1992-93. The rest will gain up to £3.37 a week from the new lower rate and increases in allowances announced in my right hon. Friend's Budget.
Mr. Arnold : My hon. Friend will know that many pensioners are very worried by Labour's taxation proposals. Will he quantify the pensioners who will be helped by the reduction in the first rate band to 20 per cent. and tell us how many pensioners in receipt of income support will benefit from the further increases announced last Tuesday?
Mr. Maples : My hon. Friend makes an interesting point. Among the 4 million people who will have a marginal rate of income tax of 20p in the pound are 1,330,000 pensioners, for whom the Labour party apparently plans to raise taxes from 20p to 25p in the pound. The total number of people helped by the measures in the Budget, through the increases in income support payments for pensioners and the ancillary benefits that go with that, is 5 million.
Ms. Armstrong : Pensioners continue to have to pay the 17.5 per cent. levied on value added tax last year. What would the Minister say to the constituent who came to my surgery last week, bewildered by the fact that the Government, having raised VAT for the specific purpose of paying for the poll tax bribe last year, are not proposing to reduce it to 15 per cent. as they are not reducing the poll tax again this year? Why are not the Government reducing VAT?
Mr. Maples : VAT was raised last year for the specific purpose of reducing everyone's community charge by £140. The idea that the Budget does nothing for pensioners is absolutely ludicrous. It reduces the marginal tax rate for 1.33 million and increases benefits for 5 million. While the Conservatives have been in office, the real incomes of pensioners have risen faster than those of people in work. If the hon. Lady does not believe me, perhaps she will believe the director of Help the Aged, who said :
"It is a positive Budget that will make a positive difference to older people."
Savings
8. Mr. Andy Stewart : To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1987.
10. Mr. David Martin : To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1979.
Mrs. Gillian Shephard : We have encouraged private saving by cutting income tax rates, implementing independent taxation, which has allowed married women to use their own tax allowance against their investment
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income, abolishing the composite rate tax which forced non-taxpayers to pay tax on their savings, extending personal equity plans and introducing tax-exempt special savings accounts.Mr. Stewart : In my constituency, more than 3,000 miners took early retirement and invested their money in savings schemes. Only this week I received a letter from a miner in Clipstone who wanted to know what would happen to his capital and income if the Labour party's savings tax were ever implemented. Will my hon. Friend tell me, my constituency and the country what a Labour Government would cost us?
Mrs. Shephard : My hon. Friend raises a good point. In the unlikely event of a Labour Government being elected, they would impose national insurance contributions on income from savings above £3,000 a year, neatly targeting the group described by my hon. Friend. That would hit almost 250,000 people with gross incomes of less than £10, 000 a year. Of course, Labour also proposes to vote against the tax cuts for people on lower incomes and, according to financial analysts, its policies would increase inflation, which would further erode the income that that group of people could expect to get from their savings.
Mr. David Martin : Will my hon. Friend continue to make it clear that we believe in people keeping more of their money to spend or to save, in stark contrast to the Opposition whose attack on savings and so-called unearned income would prejudice pensioners in particular who, if they have any sense, will vote Conservative on 9 April?
Mrs. Shephard : The Labour party has always sought to tax savings. Under the last Labour Government someone on the top level of tax and paying investment income surcharge was paying tax at the rate of 98 per cent.
Mr. Trimble : What does the Minister think the impact will be on savings and interest rates of the 100 per cent. increase in Government borrowing?
Mrs. Shephard : As the hon. Gentleman knows, the increase in borrowing is almost entirely accounted for by the effects of the recession. There will be no effects.
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