House of Commons Hansard Debates for 12 Mar 1992

Mr. Tony Banks : A lot of people thought that their savings were safe in the houses that they were trying to buy. What does the Minister have to say about savings to the 85,000 people who had their houses repossessed last year?

Mrs. Shephard : Repossession is extremely sad, and disastrous for the families concerned. With the inflationary policies and disastrous taxation policies likely to be pursued by a Labour Government, if ever one were elected, people would see a disastrous erosion in all their capital assets.

Treasury Income

9. Mr. Canavan : To ask the Chancellor of the Exchequer what has been the income to the Treasury since May 1979 from (a) privatisation and (b) North sea oil revenues.

Mr. Maples : Between 1979-80 and 1991-92, privatisation proceeds are expected to amount to about £42 billion, and North sea oil revenues to £71 billion.

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Mr. Canavan : Will the Minister have the decency to admit that the true answer to my question is that at today's prices the Tories have taken more than £100 billion in North sea oil revenues and more than £50 billion from selling the family silver? Does he seriously think that the British people will be conned by a party that has squandered more than £150 billion of public money and is now hell bent on trying to borrow an additional £28 billion in a desperate but vain attempt to buy success at the general election?

Mr. Maples : Our attempts to borrow have certainly been nothing like so desperate as those of the Labour Government. Privatisation proceeds and North sea oil revenues have reduced the levels of public sector debt from 50 per cent. of our national income to about 27 per cent. If they were still at 50 per cent., which was the level that we inherited from the Labour Government, they would be £140 billion higher.

Sir William Clark : Does my hon. Friend agree that apart from the capital receipts from privatisation the amount of income given to the Exchequer has been much increased because most of the nationalised industries that have been privatised are now making profits, whereas previously many of them made losses? Consequently, the Exchequer benefits not only from the capital receipts, but from revenue receipts, corporation tax and tax on dividends.

Mr. Maples : My right hon. Friend is absolutely right. Privatisation has been an enormous success. Anybody who seriously thinks that British Airways or British Telecom were better run businesses when they were in the public sector must be going round with their eyes shut. What is amazing is that the Opposition still plan to renationalise the water industry and large bits of the electricity industry.

Dr. Marek : Can the Minister explain how it is that in the 13 years when the Conservatives have received either £71 billion or more than £100 billion in North sea oil revenues and nearly £50 billion from selling the family silver, and when the taxation is higher now--with VAT, a regressive tax, at 17.5 per cent. compared with 8 per cent. in 1979- -our trains do not run on time, or at all, more people live in poverty, national health service waiting lists are at their highest levels ever and we are borrowing £28 billion this year, with public debt rapidly increasing? Where has the money gone?

Mr. Maples : It is interesting that all the examples that the hon. Gentleman picks of bad services are not among businesses that have been privatised. I give him the answer that I gave to his hon. Friend the Member for Falkirk, East (Mr. Canavan). One thing that the money has done is to reduce the level of public sector debt from 50 to 27 per cent. of national income. That is equivalent to £140 billion, which would involve interest of £14 billion or £15 billion per year. That is one of the differences. The Labour party apparently plans to reverse that.

Sir John Hannam : Will my hon. Friend confirm that over the next two years the Revenue will expect some £13.5 billion from privatisation proceeds? A Labour Government who do not pursue that privatisation policy will find that the £13.5 billion will have to be raised from an increase in the public sector borrowing requirement.

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Mr. Maples : My hon. Friend raises an extremely interesting point. Labour has £37 billion of public spending plans to finance and it will not receive £13 billion of privatisation revenues. It will also have the cost of privatising the water industry, although the hon. Member for Newham, North-West (Mr. Banks) said that Labour would do that without compensation, so it may not cost Labour anything.

Taxation

11. Dr. Kim Howells : To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 75 per cent. of male average earnings in 1978-79 ; and what it was in 1990-91.

14. Dr. Godman : To ask the Chancellor of the Exchequer what was the overall tax burden for a married man with two children on 100 per cent. of male average earnings in 1978-79 ; and what it was in 1990-91.

Mr. Maude : The tax burden is estimated to have moved from 27 to 28 per cent. for a man on three quarters of average earnings and from 32 to 33 per cent. for average earnings. That compares with increases of 32.2 and 35.5 per cent.--about 3 per cent. higher--if Labour's 1978 regime had been indexed. During the same period, real take-home pay for a man on three quarters of average earnings has risen by £45 per week and at average earnings by no less than £60 per week. [Interruption.]

Mr. Speaker : Order. I ask the House to listen to questions in silence because it is difficult to hear at this end of the Chamber.

Dr. Howells : In 1980, the then Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe), abolished the reduced rate band by saying, and I quote--

Hon. Members : Reading.

Mr. Speaker : The hon. Gentleman should not quote. Please paraphrase.

Dr. Howells : I will paraphrase. The right hon. and learned Gentleman said that the case for the reduced rate band was never at all clear. Why have the Government suddenly found a clear case for it? Is it not because they hope to use it to bribe the electorate?

Mr. Maude : It is extraordinarily offensive to people who work hard for their income for the Labour party to talk about that income as though it belonged to the Government and not to those people. It is their money, for which they have worked hard, and the Government believe in leaving more of it--and especially more of the money that the lower paid earn--with them. It is extraordinary that, although this is explicit Labour party policy, the Labour party has decided to vote against the proposal and to increase tax by 5p in the pound for some of the lowest paid in our country.

Mr. Speaker : Dr. Norman Godman.

Dr. Godman : Thank you, Mr. Speaker, and all the very best. Is it not the case that the overall tax burden has increased? I remind the Financial Secretary that in Scotland, gross domestic product stands at 93.2 per cent.

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of the United Kingdom average, when as recently as 1984 it was 97.4 per cent. Is it not the case, therefore, that, despite the fantastical riches given to the Government by the revenues from offshore oil and gas, for the people of Scotland things have got worse and worse? It is no wonder that the Government are slipping down the political plughole in Scotland : they are down to 18 per cent. in the opinion polls, and they have further to go.

Mr. Maude : If the tax burden has gone up by so much, and if that is such a bad thing, why does the hon. Gentleman want to increase it further? Does he really want to increase the tax burden on the lowest paid in our society by voting against the Government's measure to reduce the tax for the lowest paid by 5p in the pound?

Dame Elaine Kellett-Bowman : Does the Minister agree that families in the lower income brackets will benefit from the Government's success in maintaining the zero rate for food? Does he further agree that those families and pensioners in particular spend an above average amount of their incomes on zero-rated food?

Mr. Maude : That is so, and people right across the income spectrum have seen their real take-home pay increase dramatically while we have been in power. As I said, the real take-home pay today of average earners is no less than £60 per week higher than it was in 1979.

Mrs. Maureen Hicks : Is it not a fact that the average family man can rely on us for continuity when it comes to income tax? [Interruption.] We have brought income tax down from 33p to 25p and it is now going down to 20p. Does my hon. Friend agree that whereas we shall continue to reduce income tax, Labour would insist on increasing it?

Mr. Maude : It is a constant feature of history that Conservative Governments like to bring tax down-- [Interruption.] so as to leave more of people's hard-earned money with them, whereas every Labour Government, apart from the first Ramsay MacDonald Government, increased the basic rate of tax. [Interruption.] All history is against the Labour party. I look forward to seeing my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) back here in April.

Several Hon. Members rose--

Mr. Speaker : Order. There is a great deal of excitement this afternoon. I hope that the House will settle down.

Mr. Boateng : In relation to family income, what comfort does the Budget bring to the working woman, or the woman who wants to work? It contains nothing on child care or child benefit. Is it not clear that this cynical and incompetent Government put women and children last?

Mr. Maude : Not only is child benefit going up already, as the hon. Gentleman would know if he had done his research, but the lower rate 20p income tax band will particularly help working women. The hon. Gentleman would also know, if he had done his research, that a great many of the groups concerned with children urged us not to go ahead with a move on tax relief for child care.

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Share Ownership

12. Sir John Farr : To ask the Chancellor of the Exchequer what has been the change in the number of persons owning shares in the past five years.

Mr. Mellor : The number of adults in Great Britain owning shares has increased from about 8 million in 1987 to almost 10 million in 1992.

Sir John Farr : Does my right hon. and learned Friend agree that that transformation to share and home ownership under successive Conservative Governments has put us well on course to becoming a property and share-owning democracy?

Mr. Mellor : Yes. This major extension in popular capitalism has been one of our greatest achievements.

Sir Patrick Duffy : Did the Chief Secretary note that share and bond prices fell sharply following the presentation of the Budget? Has he also noted that the market is off a further 25 points this morning? Does not that first opinion poll suggest the thumbs down for the Budget?

Mr. Mellor : I think that the hon. Gentleman will find that all that is troubling the stock market is the thought of a Labour Government--a fear which we shall be in a position to put out of their heads quite quickly.

Taxation

13. Mr. Andrew Mitchell : To ask the Chancellor of the Exchequer whether he will make a further statement about his long-term objectives for income tax.

Mr. Maples : Our objective is to reduce the basic rate of income tax to 20p in the pound when it is prudent to do so.

Mr. Mitchell : Is it not clear while the Budget has cut the marginal rate of tax from 25p to 20p for 4 million people on modest incomes, the Labour party would cut their take-home pay and threaten their jobs by its absurd minimum wage proposals?

Mr. Maples : My hon. Friend is right. The Budget will help to reduce the marginal rate of tax immediately to 20p in the pound for those 4 million people. The Labour party may not have seen today's Gallup poll, which says that 71 per cent. of those questioned supported and approved of the 20p band.

Mr. Chris Smith : While we are on the subject of long-term objectives, will the Economic Secretary confirm that the Red Book shows clearly that the overall tax burden within our economy has risen in the past 13 years and, moreover, is set to rise further in the next four or five years? The Government have not cut the tax burden--they have raised it.

Mr. Maples : If the hon. Gentleman believes that, why is he about to vote, tonight and tomorrow, to raise the tax burden?

Demand

17. Mr. Knox : To ask the Chancellor of the Exchequer if he will make a statement on the level of total demand in the economy.

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Mr. Mellor : Domestic demand fell by 3 per cent. in real terms in 1991. In my right hon. Friend's Budget forecast, it is projected to rise by 1 per cent. in 1992 and by 3 per cent. in the year to the first half of 1993.

Mr. Knox : Does my right hon. and learned Friend agree that the tax cuts in the Budget will help to restore consumer demand, which is much in need of a boost?

Mr. Mellor : Indeed, and my hon. Friend will know only too well that since October 1990 the income of the average wage earner has increased by 15 per cent. in real terms as a result of real growth in earnings and the continuing fall in mortgage interest rates. That is the basis for my right hon. Friend the Chancellor's forecast that the economy will pick up in line with his Budget statement.

PRIME MINISTER

Engagements

Q1. Mr. Livingstone : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister (Mr. John Major) : This morning I presided at a Cabinet meeting and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today.

Mr. Livingstone : Does the Prime Minister agree that the forthcoming election will be won by the party that can best convince the British people that it can end the recession, reverse the catastrophic decline in investment, and modernise our industry? Does he agree that those issues cannot be debated by sound bites and photo opportunities, but require the party leaders to meet and debate intelligently? As the leaders of the Labour and Liberal Democrat parties are prepared to take part in that debate, is the Prime Minister also prepared to do so--or has he lost the confidence to defend his own economic record?

The Prime Minister : I agree with the hypothesis about leading the country out of recession. The Conservative party will lead the country out of recession and will sit on the Government Benches after the general election. As the hon. Gentleman knows, every party politician who expects to lose tries the debate trick, and every politician who expects to win says no.

Q2. Mr. Simon Coombs : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Coombs : Which does my right hon. Friend think will do more for low-paid people in Swindon--tax cuts, which will increase their earnings and their incentive to work, or a national minimum wage, which will soon strip them of their jobs?

The Prime Minister : My hon. Friend makes an excellent point. The Labour party now opposes measures to help the low paid and puts forward policies that would force low-paid people and others out of work. It is now official : the Labour party wants to put up taxes not only for those on high incomes, but for those with low incomes, too. It strikes oddly against Labour's proposals for a minimum wage, which was allegedly meant to help the low paid. We

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now know that Labour does not want to help them but wants to force them out of work and increase their tax by one quarter.

Mr. Kinnock : The Prime Minister has given a pathetic excuse for not engaging in a televised debate. Since he has been Prime Minister, 50,000 companies have gone out of business, 75,000 families have lost their homes and 800,000 people have lost their jobs. Why will he not debate that record? Is it because he is ashamed of it, or because he is afraid of it?

The Prime Minister : The right hon. Gentleman tries to whip a little fervour into this old chestnut. Bearing in mind how long it takes the right hon. Gentleman to answer a question, the right hon. Member for Yeovil (Mr. Ashdown) and I would be lucky to get a word in edgeways. We have set in place the foundation for recovery, the Budget builds on them and, after the election, we shall carry through our policies.

Mr. Speaker : Mr. Ralph Howell.

Mr. Kinnock rose--

Mr. Speaker : I am sorry--that was entirely my fault.

Mr. Kinnock : I am grateful Mr. Speaker. This is obviously a day for novelties. Whipped chestnuts are a new one on me, but we heard it from the right hon. Gentleman. As he believes that his only difficulty would be getting a word in, I give him an undertaking that I would give him plenty of time. Why does he not join me and the leader of the Liberals and say to the broadcasting organisations, "We have nothing to fear from the British people. Let's have a debate. Let's fix a date. Let's get on with it"?

The Prime Minister : We have better than a debate--we have a general election, at which the case can be taken to the people. If I accurately recall my Shakespeare :

"He draweth out the thread of his verbosity finer than the staple of his argument."

Appropriately, that quote comes from "Love's Labour's Lost"--and Labour will lose-- [Interruption.]

Mr. Speaker : Order. This is the public debate.

Mr. Kinnock : The Prime Minister reads quotations from Shakespeare. Let me give him one from the right hon. Member for Finchley (Mrs. Thatcher) : he is frit.

The Prime Minister : Let me remind the right hon. Gentleman of something else. Throughout this campaign, I shall be holding daily press conferences at which I shall face the national press. I hope that the right hon. Gentleman will this year face the national press, unlike his action during the last general election, when he hid from them.

Mr. Ralph Howell : I congratulate my right hon. Friends the Prime Minister and the Chancellor on their excellent, responsible and far- reaching Budget. I am pleased that maximum help has been concentrated on the low paid, low-income pensioners and small businesses. Does my right hon. Friend agree that, by resisting those changes, the Labour party has proved that it is the party of high taxation of the poor and is unfit to govern?

The Prime Minister : That is undoubtedly my view today, and it will be the country's view by 9 April. At least

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we now know what the Labour party stands for : tax rises for the rich and tax rises for the poor as well. On Tuesday, the right hon. Member for Islwyn (Mr. Kinnock) seemed to have doubts--until the right hon. and learned Member for Monklands, East (Mr. Smith) prompted him with the answer that he was proposing to put taxes back up for the poor. The right hon. Gentleman would abolish the 20p tax band, tax savings more heavily, raise national insurance contributions, and raise tax for 25 million people. He has changed his mind on everything, but the public will not change their mind about him : the right hon. Gentleman sits on the Opposition Bench, and there he will stay.

Mr. Ashdown : Has the Prime Minister noted the reactions of the markets to Tuesday's Budget--the worst fall since the Soviet coup? If he will not tell us in a television debate, will he tell us now why the Prime Minister does not know what every business man knows--that to borrow to invest is the route to success, but that to borrow to spend is the road to ruin?

The Prime Minister : As the right hon. Gentleman knows, no party in history has as good a fiscal record as ours has had in office. Nothing in my right hon. Friend's Budget will not bring the budget back to balance.

Mr. Atkinson : May I draw my right hon. Friend's attention to a letter that I received recently from the managing director of a major retail firm, Beale's, in my constituency, telling me that if a national minimum wage of £3.40 per hour were introduced he would be obliged to consider dismissing about 5 per cent. of his work force--27 of my constituents? Is that not further proof, on top of the disastrous experience of the last two Labour Governments, that the Labour party is no longer the party of the working man?

The Prime Minister : I believe that the Labour party has no solid basis of support anywhere in the country, and there is no doubt about the impact that the minimum wage would have. Everyone in this country knows that, except Opposition Front-Bench spokesmen. It would cost jobs--the jobs of people on low incomes--just as Labour's increased taxation policies would.

Q3. Mr. Cohen : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Cohen : If the Budget was such a success, why have not interest rates been cut immediately, instead of the Chancellor reserving his right to lower them during the general election when the polls go against him? Is not that ploy as bent as a £28 billion coin?

The Prime Minister : As the hon. Gentleman knows, interest rates have been reduced by 4 per cent. in the past 16 months ; as and when it is right to do so, we will reduce them further. For the first time in a generation, our interest rates are almost down to German levels because of the successful manner in which my right hon. Friend the Chancellor has managed our affairs.

Q4. Mr. Dykes : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

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Mr. Dykes : Does my right hon. Friend accept that my constituents will warmly welcome the remarkable cut in income tax and the resulting increase in money, particularly for the less well-off pensioners? Does he agree that our money increases will go to those who need the help most, while Labour's would be dissipated hypocritically, thinly spread and eliminated by inflation?

The Prime Minister : My hon. Friend is right about that. Once the increases announced by my right hon. Friend the Chancellor have been carried through, we shall be spending nearly £700 million a year more than in 1989, over and above inflation, on the less well-off pensioners. Pensioners, too, care about inflation. They know that we are in pursuit of stable prices ; Labour would be in pursuit of higher inflation.

Mr. Clelland : If neither the Prime Minister nor the Chancellor is responsible for the recession, and if the Secretary of State for Health is not responsible for the deterioration in our health services, the Secretary of State for Education and Science is not responsible for the underfunding of our schools, the Secretary of State for Transport is not responsible for the deplorable state of our public transport, and the Secretary of State for Employment is not responsible for high and rising unemployment, who is running the country?

The Prime Minister : In almost every area of endeavour in the past few years, there has been an improvement in services, an improvement in prosperity, an improvement in net disposable income, an improvement in educational opportunity and an improvement in the number of people treated in health care. If the hon. Gentleman has not noticed that, where has he been for the past 12 years?

Q5. Mr. David Shaw : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister : I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Shaw : Does my right hon. Friend accept that the people of Dover and Deal who fought alongside America in world war 2 share the view of President Bush that my right hon. Friend provides superb leadership in an uncertain and dangerous world? Will he also accept that my constituents are concerned that, in this general election campaign, people should be aware that the Leader of the Opposition wanted to pull us out of NATO, to abandon our nuclear deterrent and to destroy-- [Interruption.]

Mr. Speaker : Order.

The Prime Minister : If we had followed the advice of the Labour party and the Leader of the Opposition, we would be out of Europe, out of NATO, and out of respect. We would be living in an underprotected, overtaxed socialist backwater on the edge of Europe. The Leader of the Opposition has been wrong on every substantial issue in recent years. Once upon a time he wanted to tax the rich to help the poor--now he proposes to tax the rich and tax the poor.

Q6. Mr. Beith : To ask the Prime Minister if he will list his official engagements for Thursday 12 March.

The Prime Minister : I refer the hon. Gentleman to the reply that I gave some moments ago.

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Mr. Beith : What would it take to get the Prime Minister to revert to the view that he once held about the advantages of a fair voting system--more careful study of countries that have prospered by it, or the prospect of a spell on the Opposition Benches?

The Prime Minister : The hon. Gentleman knows my view on the voting system. The advocates of proportional representation should understand that it leads to weak

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Government and spawns faction and minority parties. The right hon. Member for Yeovil (Mr. Ashdown), with his international pretensions, knows the damage that it has caused overseas. For all his high mindedness, the hon. Member for Berwick-upon-Tweed (Mr. Beith) argues that case for his own partisan party advantage and not for the advantage of the constitution, and he knows that that is the case.

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