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Mr. Tim Smith (Beaconsfield) : The hon. Member for Newham, North- West (Mr. Banks) says that the lower rate band means nothing. If it means nothing, why was it Labour policy until a few days ago? We knew that Labour wanted to tax the higher paid. We now know that Labour wants to tax the lower paid as well. That should come as no surprise to anyone who remembers the record of the last Labour Government, because that is the best indication of what a future Labour Government are likely to do.

In 1974, only a few days after the general election, the standard rate of income tax was increased from 30 to 33 per cent. In the Budget of 1975, it was increased again from 33 to 35 per cent. By 1976, public sector borrowing had reached 9 per cent. of GDP. It was so huge that the then Chancellor of the Exchequer, the right hon. Member for Leeds, East (Mr. Healey), had to go to the International Monetary Fund and Britain had to be bailed out. It was only when the IMF imposed some discipline on the Labour Government that things started to return to a more sensible arrangement.

It was in the following Budget, in 1977, that the standard rate of income tax was cut from 35 to 33 per cent. As a result, public sector borrowing went up once again. If it was right to do that in 1977, why was it wrong to do it in 1992? We have not been told. If it was right, at the end of the previous Labour Government, to have a lower rate band of 25 per cent., why is it wrong to have a lower rate band of 20 per cent. now? We have not been told.

The hon. Member for Derby, South (Mrs. Beckett) complained that I mentioned money during proceedings on the Finance Bill. I found that rather strange. The Government are committed to reducing the standard rate of income tax to 20p in the pound, and that is a very welcome target. Opposition Members do not seem to

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understand that it is not their money--it is taxpayers' money--and we need to keep to a minimum the amount that we tax people in order to pay for decent public services. That is the object of the Budget. The Budget is a step on that road, and I welcome the Finance Bill. 1.15 pm

Mr. David Winnick (Walsall, North) : It is not surprising that the country's reaction to the Budget has been negative. The country knows what every hon. Member knows--that the Budget was determined not by the country's needs but by the needs of the Conservative party and the Government's wish to be re-elected. It is a negative Budget, and that is why it has been rejected by the country.

Let us consider, for instance, the small increase that was given to pensioners on income support. Any help for pensioners is to be welcomed, but that increase, which has been given to a relatively small number of pensioners, is derisory compared with what pensioners have lost as a result of the decision in 1980 that pensions would no longer be increased in line with earnings.

What have pensioners lost? For a single pensioner, it is £17 a week--I emphasise "a week"--and for married pensioners it is £26 a week. That is how pensioners have been cheated by the Government. Of course, there were also the changes in housing benefit in 1988. That is the year, incidentally, when the top rate for income tax was reduced from 50 to 40 per cent. At the same time, many people on relatively low incomes found that, as a result of the changes in housing benefit, they had to pay far more in rent and poll tax. Pensioners--admittedly single pensioners--in my constituency receive about £60 a week, but they must pay £10 in rent and poll tax. That is totally unfair. Even the increase announced in the Budget will be subject to means testing. Not all pensioners on income support will get that £2 or £3, because they will pay more in rent and poll tax. My region, the west midlands, has been devastated as a result of Government policies. There have been two major recessions. We lost many jobs in the early 1980s. In the first recession, in the early 1980s, 280,000 manufacturing jobs were lost in the west midlands. In the black country, 70,000 jobs were lost.

Far too many people in my part of the world find that they cannot get jobs. If they have reached a certain age group, their chances of getting work are remote. In the metropolitan part of the west midlands--Birmingham, Walsall, Coventry, Dudley, Sandwell, Wolverhampton and Solihull, the very heart of the west midlands--more than 40 people chase each vacancy. There is no sign that there will be a significant change as a result of present policies.

Of course, there has been no help for the construction industry. Eighty-one per cent. of building firms in the west midlands expect less work in the next 12 months and 78 per cent. of such companies expect to employ fewer people. That is the dismal scene. That is why we are so concerned. That is why we wanted a Budget for the country's future and not the future of the Conservative party.

Mr. Barry Sheerman (Huddersfield) : Does my hon. Friend agree that perhaps even in Beaconsfield, the constituency which the hon. Member who spoke before my hon. Friend represents but will not represent for much longer, there are many people who hated or disliked the

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Budget? The hon. Gentleman has been disregarding them for years, but on 9 April he will get the message about the Budget loud and clear.

Mr. Winnick : One thing is absolutely clear : the Government will get the message on 9 April. We have been waiting for the election for some time. When the Prime Minister succeeded the right hon. Member for Finchley (Mrs. Thatcher), he did not have the courage to go to the country. He did not have the courage to go to the country last June or in the autumn. Now, with only three months before he is forced to go to the country, he has screwed up enough courage to call the election. We welcome the election. I notice that, after the Budget, the latest opinion poll shows a 3 per cent. Labour lead. The past 13 years have been a nightmare for Britain and its people and certainly for those who have suffered most such as the unemployed, the low-paid and pensioners. Time and again, in every Budget up to now, they have seen how a Tory Government have benefited the rich and penalised the poor. So we welcome the election. On 9 April, the people of Britain will decide.

When people ask me whether I am optimistic, I immediately go back to 1983 and 1987. Frankly, I do not deny, and my colleagues would not deny, that we knew that we stood no chance in those two elections. When we left the House of Commons, we knew only too well that the opinion polls were right and that, unfortunately, we would see the return of a Tory Government. But the people have now decided. That has been shown in by-elections and local elections. They want a change. They will vote Labour in millions more than they did in 1983 and 1987.

The Government are a dying Government. They will end their life on 9 April. We shall have a Labour Government to determine the progressive policies to rebuild our country.

1.21 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East) : In proceedings on the previous four Finance Bills on which I and my hon. Friends have served, we were able to tackle clause by clause and issue by issue the case that the Government made. We were able to table amendments. Through reasoned argument rather than weight of numbers, we secured change in those measures.

This occasion deprives us of the opportunity to secure any change in the measures before us. Indeed, it deprives us of the opportunity even to table amendments so that we can discuss the changes that we would like to see. That is a fundamentally undemocratic way to proceed. It is made much worse by the intervention by the hon. Member for Chichester (Mr. Nelson), who is not in his place. He said that we should not discuss these matters and that the Finance Bill should be put through on the nod. That shows a complete contempt for the democratic process.

It was not surprising to me that, as the Chief Secretary to the Treasury tried to justify these things, we could smell the flames of sulphur coming up around him. So confident is the Conservative party of the strength of its argument that it is bullying through a Bill of 11 clauses containing all the major tax changes, without allowing any opportunity to discuss amendments. It is putting the Bill through on a guillotine with only two hours of debate. That is not evidence that the Conservative party has great confidence in its arguments.

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I should like to deal with several issues which arise from various clauses, but I cannot, so I shall concentrate on the main question, which is, of course, the lower rate tax band. The hon. Member for Beaconsfield (Mr. Smith) asked why, if the Labour party believed in a lower rate tax band in the past and had a policy proposal to introduce one for the future, it intended to vote against such a proposal now. In asking the question, as he probably most certainly knows, he answers it.

The reason why we oppose the lower rate tax band is not because we are against it in principle. We are not. It is because we are against it now. We are saying that resources should not be borrowed, thereby effectively increasing the public sector borrowing requirement, to fund a tax giveaway. That is effectively what the Government are doing.

Mr. Tim Smith : Will the hon. Gentleman give way?

Mr. Brown : No, I shall not give way, because time is short. The Government argue that somehow the lower rate tax band can be afforded and will be repaid over the cycle. I return to the argument that I put to the Chancellor yesterday. The argument is set out in the Government's Red Book. The Government clearly say that there will be a public sector borrowing requirement for the forecastable future. In other words, there will be a PSBR over the cycle. On the Government's own evidence, the Budget will not be balanced over the cycle. An on-going, and in my view unhealthy, deficit is forecast for the future.

The Chief Secretary to the Treasury had the cheek to say that we had changed our minds. [ Hon. Members :-- "What minds?"] I am talking about the minds. The hon. Gentlemen must keep quiet. What about the minds of Conservative Members? They always opposed the lower rate tax band on the grounds of cost and efficiency. They said that it would be too expensive. They opposed it because they said that they would prefer a streamlined tax system and did not agree with extra bands. They admired the elegance of the two rates, which in time they said they hoped to see reduced to one.

The hon. Member for Beaconsfield argued previously against an extra tax band. He said that the eventual objective of the Conservative party-- although one would not think it from reading the Red Book--was a 20 per cent. basic rate. He used to use that as an argument against lower rate bands. He now stands that argument on its head and uses it--as, of course, he has to--as an argument for lower rate bands. The Conservative party always advances the argument that the tax rate for everyone should come down to 20 per cent. It does not argue for a special lower rate band. Indeed, the right hon. and learned Member for Surrey, East (Sir G. Howe) said when he abolished it that the case for the lower rate band was never clear. However, solely for reasons of expediency, it seems that the case is becoming clear to Conservative Members.

It is reasonable to ask why the Government are introducing the lower rate band. Are they doing it to help the poor? Does anyone really believe that the inventors of the poll tax are doing it to help the poor? There are much more tax-efficient ways of helping the poor. The Conservative party has not adopted those methods.

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The Chancellor has claimed that every average single-earner family will gain £2.64 per week as a result of the Budget, but 72p of that is as a result of the annual indexation of allowances in line with inflation. Again, the quarter of a million people in tax-paying families on family credit gain less. They lose 70p in benefit for every £1 that they gain in tax cuts. Moreover, the increases in excise duties which we are voting through without amendment or any real chance of discussion will cost such people an extra £1.56 per week on average. So the result is a net loss for the low-paid of 76p per week.

In those circumstances, it is the most grotesque hypocrisy for the Conservative party to say that the lower rate band is intended to advantage the poor. It is clearly nothing of the kind. It is not intended to be anything of the kind. It is being introduced for one reason only--to confuse the debate about taxation in the run-up to the general election. It is intended specifically to confuse the debate about the Labour party's tax policies.

The Chief Secretary said that he wanted to hear the Labour party's Budget proposals. Of course, after the general election, the House will have an opportunity to discuss the Labour party's Budget. It will be formally presented to the House, with a proper Finance Bill. The measures will be discussed in detail, not bullied through on a guillotine. My only regret--I have to say that it is not an overwhelming regret--is that the Chief Secretary and the Financial Secretary will not be present to hear our Budget.

1.28 pm

The Financial Secretary to the Treasury (Mr. Francis Maude) : The hon. Member for Berwick-upon-Tweed (Mr. Beith) asked why the important provisions on the unified business rate are not contained within the Bill. They relate to a tax introduced under the Local Government Finance Act 1988 and not under an ordinary Finance Act. They would have to be amended by a separate Act, which we propose to introduce after we are re-elected.

On excise duties, and especially the question raised by my hon. Friend the Member for Erewash (Mr. Rost) in his valedictory remarks to the House, we have increased the differential between leaded and unleaded petrol. We have also increased, in cash terms, the differential between unleaded petrol and diesel. I hope that he finds that a welcome development.

My hon. Friend the Member for Chichester (Mr. Nelson) mentioned car tax. He was right to do so, and I may be able to give some comfort. The reduction in car tax has been widely welcomed and I am happy to say that it has already given a substantial boost to the motor industry. In a few cases, as my hon. Friend pointed out, tax had already been paid by manufacturers and importers at the higher rate before the Budget. Some traders would therefore stand to lose. I am pleased to be able to tell the House that Customs and Excise have introduced an extra-statutory class concession to enable refunds of car tax to be made in respect of chargeable vehicles held by dealers as 10 per cent. tax-paid stock and unsold to final consumers on 10 March 1992. Those refunds will ensure that such vehicles will bear an effective car tax rate of 5 per cent., and will bring consistency of treatment to manufacturers and importers, who opt to deal on a tax-paid rather than a

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tax-free, sale or return, basis. I hope that that announcement is welcome to the House, as I am sure it will be to the industry. Much of the debate has focused on income tax. It is right that it should, and we have been treated to some remarkably dishonest speeches and some contempt by Opposition Members.

The Labour party asks us to believe that it now reckons that 25 per cent. is right for the basic rate of income tax. Labour Members tell us, hand on heart, that a Labour Government would not increase the basic rate of income tax. They say that 25 per cent. is just about right and that they will not put it up, adding, "There is no need to do so. We wouldn't want to do anything like that."

In that case, when we reduced the basic rate of income tax from 33p to 30p, why did Labour Members vote against it? Do they now admit that they were wrong to oppose that reduction? When we reduced the rate from 30p in the pound to 29p, why did they oppose it? Do they now admit that they were wrong? When we reduced the tax from 29p to 27p, they opposed it. Do they now admit that they were wrong and that we were right?

Mrs. Beckett rose --

Mr. Maude : If the hon. Lady is prepared to stand up and admit that, every time that we reduced the basic rate of tax, they were wrong to oppose it, and to apologise to the House and to the country for what the Opposition have done, we will happily accept their apology.

Mrs. Beckett : Sadly, the Financial Secretary will not have the opportunity to repeat these remarks, but I recommend that he reads the book by the Chancellor of the Duchy of Lancaster, who is now chairman of the Conservative party, in which he says that the case for further tax cuts has been much over-egged and that there should not be further tax cuts. At that stage, the top rate of income tax was 60p in the pound and the standard rate was 30p.

Mr. Maude : If that is the best that the hon. Lady can do by way of an apology to the nation, she has some further learning to do. Every time that the Government have properly reduced the basic rate of tax, Labour has opposed it. Now Labour Members say that they have changed and that they do not want to increase the basic rate. Why, then, did they oppose it? They owe the House and the country an apology, but the House and the country will not believe them. They know that a future Labour Government, like every other Labour Government in history, would increase the basic rate of income tax. We know that because they are giving a signal of it today. We are introducing a lower rate for the lower paid, as an important first step towards a 20 per cent. basic rate for everyone. What does the Labour party do? Labour Members say that they will increase the rate, despite the fact that it has been their stated policy to move towards it. They are saying that, although they believe that it is a good idea, they will oppose it because they want to increase the tax on the lower-paid. As every Labour Government increased the basic rate of tax for everyone, a future Labour Government would do the same, because they do not know any other way. They would increase the basic rate of tax for the lower paid, the middle paid and the higher paid--for everyone

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--because they believe that the money that people work hard to earn does not belong to the people. They believe that it belongs to the Government.

Every time a tax is reduced, the Opposition think that it is a giveaway. I have news for them, and the British people who work hard for their money have news for the Labour party : they believe that it is their money, and they want to decide how to spend it and what to do with it. That is what they are telling the Labour party. It being four hours after the commencement of proceedings on the motion relating to the Finance Bill and Further and Higher Education (Scotland) Bill (allocation of time), Mr. Deputy Speaker.-- put the Question already proposed from the Chair, pursuant to Order this day.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.-- [Mr. Greg Knight.]

Bill immediately considered in Committee.

Clauses 1 to 9 ordered to stand part of the Bill.

Clause 10

Charge etc. for 1992-93

Motion made and question put, That the Clause stand part of the Bill :--

The Committee divided : Ayes 325, Noes 143.

Division No. 11] [1.36 pm

AYES

Adley, Robert

Alexander, Richard

Alison, Rt Hon Michael

Allason, Rupert

Amess, David

Amos, Alan

Arbuthnot, James

Arnold, Jacques (Gravesham)

Ashby, David

Aspinwall, Jack

Atkins, Robert

Atkinson, David

Baker, Nicholas (Dorset N)

Banks, Robert (Harrogate)

Barnes, Mrs Rosie (Greenwich)

Batiste, Spencer

Beaumont-Dark, Anthony

Bellingham, Henry

Bendall, Vivian

Bennett, Nicholas (Pembroke)

Bevan, David Gilroy

Biffen, Rt Hon John

Blaker, Rt Hon Sir Peter

Body, Sir Richard

Bonsor, Sir Nicholas

Boscawen, Hon Robert

Boswell, Tim

Bottomley, Peter

Bowden, Gerald (Dulwich)

Bowis, John

Boyson, Rt Hon Dr Sir Rhodes

Braine, Rt Hon Sir Bernard

Brandon-Bravo, Martin

Brazier, Julian

Bright, Graham

Brooke, Rt Hon Peter

Brown, Michael (Brigg & Cl't's)

Bruce, Ian (Dorset South)

Buck, Sir Antony

Budgen, Nicholas

Burns, Simon

Burt, Alistair

Butler, Chris

Butterfill, John

Carlisle, John, (Luton N)

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Cartwright, John

Cash, William

Chalker, Rt Hon Mrs Lynda

Channon, Rt Hon Paul

Chapman, Sydney

Churchill, Mr

Clark, Rt Hon Alan (Plymouth)

Clark, Dr Michael (Rochford)

Clark, Rt Hon Sir William

Clarke, Rt Hon K. (Rushcliffe)

Colvin, Michael

Conway, Derek

Coombs, Anthony (Wyre F'rest)

Coombs, Simon (Swindon)

Cope, Rt Hon Sir John

Cormack, Patrick

Couchman, James

Cran, James

Critchley, Julian

Currie, Mrs Edwina

Curry, David

Davies, Q. (Stamf'd & Spald'g)

Davis, David (Boothferry)

Day, Stephen

Devlin, Tim

Dickens, Geoffrey

Dicks, Terry

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dover, Den

Dunn, Bob

Durant, Sir Anthony

Dykes, Hugh

Emery, Sir Peter

Evans, David (Welwyn Hatf'd)

Evennett, David

Fairbairn, Sir Nicholas

Fallon, Michael

Farr, Sir John

Fenner, Dame Peggy

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