House of Commons Hansard Debates for 14 May 1992

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of the Home Office team and the team which I am sure is now being created in the Department of National Heritage.

I hope that the Churches and others concerned with social conditions will pay attention to the issues--not because it is necessarily right or proper to block the national lottery Bill, but to try to ensure that issues are considered in advance, rather than our simply finding ourselves with the benefit of the money, but with the "disbenefit" that many people's lives will be wrecked by the temptation of instant success.

I pay tribute to the pools industry for the fact that people in general do not stake large sums on the pools. A very few may win large sums but they do not stake too much. Very few people's lives are made difficult because of the money that they have put on the football pools.

Mr. William Ross (Londonderry, East) : The hon. Gentleman mentioned the Churches while he was talking about the national lottery. Perhaps he would encourage his right hon. and hon. Friends in government to take notice of the views of the Churches in the Republic of Ireland.

Mr. Bottomley : My hon. Friend the Minister will have heard that remark. We should retain a focus on the experience of the Republic of Ireland. Some of the promises made there did not turn out to be accurate.

Mr. Barry Porter (Wirral, South) : My hon. Friend is taking an unusually Cromwellian and gloomy view of people. As we already have a national lottery, called the premium bonds, can he tell us how many people have gone bankrupt as a result of buying those?

Mr. Bottomley : My hon. Friend the Minister will have heard the remarks of the hon. Member for Londonderry, East (Mr. Ross). The stake money on premium bonds is available to be paid back. It may be affected by inflation, but as we are now aiming at stable prices, premium bonds may become an even better deal.

Several changes have been made affecting charitable giving. Most have been welcome, and I am sure that others will be suggested. The gift aid schemes and give-as-you-earn schemes need more publicity rather than all those changes in the legislation.

I pay tribute to Mr. Russell Twisk, the editor of the Reader's Digest, who has taken positive action with his colleagues at work, as a result of which a level of giving has been reached under the give-as-you-earn scheme which I doubt can be matched by any other organisation. If more of us were willing to find out how people can come together and give successfully, and to gain charitable donations in new ways, using the tax break system, more of us would give more cheerfully and more often. That would be a good thing.

I am sure that my hon. Friend the Financial Secretary would be disappointed if I did not say something about resolution No. 19. As a stepping stone to that, may I say how important it is for us to pay serious attention to social politics. Social conditions need to be improved ; people need greater opportunities in their lives. Often it is those whom we do not see in our ordinary lives who need those opportunities most. People need the opportunity to earn--too many people are out of work--and the opportunity for their needs over the family life cycle to be better recognised. People need the chance of better housing.

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The building society movement has done as much as local authorities and housing associations over the past 40 years to increase the number of homes available and to improve their condition. We should recognise the role of those who founded the building societies in helping people to create new homes. I hope that now the building societies will turn more of their time and talent towards helping to create more new homes again, rather than simply helping people to buy and sell clean secondhand houses.

It is worth remembering that the way in which the building societies managed to help so much was by getting the savings of so many people. There are between four and 10 savers for every person who borrows. The taxation arrangements made it possible for the societies to expand without there being too much bureaucracy or form-filling for the depositors--the members of the societies. The hon. Member for Newcastle upon Tyne, East gave us a good potted history of the events that have led to resolution No. 19, one of the few resolutions to be introduced since the general election. As my hon. Friend the Minister said, it is clearly a consequence of the Leeds Permanent judicial review. That review has been joined by at least three other building societies that are adversely affected. That conjoint judicial review is a bad precedent. On tax appeals, it is perfectly reasonable to say that if someone wins an appeal against the intention of the Government or of the Inland Revenue, he should necessarily get the benefit only if he appealed along with the person whose case was heard.

It is a very bad precedent to follow what has happened in the Woolwich case. The Woolwich went ahead with a judicial review. Others did not join in, although the Leeds Permanent, to mention just one, was the first to complain strongly about the use of the 1985 legislation in 1986. The societies shared the same lawyers. If the Government were going to say, "We are not willing to accept the risk of the Woolwich winning", they should have introduced a resolution similar to resolution No. 19. They should have said, "We are going to knock out your judicial review by primary legislation". I would not have advised that, but I believe that that would have been a more open approach.

To have drawn a distinction between the Woolwich, the Leeds Permanent, the Greenwich and the other societies affected was a mistake which should be reviewed by the Law Officers, and by the legal advisers to the Treasury and to the Inland Revenue. There should be an open statement that from now on, in the absence of exceptional circumstances, those who gain by judicial review should be treated on all fours with each other. If not, we shall find that there is the extra cost of many people going for conjoint judicial reviews, which would be a waste of money and would give too much money to the lawyers.

One per cent. of the £15 billion will be at stake if the Leeds Permanent is successful in the judicial review. Whatever the outcome of resolution No. 19 and whatever the outcome of the Finance Bill, it would be sensible for the Inland Revenue or the Treasury to have discussions with the building societies that are adversely affected to see whether it is possible to draft a resolution which does not put £15 billion at risk and which could tidy away the issue. Following the point made by the hon. Member for Newcastle upon Tyne, East, no matter how often the Government bring retroactive legislation to the House--this is the third time--they cannot achieve the same object

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at the higher Court of Appeal. There is a good case for taking the issue to Europe where people can put their experience of extra taxation for a period for which they have already paid tax that satisfied the Revenue.

We had a merry-go-round of legislation and I doubt whether it will stop here. I seriously advise the Government to see whether it is possible to find a way out which will resolve the issue with reasonable rough justice.

5.52 pm

Ms. Tessa Jowell (Dulwich) : I join other hon. Members in congratulating you, Mr. Deputy Speaker, on your appointment. I have been elected to represent Dulwich, a constituency in south London a few miles from here. Within it are extremes of prosperity and poverty which mirror the country as a whole.

Dulwich is principally a residential area. What industry there was has mostly long since gone. Employment, being mainly service-based, has been heavily hit by the recession, and unemployment has increased locally by 99 per cent. since March 1990. One person in six is now out of work, and the fear of unemployment is a fact of life. Action to end recession, to combat poverty and to see improvements in health care, raise standards in our local schools, the development of nursery education and nursery care, and the regeneration of our inner cities are all policies for which people in Dulwich voted and which led them to elect me as their Labour Member of Parliament and to displace my Conservative predecessor.

I take the opportunity to pay a sincere tribute to Gerald Bowden, who was the Conservative Member for Dulwich until the election. He served my constituents well and conducted the election campaign with dignity and integrity. He earned widespread respect for his active lobby against the rail link, an issue that I will continue to pursue along with local groups such as Peckham Against the Rail Link on the sure foundation that he laid.

I also record the debt that Dulwich owes to its previous Labour Member, Sam Silkin, the former Attorney-General, who represented the seat for 19 years until 1979. Local people say about him, "Sam was Dulwich". There was nothing more important to him than the attentive and conscientious care with which he addressed the problems and issues affecting his constituents. That is a fine tradition which I will do my best to follow in my work as the new Member for Dulwich. I used to work at the Maudsley hospital in Dulwich, where my brief was to re-establish and resettle in the local community people with long-term and chronic mental illness. I want to talk about a very big question for my constituents--how we care for our elderly people, for people with mental illness and for people with disabilities, and how we get the best from community care.

In Dulwich, one person in five is over 65. The number of very elderly people living alone is on the increase. Serious problems are emerging in the local health service on the care of elderly people which arise partly from the loss over the past three years of 52 beds previously provided for elderly people. The closure of those beds has increased pressure for elderly people to be admitted to other beds, generally acute and surgical. The evidence of that pressure exists in the notorious and scandalous queues of people waiting on trolleys in the casualty department of King's College hospital until a bed in the hospital becomes free.

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The risks to elderly people are especially great. If they are confused, they may become even more so. There are attendant risks of dehydration, and pressure sores may develop even after a relatively short time lying on a trolley. A wait on a casualty trolley may set back the time of recovery. A longer hospital stay may be caused by the difficulties of the hospital's admission procedure.

Some of the elderly people seeking admission to hospital could be looked after at home if the community services were still available. I spoke recently to an elderly lady who had been waiting for six hours to be admitted to King's and who had been lying on a casualty trolley. She had broken her arm, but she did not really need to be in hospital. However, there was no one to put her to bed at home, so hospital was the only safe alternative. Until a year ago, it would have been possible to get a district nurse to put her to bed, but the service has been cut.

Two Government policies are clashing headlong, and that elderly lady is the victim. The hospital needs to reduce its costs as it prepares to become a trust. That clashes with the other Government policy to provide responsive and individually appropriate care to elderly people in their own homes wherever possible.

If the community care policy is to work properly, elderly people must also have immediate access to the medical treatment they need. That is important if they are to have a real chance of being able to cope in their own homes, even with support. An elderly man is, for example, today waiting in a Dulwich hospital for a hip replacement. He cannot manage at home until his hip is repaired. However, by the time that he has his operation, it is likely that he will be so dependent that he will be unable to manage in his own home. Residential care will be the only alternative.

"Going into a home" and "arranging a residential placement" are bureaucratic carespeak which obscures the personal tragedy which the loss of a home invariably represents. Let us pause for a moment and consider what it means to leave one's home for ever and enter a residential or nursing home, however good the care, however much safer and however unavoidable. It means the loss of freedom to run one's life in the way that one chooses ; to make a cup of tea when one wants ; to wear the clothes that one wants to wear ; to cook one's own choice of food and watch the television programmes that one prefers. Those are the freedoms which we properly take for granted and which define us as individuals. That is why it is so important to make the community care policy work and to understand the impediments to its success.

We will hear a lot during this Session about the need to measure the performance of our public services and about the role of the citizens charter. However, we should not be carried away by the creation of a new science to help us to recognise a good service. The delivery of health and community care should be measured against a simple question : hon. Members, as they take decisions about the care of vulnerable elderly people, should ask themselves whether what they are deciding is what they would want for themselves or for their families. If the answer is that it is not, the policy is unacceptable. That simple test should set our standards for the judgment of effective community care.

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6.1 pm

Sir Michael Grylls (Surrey, North-West) : I congratulate the hon. Member for Dulwich (Ms. Jowell) on her first-class maiden speech, which she delivered with great confidence and fluency. We were much impressed by what she said. Her handsome tribute to Gerald Bowden, the former Member for Dulwich who was a much loved and respected Member of this House, struck a chord with all of us. I hope that she will not take it amiss when I say that I am sure that we all hope to see Gerald Bowden back in this place in the very near future. However, I wish the hon. Lady success in her career, and the House looks forward to hearing from her in future.

There are many excellent measures in the Budget resolutions, and I want to concentrate on the changes in the inheritance tax for private businesses. Although Conservative Governments over the past 10 years have greatly reduced the impact of inheritance tax on privately owned businesses, it was still a penal burden which all too often could result in a business having to be sold or taken over by a larger firm. In such circumstances, that independent small business would cease to exist.

My right hon. Friend the Chancellor of the Exchequer should be congratulated on seizing that point and opting for outright abolition. From now on, firms can be passed on intact from one generation to another so that they can grow from one generation to another. When defending the continuation of any form of inheritance tax on privately owned businesses, previous Chancellors, including some Conservative Chancellors, have said that, with proper advice and planning, it was possible to avoid that tax. If the business was handed over within seven years, that tax could be avoided. However, that is the wrong way to consider the issue.

Business decisions that are tax-driven are all too often wrong business decisions. It is wrong to tell entrepreneurs that they can avoid tax if they hire professional tax advisers. It is wonderful that the House is about to abolish that tax and so tell that splendid breed of people from the 1980s--and I am sure from the 1990s as well--who have risked their own capital and effort in building up businesses, employing people and creating wealth, that, when they decide to retire or if they die, the Government will not take a large lump from them in inheritance tax. Those businesses can be continued by future generations of the family or by future generations of the management. They can carry on and expand those businesses. The alteration to inheritance tax in respect of small businesses is a momentous part of the Budget. Strangely, in the excitement of the general election, it was not a central issue. I guess that a Labour Government would not have pursued that tax change. However, when the Budget is examined in years to come, the abolition of inheritance tax for private firms will, in the context of British entrepreneurship, be seen as an important and historic decision. I hope that my right hon. Friend the Chancellor will be encouraged by that.

I want to jump a wide gap from referring to the interests of small firms in relation to the Budget to an issue that affects many of our largest companies and international businesses. I must first declare an interest of which the House is aware.

Nearly seven years ago, during the passage of the 1985 Finance Bill, I tried to describe the efforts of the United Kingdom to eliminate the use by certain states in the

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United States of unitary taxation as it affected British firms. That involved taxing companies not just on their profits within a particular state, but including that company's worldwide profits and other statistics.

That form of taxation still exists in California. It is internationally criticised and is agreed to be a barrier to trade. We want to remove as many barriers to trade as we possibly can. That form of taxation is also a severe irritant to good international relations. The use of unitary taxation has been condemned internationally by the United Nations, the Organisation for Economic Co-operation and Development, the European Community, Japan, Australia, Switzerland and Canada. They have all said that that form of taxation is the wrong way to deal with international business. Even the United States Administration has agreed with that. The strongest opponent of unitary taxation has been the United Kingdom. Although the House had been patient to a fault, I said in 1985 that it could no longer continue to wring its hands about the issue and hope that something would be done. I said that the time for action had arrived.

As you will recall, Mr. Deputy Speaker, the House decided in 1985 to adopt retaliatory legislation in section 54 of the Finance Act 1985, which is now section 812 of the Income and Corporation Taxes Act 1988. I raise the matter today because, seven years after I raised the matter in 1985, I have bad and disappointing news. On Monday, the California supreme court issued an opinion in the Barclays bank case reversing victories obtained in the lower and middle courts. The opinion declared that unitary taxation is constitutional in California.

That news will be a shock to the House and to the Government. Many will say that it is an outrage, and I would agree. It is apparently a very perverse judgment. The House may be surprised to learn that the California supreme court believes that the United States Congress had approved unitary taxation because, although when the Senate originally considered article 9(4) of the United Kingdom/United States double taxation treaty, it failed to pass it by a majority of two thirds, it nevertheless received a clear majority.

The House may be surprised to learn that the California supreme court believes that, when the United States Administration assured Her Majesty's Government that they would use their best endeavours to eliminate the international application of unitary taxation, Congress had already acted to approve the tax. The House may be equally surprised to learn that the California supreme court believes that Congress, by failing to bar the use of unitary taxation, approved the use of such a tax.

I believe that the House will say, of course, that such arguments are nonsense. The California supreme court also believes that only the states of the United States and United States business have an interest in the outcome of the unitary taxation issue. That is profoundly wrong. The court has ignored the real interests of British international firms, which are welcomed in California and other places and are highly successful. It has ignored the real interests of the British Parliament and Her Majesty's Government by refusing to eliminate a method of taxation that is contrary to all

internationally accepted principles of taxing profits where a company or group of companies operates internationally.

We can no longer wring our hands and hope that something will happen. I am sure that, with the agreement

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of Her Majesty's Opposition, the House will want to urge the Government and the United States Administration to seek an urgent review of the Barclays decision in the United States Supreme Court with no further delay.

You will recall, with your excellent memory, Mr. Deputy Speaker, that, during the 1985 retaliatory debate, the then Financial Secretary, the predecessor to my hon. Friend the Member for Loughborough (Mr. Dorrell), the right honourable John Moore, asked rhetorically :

"have we done enough to impress our friends in the United States the importance which we attach to the unitary issue?"

Sadly, tonight the House will say, "Apparently not."

We should send a clear message today that we shall wait no longer, that our patience has finally run out. I ask my hon. Friend the Financial Secretary to convey to my right hon. Friend the Chancellor the wish of the House that he introduce at the earliest possible opportunity the retaliatory clauses contained in section 812 of the Income and Corporation Taxes Act 1988. Only such action, and no lesser action, will convince the diehards in the United States who wish to cling to such an improper use of taxation, which is so damaging to investment and international trade. It is also damaging to Britain's relations with our great friend and ally the United States.

The role of Her Majesty's Government in taking retaliatory action must be finally to convince the United States Administration that Britain will not tolerate one day longer the continuation of this abominable form of taxation which, as I have said, is so damaging. I believe that the House will agree that it is damaging to international trade and investment and to British business in general.

6.13 pm

Mr. Malcolm Bruce (Gordon) : May I also welcome you to the Chair, Mr. Deputy Speaker. It is the first occasion on which you have called me, but I certainly hope that it will not be the last, in view of the length of the Parliament that stretches ahead of us. The whole House is pleased to see you in the Chair.

I also congratulate the hon. Member for Dulwich (Ms. Jowell) on an excellent maiden speech. It struck a definite chord with me, because my maiden speech nine years ago was on health and community care. The House will welcome her clear expertise on the subject and her obvious commitment to it. Tomorrow I shall have a meeting at one of my psychiatric hospitals which is about to become a trust. I shall be able to report that another Member of Parliament is well able to argue the case. I congratulate her and look forward to many more speeches from her.

I support what the hon. Member for Surrey, North-West (Sir M. Grylls) said. I have signed numerous motions on the issue that he raised. I wholly agree that it has gone on for far too long. The one word that he did not use was "unfair". Unitary taxation is downright unfair. Indeed, if everyone operated that system, world trade and business could grind to a halt. It is preposterous that people should tax the benefits of activities that have taken place halfway round the world and have no connection whatever with the receivers of that tax benefit. I agree with the hon. Gentleman that we need to press for urgent action on that matter.

By its nature, this is an esoteric debate. I do not even pretend to be qualified in the technical details of some of the resolutions on the Order Paper, but I want to address

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several general and specific points. The first resolution is a catch-all to stop us from trying to change the Budget in any fundamental way. But one or two points arise. It is worth going back to the Queen's Speech and asking the Financial Secretary a question. The Queen's Speech says that the Government

"will reduce the share of national income taken by the public sector and balance the budget over the medium term, reducing taxes when it is prudent to do so."

How the hell will the Government do that ?

Mr. Dorrell : In exactly the same way as we did it through the 1980s.

Mr. Bruce : That does not seem to me to be very likely.

Mr. Dorrell : We did it.

Mr. Bruce : Yes, but in different circumstances from those which the Government now face. The question that I was about to ask--

Mr. Nicholas Brown : Will the hon. Gentleman give way?

Mr. Bruce : Give me a minute.

The Government have produced forecasts for the medium-term strategy. Already, over the period 1990 to 1993, forecast repayments of £10 billion, £6 billion and £3 billion have become deficits of £0.5 billion, £14 billion and £28 billion. So over three years, the Government are just £61.5 billion down on their short-term forecast, to say nothing of their long-term forecast.

Indeed, at no time on the horizon can one see the Government achieving a balanced budget in anything that would normally be described as the medium term.

Mr. Nicholas Brown : The Financial Secretary's intervention was revealing. The total tax take from the British economy went up during the 1980s, not down. So the Financial Secretary is effectively announcing further tax increases this evening.

Mr. Bruce : That is a point to which I intend to refer. I freely admit that my speech is somewhat fluid and unstructured, so I can pick a piece out which I intended to come to later.

During the election, I was canvassing in one village in my constituency when I was asked a direct question by a gentleman who said, "I am on disability benefit. That is my only source of income. All this talk about tax cuts--what good is it to me? I do not pay income tax. But I do pay the increase in VAT, poll tax and all the other taxes imposed on me by this Government, who continually claim to cut taxes." For people like that constituent, taxes have done nothing but increase steadily under the Conservative Administration. Indeed, as the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said, the disparity between the tax burden on the better-off and that on the less-well-off has widened. The Government should consider how they can address that. A simple political comment is making many of us think, and I hope that it will make the Government think, too. A Government who can be continually re-elected with 42 per cent. of the vote can afford perhaps to ignore the poor and underprivileged, because such people do not have enough votes to defeat the Government.

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I hope that the Government will not ignore the poor and will not allow the imbalance to continue. If they do, they will be setting up Britain to become a South American country, where the poor become very much poorer and the rich become very much richer.

Mr. Dorrell indicated dissent.

Mr. Bruce : The Financial Secretary is shaking his head. I do not suggest that that is the intention of the Government, but they are setting objectives in terms of political promises to the people who elect them which can be paid for only by squeezing the people who do not. It is high time that we sought to secure some cross-party consensus to address the problem of people such as my constituent and ensure that they do not face continuing reductions in their real standard of living, given that it is much lower than the average across the country.

It is unfortunate, perhaps, that resolution 1 will prevent us from introducing one or two pieces of "mischief" that might discipline the Government. They have failed to predict and manage the public sector borrowing requirement, and £60.5 billion is a monumental discrepancy. Perhaps we should set a target for what the Government think the PSBR is and introduce a requirement that, if they overshoot it, they undertake to raise the difference by increasing taxation or cutting services. That would impose a sharp discipline on all Government Departments to be more accurate in their forecasting and more close in their management and acceptance of responsibility for the state of the economy.

Businesses in Scotland, and especially small ones, feel that it is unjust that they have to pay £450 million more in business rates than they would pay if they were taxed on the same basis as businesses in England and Wales. I have already raised this matter with the Minister in an intervention, and I shall certainly take it up with Scottish Office Ministers. The Government have said that they are prepared to eliminate the discrepancy, but they have not said how long that will take. The measures that they have introduced suggest that the process is more likely to take 15 years than the lifetime of this Parliament. I ask the Government to give themselves a much shorter and sharper target and provide Scottish business with the chance to compete on an equal footing with businesses in England and Wales.

I shall raise a legitimate and important issue that I take up in all Budget debates. I shall continue pressing it until there is a response from the Government. I make what I consider to be a legitimate plea on behalf of the Scotch Whisky Association. The unique character of Scotch whisky is that it has, by law, to be matured for three years before it can be marketed as Scotch. I have been told on numerous occasions that this piece of legislation was requested by the industry because it wanted to secure the quality of Scotch and its distinctive character and maturity. It was requested, however, in 1913, and those who requested it are probably all now dead. The industry should be given the chance to engage in a reassessment.

Scotch whisky constitutes one of our major export industries. It is an important employer, especially in the more remote rural areas of Scotland. It is important also, of course, in some urban areas, where there are substantial bottling plants. The industry is at a definite disadvantage compared with its counterparts which produce other spirits in the United Kingdom or, more importantly,

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produce them elsewhere in Europe. Its request is that it should be able to have tax relief on the statutory requirement to stock whole for three years.

The problem arose with the abolition of stock relief some years ago. Governments never admit publicly to mistakes of this sort, but I am assured that, when the then Chancellor of the Exchequer abolished stock relief, he did not realise the implications for the Scotch whisky industry. Ministers must know now, because the message is brought home to them every year. There are serious implications, and it is a matter of genuine concern. I believe that it is a legitimate interest, and I hope that Ministers will take it on board. Were it not for resolution 1, I would be motivated to table an amendment to the Finance Bill.

Do the Government have real control over the direction of the economy? Is the rather spurious accuracy of Budget figures anything more than a fantasy or fairy tale that reflects what the Government hope will happen rather than a solid belief? The figures are based on the presumption that there will be a 3.5 per cent. growth rate per annum, and I do not know many independent commentators who have the confidence to believe that that is likely to be achieved. I hope, of course, that it is achieved. I have no desire to see anything other than success for the recovery of the economy. At the moment, however, ministerial speeches do not create wealth, and the wealth-creation process suggests that the target, which is necessary for the fulfilment of the Government's budget, is not being reached. There is a relationship with the unemployment figures. Unemployment has increased by 29,000, and the total is 2.7 million. I have been my party's employment spokesman in the past, and today I went the round of the studios with the shadow employment spokesman. We tried to find some new adjectives to describe the situation but it is difficult to make interesting and original comments on the monthly figures. It is clear that unemployment of 2.7 million is causing a great deal of misery for many families. It is not good enough to ignore those people because they are not part of the 42 per cent. who voted for the Conservative party. I know that some of them did vote Conservative, but heaven knows why.

Mr. Dorrell : They did so because they want jobs.

Mr. Bruce : They want jobs, but they have not been successful in obtaining them. In a way, that is neither here nor there. People are entitled to vote for any party according to their own judgment. Unemployment is a tragedy and a waste for those who find themselves in that position. More to the point, it is a tragedy and a waste for the entire community. Those who are employed should be outraged at having to carry the burden of the many who are not. It is estimated that each unemployed worker costs the Exchequer £8,900 a year. If it were possible to reduce unemployment by 1 million--at 1.7 million, it would still be high--we would be able to generate £9 billion of revenue. Far be it from me to cross the Floor and determine the Government's priorities, but I would point out that the Government's objective is a standard rate of income tax of 20 per cent. If 1 million fewer people were unemployed, they would be able to achieve that at a stroke. Yet there is no evidence that the Government have the necessary will or imagination to set the necessary target.

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I would have liked to see measures in the Budget designed to stimulate real jobs in new areas and new industries. We heard this morning that a royal ordnance factory in Lancashire is to shed 450 employees. We all accept that the peace dividend means substantial cuts in defence spending with consequential job losses, but it must be borne in mind that it is an employment area of high skill and high technology, and that traditionally it has a high export value. If we no longer have a need for its specific products, we surely have a need for the skills and capabilities of its employees and for the revenue that they could produce. We must find ways of reorienting and retraining them.

It is a matter of beating swords into ploughshares in modern, high-tech terms. We must try to ensure that the technical capabilities of the defence industry are introduced into new areas, so that skills are not lost and wasted and export opportunities are made secure. I would like to believe that the Government would accept that they have some responsibility to do that. The tax mechanism may be a useful component for introducing imaginative ways of stimulating special investment, long-term investment, research and export opportunities in areas where there is new growth. Perhaps there could be training support for those who have skills but need to be reoriented.

Sir Michael Grylls : Perhaps I should not intervene, having only just resumed my place, but I wish to say that the hon. Gentleman is on to an important point. As he has said, it is essential that firms in the defence industry switch to civil work. If the hon. Gentleman studies the record of the past two years, he will learn that this is beginning to happen. Much more of the turnover of British Aerospace, Lucas and other large companies is in civil work.

I part company with the hon. Gentleman when he says that there is an active role or pro-active role for Government. It would be better to keep corporation tax as low as possible and leave it to the brains, skill and entrepreneurial expertise of those who are responsible for firms in the defence industry to seek out new markets in the civilian sector. When Governments have tried to intervene, they have not been very successful.

Mr. Bruce : The hon. Gentleman may be surprised to hear that I do not disagree with anything that he has said. I was not suggesting that the Government should step in and act ; I was suggesting that the Government should consider ways of ensuring that the private sector effort is given an extra spin by giving it some short-term additional tax incentive, tax relief or training boost to enable it to pick up the opportunities and make the switch more quickly than would otherwise be the case. I was not suggesting that the Government should say what the switch should be or second-guess the markets. We are at one on that issue. I am glad that the hon. Gentleman intervened to give me a chance to explain that.

I have tried to link my points to my concern that the Government are not in control and do not know what is happening. They are on a wing and a prayer, and are well out of touch with their own forecasts. I have suggested how they might achieve their targets. I remain puzzled by the argument for the reduced 20 per cent. rate band. I will not dig out the papers now, but I have here endless speeches from Conservative Ministers saying that it was a daft idea, which was why it was

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abolished in 1981. It is not efficient at delivering its objective, which is to help the low-paid. [Interruption.] If the Minister is saying that that was a Liberal idea, I accept that, too. Every party has tried and opposed the suggestion on different occasions. I make no virtue of that. This is not suddenly a bright and consistent idea.

The reduced 20 per cent. rate band is not the most efficient way of simplifying the tax system, which is one of the Government's objectives. It adds complexity. Some people estimate that it would mean 800 extra staff ; the Chief Secretary to the Treasury estimates 300 extra staff. It is not as effective as raising thresholds and targeting benefits, which would help to narrow the differentials that the Government have succeeded in widening over the years. I accept that to some extent the Government are committed to the band. We have had an election, they have won and they must go ahead with it. However, I hope that they will give real thought to how they can simplify and structure the tax system in a way which provides incentives, but not at the expense of the very poor and the low-paid. I hope that the Government try to strike a balance between stimulating business and achieving social justice.

That should be the aspiration of the entire House, regardless of one's political base. It would be best if we got out of this ideological conflict and genuinely tried to find ways of achieving that more balanced result. Clearly, this Budget will not do that because of the Government's commitments, but I hope that the next one will.

6.32 pm

Mr. John Austin-Walker (Woolwich) : I, too, congratulate you, Madam Deputy Speaker, on your election to your office.

My immediate predecessor had a reputation in the constituency as a hard- working constituency Member of Parliament. I hope to follow in that tradition as the representative for Woolwich.

As the new Member for Woolwich, it is impossible for me to stand in this Chamber without a sense of history. When I first moved to Woolwich in 1966, Plumstead school was at the bottom of my garden, which is now in the constituency of the hon. Member for Eltham (Mr. Bottomley). On the wall there was a plaque which said that on that spot Mr. William Ewart Gladstone had made his last speech to his Greenwich constituents. I doubt whether many Members of the House can claim to have had a speech made by a Prime Minister at the bottom of their garden.

Outside the Chamber there is a bust of another of my predecessors. Younger residents of Woolwich may know of Ernest Bevin only as the name on one of the Woolwich ferries. Parliamentarians will probably remember him as one of our great Foreign Secretaries. I prefer to remember him for his origins and trade unionism : born into poverty, often hungry and admitting that he sometimes had to steal for food as a young boy, he permanently identified with those whose experience had been the same as his. It has been said of him that

"unlike many self-made men of the Victorian age he never had any wish to climb out of his own class. He preferred, instead, to help it to rise and to rise with it."

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In 1908 Ernie Bevin led the Right to Work movement. Given the absence of any reference in the Gracious Speech to the problems of unemployment, perhaps now is the appropriate time to relaunch that movement.

Unemployment in Woolwich and Eltham has risen 170 per cent. over the past year and more than 400 per cent. since 1979, with an overall unemployment rate for the constituency of Woolwich approaching 25 per cent. Around the town centre the level of adult male unemployment is 40 per cent. and in the Arsenal ward it is a staggering 60 per cent., the highest in London. The lack of any measures to redress that situation in the Government's programme is deeply distressing both for those already unemployed and for the many more in Woolwich who fear for their jobs and security.

Young people face the most difficulty and poorest prospects. The unemployment figures reveal the complete failure of the Government's training policies. Although the Government claim to give the highest priority to helping young people who have been out of work for more than six months, it is precisely in that group where the rise in unemployment has been highest. In the borough of Greenwich 790 people under 18 are registered, available and looking for a training place. There are currently 12 vacancies. Unemployment is costing the country more than £20 billion a year--money which could and should be invested in our schools, hospitals, public transport and training. Woolwich has been particularly hard hit by the decline in jobs in manufacturing industries and the lack of training and skills opportunities for young people. London has the lowest percentage of apprenticeships in the country and the skills shortage will soon become apparent, if and when the recovery begins. Figures for economic performance published in January by my hon. Friend the Member for Fife, Central (Mr. McLeish) show that Woolwich and Newham, North-East are the hardest hit constituencies in London. Woolwich needs policies that recognise the need to rebuild our manufacturing base and offer opportunities for young people in training and education.

Of the 10 most deprived wards in Greater London, three are in and around Woolwich town centre. For 300 years the area was the home of and provided labour for the Royal Arsenal. At one time the arsenal employed 80,000 people and was the largest single factory in the United Kingdom. If ever there were an example of where the skills of people in the defence industry have been lost because of a lack of provision for retraining, it is Woolwich. The number employed in the arsenal today is down to 1,300 and those jobs are shortly to go. The 300-year-old role of the arsenal as a huge primary industrial production centre has come to an end, but tremendous opportunities can be realised with Government help. The closure of the last remnants of the arsenal will release 75 acres of development land in the town centre. The arsenal site contains an extraordinary heritage of buildings of international significance, at least one by Vanbrugh. Yet the Ministry of Defence has allowed many to fall into such a state of dilapidation and decay that an estimated £60 million may be needed for basic restoration of those historic buildings which have lain hidden from public view behind the arsenal wall. That any property owner could allow such a heritage to fall into disrepair is a tragedy ; for the Government to have done so is a crime. I invite the Secretaries of State for Defence, for

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