House of Commons Hansard Debates for 2 Jun 1992

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not merely the pay-as-you-earn system but national insurance contributions. If the two were integrated into a single system, there would be a considerable saving in costs to small businesses, as well as a saving on the £1.2 billion that the Government spend on administering the present system.

In Committee, we shall have to address increasing anxiety about the way in which small businesses are treated by the Inland Revenue. The Sunday Times has highlighted some of the interviews that take place in which taxpayers-- especially small business taxpayers--are not fully advised of their rights and interviewed about their tax obligations but find that ignorance of their rights is presumed upon. Tax inspectors, often pressured by their training and the promotion system to take a rigorous attitude, put a great deal of pressure on taxpayers and give the impression that taxpayers are presumed to be guilty, when in law they must be presumed to be innocent. There is an increasing file of cases, many of which have been brought to my attention, in which interviews seem to have been conducted in a hostile and unpleasant manner. In Committee, we shall need to inquire what is happening on that front and whether, for example, more details could be made public about the advice and training given to inspectors who carry out the work. They seem to be put under increasing pressure to achieve results by questionable means.

A measure which might have been included in the Bill, and which I was surprised not to find, was included in the Conservative manifesto. It is the proposal to exclude home owners from paying tax on the rent of rooms in their home. It is a good scheme, which closely echoes something in our manifesto at the previous election. It is a piece of borrowing that I would encourage and welcome. If people have surplus capacity in their home, it seems a good idea to encourage them to make it available. It would be particularly helpful to young people with housing problems to relieve them of a tax burden. Often it is not only the tax burden that causes the problem. The problem is that people have to become involved in the tax system simply because they rent one room in their house for perhaps a limited period of a few years when they do not need it for their own family. It is a good idea to relieve them of that problem, and I would like to know from the Government what progress they intend to make on it.

The Government could also say more about stamp duty. When the stamp duty relief was announced, we all predicted that it would expire at just the time when signs of recovery in the housing market were too few to make it sensible to impose an additional burden at that point. Sure enough, that seems to be what has happened.

If there is one particularly unwelcome measure in the Bill, it is the third piece of retrospective legislation in respect of certain building societies. The Leeds building society has already been subjected to retrospective legislation. The retrospective proposals in the Bill appear to be designed to frustrate a court action that has already been entered into the lists. They thereby contravene a principle set out by the Economic Secretary last year, when he said that it would have been wrong to try to change the law during a court case. He said that the Committee would have been rightly shocked if the Government had sought to change the law between appeals, and that that would not have been right. Yet here we are engaged on a third piece of retrospective legislation on building societies precisely to prevent a court case from settling the matter.

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All Governments should be stopped in their tracks when they consider engaging on retrospective legislation, yet here we have it for a third time on this matter.

A further proposal for retrospective legislation is not in the Bill but the Government have announced that it will be introduced by an amendment. It involves life insurance companies. We shall examine it with particular care as the Government engage in their habitual recourse to retrospection in almost every Finance Bill.

I welcome some features of the Bill. Clause 59 increases the rates of relief against inheritance tax, as has already been mentioned. I also welcome the farmland exemptions. In the case of farmland, it is important to get the balance right so that we do not open a door which invites investment solely for the purpose of securing a tax exemption. That would damage agriculture. So far as those engaged in the industry have been able to assess, the clause seems to get the balance about right. It is a point that the Government must watch carefully.

The objective is obviously to help to keep farmland in families who have farmed it as a viable business proposition : it is not to open up a new door to people looking for a tax shelter who, in the process of doing so, inflate land prices to the general detriment of agriculture. We must be sure that that balance is carefully kept. The provisions on the married couple's allowance are welcome. Again, they are provisions which we have sought for some time. In the past, the Government resisted them on the grounds of administrative cost. I also welcome what the Government have done on gift aid, which again follows an amendment that we moved last year. We wanted to go further, but at least the Government have made a move, and we welcome it. The Bill is far from the most exciting Finance Bill that has come before the House. I hope that its Committee stage will not drag on too long. It will allow for the exploration of several points that I have mentioned this afternoon. There will be many other occasions on which the general failings of economic policy which have rather dominated today's debates can be explored.

5.59 pm

Mr. John Horam (Orpington) : As you will be aware, Madam Deputy Speaker, this is not a maiden speech, but speaking for the first time as the Member for Orpington it would be remiss of me if I did not pay tribute to my predecessor, Mr. Ivor Stanbrook, who had been the Member for Orpington for 22 years. Those who remember Ivor will recall his trenchant views on many subjects, from the family to Northern Ireland, and his willingness to express them both inside and outside the House with strength and vigour. In that sense he was a true parliamentarian and was highly regarded as such. He was also highly regarded by the people of Orpington.

Historically, Orpington was a part of the county of Kent, but due to some ill-advised local government changes by a previous Conservative Government, for the past 25 years it has been part of the London borough of Bromley. For the most part, my constituents earn their living by commuting into central London and in particular to the City. Their first concern, therefore, is the health of the British economy, which is why I thought it appropriate to make my re-entry speech on the Finance Bill.

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My constituents are equally concerned about British Rail's performance when they make their journey into central London, but that is a topic for another occasion.

The Government rightly gave high priority in the Queen's Speech to reducing inflation further, but they, and we, will not forget that this recession began in mid-1990, and we have not seen the end of it yet. In their natural concern to reduce inflation further, I hope that they will not push it to the point where the recession is prolonged unnecessarily. Any Government's economic policy must maintain a balance between inflationary dangers and deflationary problems. While we concede that we went too far in pushing growth and inflation in the late 1980s, I do not want the Government to make the equal and opposite mistake and to persist too long with deflationary policies, given the present state of the economy.

I agree with my right hon. Friend the Member for Shropshire, North (Mr. Biffen), who said that we have an opportunity to lower interest rates and that we should press it. I shall not follow him down the path of Lubyanka and lederhosen, but will simply make the straightforward political point that, while we understood that, for economic and political reasons, the Government could not take risks before the general election, they have forced themselves out of that trap by their skill, and are in a much stronger position. They can take risks, and they should pursue every legitimate opportunity to lower interest rates. I do not believe that we will for ever be bound by the German view of what is right for Europe, and that is becoming the more rational appreciation in the markets and among economists My second point relates to public expenditure, on which my view is simple : public expenditure has risen, is rising and should be diminished. As my hon. Friend said in his opening remarks, while the Government reduced the share of GDP taken by general Government expenditure during their period in office from 45 per cent. to a low point of about 40 per cent., it is now creeping back towards 43 per cent. That is too high. One argument is that the increase results partly from the recession. Unemployment benefit has increased and as a result public expenditure has increased, but, ineluctably, it will automatically reduce as we emerge from recession.

As the prospects of coming out of recession recede--GNP is already being revised downwards for this year--the problem will remain with us. There again, the Government have an interest in striking the right balance between restarting growth and dealing with public expenditure.

No doubt the Government would also say that part of the public expenditure total was engineered deliberately to flatten out the recession--if public expenditure had not been as high, the recession would certainly have been worse. That argument is all very well at that point in time, but when one begins to emerge from recession the position looks different.

Present fiscal policy is too lax and monetary policy too tight. That is what is wrong with the balance of Government policy. They need to adjust the balance as soon as they can, in the interests of sensible growth.

The Government have achieved a low-income-tax, low-corporation-tax economy. Our continental competitors take far more of their GNP in taxation than we do. We have opened a gap between us and them. That is one reason among many --others are a stable Government, an open trade policy and access to the Community--why we

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are making this country a superb place in which to do business. That opportunity is open to us and should be pursued.

However, even if we reduce general Government expenditure to 40 per cent. of GNP, other countries are still below us, such as Japan, where it is 32 per cent., and the United States of America, where it is 37 per cent. America still has a good economy despite all the rubbish which is written about it. They will continue to open the gap, as will many other Asian countries. We have to press further in that direction.

The Chief Secretary wrote a pamphlet not long ago describing his vision of an ultra-low-tax economy, and I share that vision. That is the way forward. It can create the virtuous circle--with lower taxation, one will achieve growth, and although public expenditure declines as a proportion of GDP, absolute expenditure rises in real terms, as my hon. Friend the Financial Secretary said. Although past Conservative Governments have increased the standard of living of the average family by a monumental proportion, in comparison with Labour Governments, they have also kept public expenditure rising at a rate not far short of expenditure under Labour Governments. They have done the two-card trick.

That is the course that I recommend to my right hon. Friend. The Government will know when they have reached the point of success because, precisely at that moment, 365 academic economists will undoubtedly write to The Times to say that their policy is wrong and will never come right, and that the economy can make no progress with that approach. Perhaps that will not happen this time. The academics may have learnt their lesson. However, I am afraid that academics do not usually learn their lesson and are too arrogant to keep quiet.

Perhaps this time, 365 distinguished members of the public sector will condemn the Government, led by the governors of the BBC, the British Medical Association and others, no doubt after a reflective lunch at the Luckham Park or some other watering place. I hope that, when that moment comes, the Government will have seen the success of those policies and will stick to their guns.

6.7 pm

Mr. Ken Purchase (Wolverhampton, North-East) : I am grateful that you have called me, Madam Deputy Speaker, and, in rising for the first time in the House, I congratulate you on your new position. As you would expect, I extend those congratulations to my fellow west midlander, the new Speaker. In Wolverhampton, North-East many people were delighted at the appointment of Miss Betty Boothroyd to the Speaker's Chair and felt that it brought honour to the west midlands.

I know that it is customary to pay regard to one's predecessors and it gives me considerable pleasure to remind the House of John Baird, who finished serving as a Member in 1964. I recall him visiting my boyhood home during his constituency duties. Later, when I was a young and active trade unionist, I remember the great pleasure of listening to John Baird on his public engagements. He was a great and considerable advocate of equality. I recall reading that, when asked about the honours list, he said, somewhat pithily :

"I joined the Labour party to make workers of Lords and not Lords of workers."

That was a considerable statement at the time.

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Following John Baird came Rene e Short, who had a distinguished parliamentary career, not least as Chair of the Select Committee on Social Services, which produced a number of important reports. One report, with a touch of de ja vu, dealt with the hours of junior doctors, and another seminal one covered maternity services in this country. That report is still widely quoted and much respected, and Rene e's work on it will be long remembered.

My immediate predecessor, Mrs. Hicks, will be recalled more for what happened to the people of Wolverhampton, North-East during her term in the House than for what she did. However, I know that she had a sincere understanding of her constituents' needs and that she worked hard during her time in the House to ensure that those needs were met However, it is for what happened during her tenure, particularly the unremitting increase in the number of unemployed in Wolverhampton, North-East, for which Mrs. Hicks will be recalled. On average, 30 people were chasing every vacancy. In the past two years in Wolverhampton, between 50 and 60 unemployed folk have been chasing every vacancy.

In the same period, the social security system was changed. It is no coincidence that there was a tremendous increase in the crime rate at the same time as the young, long-term unemployed experienced such difficulties in finding remunerative work. Those factors are connected, although other considerations must be taken into account. In the context of changes in the benefit system, many people may share my concern that there has been a poor take-up among elderly people of the benefits available to them. Many of them fear that, if they go to the benefit office for support or for a grant, they will end up with a loan that they cannot possibly repay. I ask hon. Members to recognise that that particular aspect of the benefit system is bound to fail because it does not take into account the great fears that many pensioners have. They share similar fears to their parents who, in the 1930s, were worried about the workhouse and the debtors' gaol. Pensioners still hold such fears, and if the benefit system does not take proper account of them it is no surprise if the take-up of benefit by elderly people is not particularly high.

In my constituency, great distress was caused to a partially sighted man of 70 years who lost what little money he had to take him through a particular week, and faced a weekend with no food in his flat. He attempted to sell bits and pieces of his belongings to make ends meet before his next benefit cheque arrived, but failed to do so. He went to the local benefit office and was offered a loan of £10, but he refused to accept it because he felt that he would be unable to pay it back as his income for the following week would be exactly the same and there was never anything left to spare. We do not want such cases to arise in Great Britain and I urge that benefit officers should be told that grants rather than loans should be given to pensioners in almost every case when an emergency occurs. The period in which my predecessor, Mrs. Hicks, was in the House was marked by a local authority housing waiting list which grew to its highest level for 25 years. Of course, there are some social reasons for that--such as the unfortunate breakdown of marriages and the number of young people pursuing tenancies in their own right. However, at the heart of the growing waiting list problem lies the fact that local authorities have not been able to

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build for need. When that is combined with the fact that many young people starting out fear unemployment and do not take the plunge into buying a house, it has led to considerable housing difficulties in Wolverhampton and elsewhere in the country. Those difficulties are rooted in the fact that local authorities are unable to build for general needs.

Many couples face frustration in their hunt for decent housing. I do not want to witness the tragedy of little children spending their formative years in high-rise flats and five-storey walk-ups. Councils should be able to build for general need so that every young couple has an opportunity to rent or buy property at a price that they can afford and children have an opportunity to play in gardens, as is their absolute right.

It has been my intention that the thread running through my speech should be related to employment--the wealth that it creates and the misery that the lack of it causes. One of the growth areas for employment in recent years has been the worker co-operative movement, in which I have been proud to play some part. At the same time, mainline co-operative societies have faced strong competition, but they have met it by merging and growing. Unfortunately, the tax position of those societies has worsened since 1984 so that the growth in their profits has been overtaken by the growth in their tax burden.

I am sure that that was not the intention, but as the societies have grown and amalgamated to face the competition, they have lost the benefit of the small firms remission of corporation tax. I urge the Government to consider that with some sympathy because the first priority of co-operative societies is not profit maximisation : they depend on retained profits and borrowing to expand and to meet the needs of the shopping public. I believe that they should be encouraged, rather than discouraged as they have been by the loss of the remission.

The reasons that remission was given to co-operative societies are still valid today as co-operatives have an important part to play in the development of employment in our communities. Statistics show that, in 1990 -91, such societies paid a much greater rate in tax than they earned in profits. That matter should be addressed by the House.

6.16 pm

Mr. Alan Duncan (Rutland and Melton) : I am obliged to you, Madam Deputy Speaker, for giving me the opportunity to utter my first words in the House.

I am pleased to speak in the same debate as my right hon. Friend the Member for Shropshire, North (Mr. Biffen), whom I have watched for many years with great respect. Even though he has momentarily left the Chamber, I am also glad to follow my constituency neighbour, the Financial Secretary to the Treasury, who I am pleased to see so happily installed in his new job. I congratulate the hon. Member for Wolverhampton, North-East (Mr. Purchase) on his maiden speech, and I look forward to sparring with him across the Chamber on many future occasions.

Rutland and Melton is an oasis of traditional England between the M1 and the A1. It is surrounded by towns such as Leicester, Nottingham, Grantham-- perhaps not so much a town as a shrine--Stamford and Corby. The agricultural interest remains important and, although it

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may not please some hon. Members, hunting remains not only popular, but a living force for the interests of conservation.

The constituency also has light industry. Indeed, if one owns a pet, the chances are that one will have fed it with a brand name from Europe's largest canning factory in Melton Mowbray. The constituency also includes Syston and Thurmaston on the edge of Leicester, and the spectacular vale of Belvoir.

Perhaps the constituency is best known for containing the valiant county of Rutland. I took a look at the history books, one of which says :

"although Rutland had a distinct status in the Anglo-Saxon period, its rise to the status of shire and the dignity of a sheriff was the product of a confused process in the twelfth century".

That same book states that the 1974 local reforms

"removed elements of disorder on the map, such as the foolish county of Rutland."

I say of that author, the more fool him.

Those local government reforms created a hateful mix of the urban and the rural. They trampled over traditional boundaries and ignored community identities. Feeling in Rutland still runs very high indeed and most people want the return of unitary status for the county. And why not? If the cost is not punitive, they should be entitled to the status for which they are asking. I am pleased to say that, thanks to legislation passed by my party, including the Local Government Act 1992, and with the Royal Commission just starting its work, Rutland is given a chance. I implore hon. Members to take Rutland's case seriously and not to dismiss it as a quixotic campaign or to disqualify Rutland simply on the grounds of its size.

I take up the cudgels for Rutland and Melton behind a line of distinguished parlimentarians. For a long time, Rutland was represented by Sir Kenneth Lewis. He still lives in the constituency, and I sometimes think that he has as many friends as there are people in the county. He is a popular figure, always ready with some fatherly advice and a good yarn to tell.

But for 18 years Melton, and then Rutland and Melton, were served by Michael Latham. From a personal point of view, I could not have been more fortunate in the person I shadowed for two years as prospective candidate. All in the area talk of the diligent and conscientious manner in which Michael Latham handled constituency problems. He entered the House with a particular expertise in housing, and Ministers came to value his advice. He developed a reputation for being independent-minded. He was not one to seek office at all costs.

His religious views, and his opinions on the state of Israel particularly, are well known, and it is appropriate that he should have moved on from here to run the Council of Christians and Jews. Contrary to reports, I do not believe that he intends to take holy orders. I hope that that will mean that Michael will not be entirely lost to politics in the years ahead. I am sure that hon. Members join me in wishing him and his wife Caroline every good fortune. My purpose in speaking today is to welcome the measures in the Finance Bill. The measure marks the continuation of the economic progress that we have made since 1979. Indeed, the determination to tackle economic collapse spurred me above all to enter political activity in the first place.

Particularly welcome are the inheritance tax proposals. They are based on the belief that the successful

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accumulation of wealth should be allowed to be passed on. Why--as it appears many Opposition Members would have it-- should every generation be required to go back to square one, based on some misplaced understanding of what equality of opportunity involves? The Bill will benefit family farms and family businesses, and I welcome the measures so well defended by my hon. Friend the Member for Bridlington (Mr. Townend).

Any Bill designed to alter the rules of taxation inevitably provokes a litany of special pleading, and it is the unenviable task of the Chancellor and his team to distinguish naked self-interest from a good case. In his original Budget statement, the Chancellor referred to surplus advanced corporation tax--to some, perhaps, a rather abtruse matter. Some companies are taxed in the United Kingdom on estimates of their earnings overseas. Indeed, they are overtaxed, but they are stuck with the position.

The effect is to reduce the research and development that such companies would carry out in this country, and it works against their wishing to set up their headquarters in the United Kingdom. That was not intended to flow from the imputation tax system that developed in the 1970s, and I hope that the Chancellor will reconsider in the years ahead the effects of the measure.

The Bill contains many welcome measures affecting the operation of VAT, especially the removal of fiscal frontier controls. But there remain some simple, practical difficulties in the administration of VAT that should be addressed particularly as no cost would be involved.

I could cite the example of a haulage contractor based in Melton Mowbray who pays VAT on his fuel purchases in other EC member countries. As a business, he is entitled to reclaim it, but he does not get it back, as least not for months and sometimes even years. We decent Brits repay overseas claimants quickly, but that efficiency is not reciprocated. So again, our comparative sense of fair play works more to the benefit of our competitors than to that of our exporting businesses. I urge the Revenue to take a good look at the fair working of the refunding of VAT elsewhere in the Community. I hope that the Finance Bill is but a prelude to our addressing certain long-term objectives for the economy. Some of the nastier consequences of the recession flow from the extent to which the fortunes of businesses and individuals are critically affected by changes in interest rates. We have a structural problem, in part a cultural one. Far too much of our investment funding in based on debt rather than on equity. It should become one of the major challenges of this Parliament to address the question of how to shift investment from debt to equity, because part of the problem arises from the simple fact that debt servicing is tax-deductible, while the cost of equity servicing is not.

Hand in hand with that is the objective of overseeing recovery without massive house price inflation. As many of my hon. Friends know, wary though I am of taking further steps towards monetary union, I believe that the ERM might yet prove a blessing, in that its effect will be to iron out the peaks and troughs which in the past have been damagingly extreme.

I am all for people owning their homes, but we do better to persuade them not to look on their houses as a tax-free source of easy riches on which they can regularly draw. I

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would rather we promoted a savings culture in which individuals increasingly had a genuine stake in the economy, and the key to that is pensions.

At present, our pensions rules are unfathomable. A personal pension attaching unequivocally to the person who has invested in it will lead to private capital accumulation in areas other than housing. Why cannot employees in the public sector pay their contributions into private schemes? We should take a long-term view, for the time has come when people should be allowed to do that.

By tackling such structural deficiencies in the economy, we could provoke a major change in the economic fortunes of individuals. I share the Chancellor's vision of a capital-owning democracy. I hope that we can see an economy in which individuals increasingly build their own stake in it. I hope that we can promote a savings culture out of which dependency on the state will be reduced and self-reliance increased. If, to set the tone, a strict settlement of our public expenditure commitments is demanded, the Chancellor and his team will have vigorous support in their efforts from this quarter.

6.29 pm

Mr. John Battle (Leeds, West) : I congratulate the hon. Member for Rutland and Melton (Mr. Duncan) on a witty and thought-provoking speech. Listening to him, I felt that my constituency in the inner city of Leeds was worlds away from his. I agree that we should be addressing the long- term structural problems facing our economy but, unlike the hon. Gentleman, I do not believe that the Finance Bill even starts to do that. We are faced with the leftovers of the pre-election tax-cutting bribe of a Budget that was rushed through the House in March.

In response to the Finance Secretary's speech, I would point out that, on 9 April, the people of Leeds, West delivered their verdict on the Budget and the Finance Bill : they overwhelmingly rejected them because they felt that they do not address their problems. Like the recent Queen's Speech, there is nothing in the Bill to tackle the rising unemployment that so many of my constituents face. According to the Government's last April figures, unemployment in my constituency is running at 10.7 per cent. That is a 17 per cent. increase on April last year. However, there are no practical measures in the Budget to tackle long-term unemployment, which is becoming a primary cause of poverty, particularly when financial assistance to the unemployed is so inadequate.

In his former life, before he converted to Treasury ways, the Financial Secretary voted against Government moves to cut unemployment benefit. I hope that he continues in that strategy, but I suspect from his speech that we shall not see him defending unemployment benefit.

There are no measures in the Bill to address the problems of the change in the labour market. There is now a fracture between what might be described as the primary restricted market, offering relatively secure, well-paid employment, and an expanding secondary labour market in which employment is temporary, irregular or part-time and often badly paid.

There is not much in the Finance Bill for the homeless and those in my constituency who desperately need a decent, adequate home at a rent that they can afford. There is not even a clause to enable local authorities to use their accumulated capital receipts from the sale of council houses. There is no extension of last year's moratorium on

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stamp duty. Despite the fact that, in 1991, 75,500 homes were repossessed because people could not keep up mortgage repayments, all that the Bill offers, in clause 36, is a tinkering with the business expansion scheme.

In other words, the Bill is characterised by its omissions. It is remarkable for its silences on matters that affect thousands of our constituents who want something to address their real economic circumstances. The Bill is part of the Government's strategy of simply sustaining the impression that there are no economic problems left since the general election. The Government are putting across the impression that unemployment has not escalated ; that, in the first three months of 1992, 14,900 firms did not go bust ; that homelessness on our streets and in the doorways of our major cities is an illusion ; that low and lowering pay is not a reality for many people.

The President of the Board of Trade, speaking recently at a conference organised by The Sunday Times, called for pay restraint. Rather than addressing the average unit labour cost, he would have done better to address the board of directors' rake offs, which have been running at 9.3 per cent. Most of my constituents earn nowhere near the average wage of nearly £400 a week for the male earner, and many women earn even less.

In the debate on the last Finance Bill, the then Chief Secretary said :

"It is always difficult to forecast a turning point, but there is now accumulating evidence of one."

He referred to

"a marked increase in optimism and output expectations" and spoke of the "recovery in confidence". He said :

"We are confident that it will lead to an increase in activity ... We must remember how far we have come from a stagnant economy." Later, he said :

"perception is lagging behind reality."--[ Official Report, 30 April 1991 ; Vol. 190, c. 178-80.]

We have not come very far from that "stagnant economy". The Government have still not yet caught up with the reality behind their perceptions. The number of people unemployed for over a year is now 841,000--an increase by 94,000 in the first quarter of this year. Unemployment has now risen for 25 consecutive months. Last month alone, 42,600 people lost their jobs. The National Institute of Economic and Social Research forecasts that unemployment will remain at almost 3 million for the next five years. That is the prospect that we face despite the Government's assurance a year ago that we had come out of a "stagnant economy".

The public sector borrowing requirement is projected at a staggering £34 billion for this financial year, and the Government are saying that they cannot get it down without swingeing cuts in public expenditure. I predict that, despite protestations in the Chamber and in the papers, the Government will come to the House before too long to announce that they have abolished zero rating of VAT so as to tackle the size of the PSBR. The only other way to tackle it is to increase personal taxation, and the Government are committed to go in the other direction.

Manufacturing investment fell by 11 per cent. to the first quarter of 1992 and is 27 per cent. lower than at its peak in the first quarter of 1990. In constituencies such as mine, which is dependent on the engineering, textile and

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printing industries, that means that work in manufacturing has gone and will not come back because the Government will not commit resources to investment in manufacturing.

Interestingly, yesterday in Rio, the Secretary of State for the Environment told the world that the major nations were

"in the middle of a very, very bad recession."

When we come to the House to protest about high levels of unemployment, we are told by Ministers that the country is coming out of the recession. That is the line for consumption at home, but abroad they say that we are in the depths of a recession. Yesterday, my local newspaper, the Yorkshire Evening Post had a report on the struggle of students to find jobs over the summer break. Young people bear the brunt of unemployment, and young people in further education, who cannot claim benefit during the holidays and who cannot get grants, have to find work somewhere to make ends meet. The report says :

"The annual hunt for summer jobs looks set to be tougher than ever with recession still taking its toll on traditional employers of casual workers."

According to the Department of Employment in Leeds, the amount of casual work on offer is down on last year. The total number of temporary jobs for the summer available in the city last week was 39, including vacancies for bar staff, cleaners and secretaries. There are not too many signs of recovery there, when even casual labour has almost totally dried up.

The Finance Bill could make improvements. Why do not the Government use clause 53 and schedule 11, which make tax changes for insolvent companies, to tackle a loophole in insolvency law which means that the occupational pensions of hundreds of people are in jeopardy from the Maxwell collapse? I suspect that that is merely the tip of a pension crash iceberg. The Government should change the rules and protect pensions.

The hon. Member for Rutland and Melton said that the pension rules were unfathomable. What is more than obvious in recent weeks is that occupational pensions are unprotected because the Government have not enacted sufficient protection measures for those pensions. Why cannot the Bill be used for that?

On a more positive note, why cannot the Government amend clause 48 and schedule 9 in order to foster and encourage the formation and growth of local community credit unions? That would be a practical and positive way in which to take people out of personal consumer debt and help those who are often left in the hands of the loan sharks. That would be better than raising inheritance tax thresholds simply to make it easier for owners of farms and family companies to pass on land and shares to their descendants. Clauses 58 and 59 and schedule 13 effectively take some 3,000 private estates in Britain out of inheritance tax altogether. That is hardly the hallmark of the classless society that the Prime Minister claims to be creating. Clause 60 and schedule 14 deal with petrol tax. In this week of all weeks, with the Earth summit, would it not have been better for the Government to fund a complete review of the privatisation of public transport, particularly the bus sector, and then ensure that there is investment in public transport so that it becomes a positive economic alternative to cars?

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The Government suggest that they cannot do anything, that they have no power, but they have just been elected to power. They cannot pretend, like a sympathetic, hand-wringing bystander, that they can do nothing. People will not allow the Government to hide behind paper charters while secretly manipulating the country's resources and pretending that there is nothing that can be done about the economy. There is insufficient in the Finance Bill to address the fundamental problems that have been referred to of the need to provide employment and training and investment in our manufacturing base. The Bill simply shows that the Government are still prepared to give away twice as much money in personal tax cuts--about £1.8 billion--as they are prepared to give to industry, commerce and training to fight the recession--a mere £800 million.

I conclude with just a few observations from an essay by J. K. Galbraith, based on his latest book, "The Culture of Contentment". In that book, he spells out how an "underclass" is an integral part of a larger economic process serving the living standards and the comfort of the more favoured community, and how the economically fortunate are dependent on the presence of that "underclass". That "underclass" is increasingly denied any generational upward economic movement in our society and so becomes semi- permanent, frustrated and discontented.

Galbraith says :

"It is an occasion for wonder that the discontent and its more violent and aggressive manifestations are not greater than they are."

He continues :

"Nothing in the age of contentment has contributed so strongly to income inequality as the reduction of taxes on the rich." He concludes :

"Life in the great cities in general could be improved, and only will be improved, by public action--by better schools with better-paid teachers, by strong, well-financed welfare services, by counselling on drug addiction, by employment training, by public investment in the housing that in no industrial country is provided for the poor by private enterprise, by adequately supported recreational facilities, libraries and police. The question once again, much accommodating rhetoric to the contrary, is not what can be done but what will be paid."

Sadly, that is a question that the Finance Bill does not address. 6.43 pm

Mr. Roger Moate (Faversham) : The hon. Member for Leeds, West (Mr. Battle) will not be surprised to hear that I do not agree with much of his rather dismal analysis

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