House of Commons Hansard Debates for 1 Feb 1994

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Walker, Rt Hon Sir Harold

Wallace, James

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N

Watson, Mike

Welsh, Andrew

Wicks, Malcolm

Wigley, Dafydd

Williams, Rt Hon Alan (Sw'n W)

Williams, Alan W (Carmarthen)

Wilson, Brian

Winnick, David

Wise, Audrey

Worthington, Tony

Wray, Jimmy

Wright, Dr Tony

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Eric Illsley and

Mr. Dennis Turner.

Question accordingly agreed to.

Resolved,

That the following provisions shall apply to the remaining proceedings on the Bill :--

--Committee of the Whole House

1.--(1) The Proceedings in Committee of the whole House shall be completed at this day's sitting and shall be brought to a conclusion at Ten o'clock.

(2) When the Order of the Day is read for the House to resolve itself into a Committee on the Bill, the Speaker shall leave the Chair without putting any Question and the House shall resolve itself into a Committee forthwith whether or not notice of an instruction to the Committee has been given ; and Standing Order No. 64 (Committee of whole House on bill) shall not apply.

(3) Standing Order No. 80 (Business Committee) shall not apply in relation to the proceedings to which this paragraph applies.

--Standing Committee

2.--(1) The Standing Committee to which the remainder of the Bill is allocated shall report the Bill not later than 29th March. (2) Proceedings at a sitting of the Standing Committee on 29th March may continue until Ten o'clock whether or not the House is adjourned before that time, and if the House is adjourned before those proceedings have been brought to a conclusion, the Standing Committee shall report the Bill to the House on 30th March.

--Report and Third Reading

3.--(1) The proceedings on consideration and Third Reading shall be completed in two allotted days and shall be brought to a conclusion at Ten o'clock on the second of those days.

(2) On the first of those days, paragraph (1) of Standing Order No. 14 (Exempted business) shall, notwithstanding sub-paragraph (a) of that paragraph, apply to the proceedings on the Bill for only one hour after Ten o'clock.

(3) The proceedings on Third Reading may be proceeded with at the conclusion of the proceedings on consideration, notwithstanding the practice of the House as to the interval between stages of a Bill brought in on ways and means resolutions.

--Business Committee

4.--(1) For the purposes of Standing Order No. 80 (Business Committee) this Order shall be taken to allot to the proceedings on consideration such part of the allotted days as the Resolution of the Business Committee may determine.

(2) The Business Committee shall report to the House its Resolution as to the proceedings on consideration of the Bill, and as to the allocation of time between those proceedings and proceedings on Third Reading, not later than 14th April.

(3) Any Resolution of the Business Committee may be varied by a further Report of the Committee under Standing Order No. 80, whether before or after 14th April and whether or not that Resolution has been agreed to by the House.

(4) No Motion shall be made as to the order in which proceedings on consideration are taken, but the Resolutions of the Business Committee may include alterations in that order.

Procedure in Standing Committee

5.--(1) At a sitting of the Standing Committee at which any proceedings on the Bill are to be brought to a conclusion under a Resolution of the Business Sub-Committee, the Chairman shall not adjourn the Committee under any Order relating to the sittings of the Committee until those proceedings have been brought to a conclusion. (2) No Motion shall be made in the Standing Committee relating to the sitting of the Committee except by a Minister of the

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Crown, and the Chairman shall permit a brief explanatory statement from the Member who moves, and from a Member who opposes, the Motion, and shall then put the Question thereon.

(3) No Motion shall be made as to the order in which proceedings are to be considered in the Standing Committee, but the Resolutions of the Business Sub-Committee may include alterations in that order. Report of proceedings in Committee

6. On the conclusion of the proceedings in any Committee on the Bill, the Chairman shall report such of the Bill's provisions as were committed (or re-committed) to that Committee to the House without putting any Question.

Dilatory Motions

7. No dilatory Motion with respect to, or in the course of proceedings on, the Bill shall be made in the Standing Committee or on an allotted day except by a Minister of the Crown, and the Question on any such Motion shall be put forthwith.

Extra time

8.--(1) On the first of the allotted days mentioned in paragraph 3, any period during which proceedings on the Bill may be proceeded with after Ten o'clock under paragraph (7) of Standing Order No. 20 (Adjournment on specific and important matter that should have urgent consideration) shall be in addition to the period of one hour mentioned in paragraph 3(2).

(2) If that allotted day is one to which a Motion for the adjournment of the House under Standing Order No. 20 (Adjournment on specific and important matter that should have urgent consideration) stands over from an earlier day a period of time equal to the duration of the proceedings on that Motion shall be added to the period of one hour.

Private business

9. Any private business which has been set down for consideration at Seven o'clock on an allotted day shall, instead of being considered as provided by Standing Orders, be considered at the conclusion of the proceedings on the Bill on that day, and paragraph (1) of Standing Order No. 14 (Exempted business) shall apply to the private business for a period of three hours from the conclusion of the proceedings on the Bill or, if those proceedings are concluded before Ten o'clock, for a period equal to the time elapsing between Seven o'clock and the conclusion of those proceedings.

Procedure at time for conclusion of proceedings

10. For the purpose of bringing to a conclusion any proceedings which are to be brought to a conclusion at a time appointed by this Order or a Resolution of the Business Committee or the Business Sub-Committee and which have not previously been brought to a conclusion, the Chairman or the Speaker shall forthwith put the following Questions (but no others)--

(a) any Question already proposed from the Chair ;

(b) any Question necessary to bring to a decision a Question so proposed (including, in the case of a new Clause or new Schedule which has been read a second time, whether before the time so appointed or in pursuance of paragraph (a), the Question that the Clause of Schedule, or the Clause or Schedule as amended, be added to the Bill) ;

(c) the Question on any amendment or Motion standing on the Order Paper, whether in the name of a Minister of the Crown or not, which is moved or made by a Minister of the Crown ;

(d) any other Question necessary for the disposal of the business to be concluded ;

and on a motion so made for a new Clause or new Schedule, the Chairman or the Speaker shall put only the Question that the Clause or Schedule be added to the Bill.

11.--(1) Proceedings under paragraph 10 of this Order shall not be interrupted under any Standing Order relating to the sittings of the House.

(2) If an allotted day is one on which a Motion for the adjournment of the House under Standing Order No. 20

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(Adjournment on specific and important matter that should have urgent consideration) would, apart from this Order, stand over to Seven o'clock--

(a) that Motion shall stand over until the conclusion of any proceedings on the Bill which, under this Order or a Resolution of the Business Committee, are to be brought to a conclusion at or before that time ;

(b) the bringing to a conclusion of any proceedings on the Bill which, under this Order or a Resolution of the Business Committee, are to be brought to a conclusion after that time shall be postponed for a period equal to the duration of the proceedings on that Motion.

(3) If an allotted day is one to which a Motion for the adjournment of the House under Standing Order No. 20 stands over from an earlier day, the bringing to a conclusion of any proceedings on the Bill which under this Order or a Resolution of the Business Committee are to be brought to a conclusion on that day shall be postponed for a period equal to the duration of the proceedings on that Motion. Supplemental orders

12.--(1) The proceedings on any Motion made in the House by a Minister of the Crown for varying or supplementing the provisions of this Order (including anything which might have been the subject of a report of the Business Committee or Business Sub-Committee) shall, if not previously concluded, be brought to a conclusion one hour after they have been commenced.

(2) Paragraph (1) of Standing Order No. 14 (Exempted business) shall apply to those proceedings.

(3) If on an allotted day on which any proceedings on the Bill are to be brought to a conclusion at a time appointed by this Order or a Resolution of the Business Committee the House is adjourned, or the sitting is suspended, before that time no notice shall be required of a Motion made at the next sitting by a Minister of the Crown for varying or supplementing the provisions of this Order.

Saving

13. Nothing in this Order or a Resolution of the Business Committee or Business Sub-Committee shall--

(a) prevent any proceedings to which the Order or Resolution applies from being taken or completed earlier than is required by the Order or Resolution ; or

(b) prevent any business (whether on the Bill or not) from being proceeded with on any day after the completion of all such proceedings on the Bill as are to be taken on that day.

Recommittal

14.--(1) References in this Order to proceedings on consideration or proceedings on Third Reading include references to proceedings at those stages respectively, for, on or in consequence of, recommittal.

(2) On an allotted day no debate shall be permitted on any Motion to recommit the Bill (whether as a whole or otherwise), and the Speaker shall put forthwith any Question necessary to dispose of the Motion, including the Question on any amendment moved to the Question.

Interpretation

15. In this Order--

"allotted day" means any day (other than a Friday) on which the Bill is put down as first Government Order of the Day, provided that a Motion for allotting time to the proceedings on the Bill to be taken on that day either has been agreed on a previous day, or is set down for consideration on that day ;

"Resolution of the Business Sub-Committee" means a Resolution of the Business Sub-Committee as agreed to by the Standing Committee ; "the Bill" means the Finance Bill ;

"Resolution of the Business Committee" means a Resolution of the Business Committee as agreed to by the House.

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Orders of the Day

Finance Bill

Clauses 28, 46, 72 and 77)

Considered in Committee [Progress, 31 January].

[Mr. Geoffrey Lofthouse

in the Chair ]

Clause 46

Insurance Premium Tax

Mr. Alistair Darling (Edinburgh, Central) : I beg to move amendment No. 4, in page 32, line 4, after "(1)", insert--

"Subject to subsection (3) below.".

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse) : With this it will be convenient to take amendment No. in page 32, line 7, at end, add--

"(3) This tax shall not be charged until the Government has presented a report to Parliament on its effects on policyholders, the extent of insurance cover and the future of the insurance industry.".

Mr. Darling : I shall now deliver the speech that I would have delivered last night shortly after 10 o'clock had the Government not stopped me doing so. My speech will be of exactly the same length as it would have been last night, which would have enabled the House to consider the clause in the detail and time required, before the Government decided that they wanted to stifle debate on yet another new tax.

The amendments seek to delay the imposition of the tax until a report has set out the effects on not just the industry but the public who will be expected to pay it. On Second Reading last week, the Chief Secretary told us that his instincts were against high taxation, yet this is the second new tax that we are debating in the Bill. It is not surprising that the Government did not want much discussion on it and attempted to stifle debate by using the guillotine. Once again, what they say and what they do are entirely different. The Chief Secretary mentioned in his speech neither this new tax nor the other new taxes.

The insurance tax is a tax on victims and will affect 16.5 million households. It is yet another "double whammy", an expression that the Conservatives will remember from the last election. People will be robbed by a villain in the street and robbed again by the Chancellor in Downing street. The tax is, effectively, VAT on insurance and will be paid by 85 per cent. of all households. In the next financial year, it will raise £295 million ; in the following year it will raise £775 million ; and, the year after, it will raise a staggering £840 million if people continue to insure their properties properly. I say that because there is a substantial risk that the imposition of this tax will tempt too many people to underinsure their risks or not insure them at all.

The new tax illustrates a philosophic point on which it will be interesting to hear the Government's view. As a matter of public policy, we should encourage people to insure not just their houses and cars but many other risks. The tax is unavoidable. It is socially necessary and economically desirable that one should not be able to get

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out of insuring one's car, especially for third party liability, or one's house, whether it is for the building or contents. So, once again, the Government tax it.

Given that the average car insurance premium is about £340 and the average house contents premium about £300, most households have an outlay of between £600 and £1,000 a year--sometimes more-- depending on the risks that they must insure. That is a substantial and unavoidable commitment. As my hon. Friend the Member for Peckham (Ms Harman) said in her closing speech in the previous debate, insurance premiums are much higher in the inner city areas of Liverpool, London, Manchester, Glasgow and many other cities than they are elsewhere, and the annual insurance commitment can be as high as £1,500 or even £2,000 a year.

The Government said that the tax would cost 35p a week. As usual, they are wildly out. Many people consider that a minimum of 70p a week will have to be found by people who are already hard pressed because of other taxes imposed by the Government. So the insurance tax will be paid by people who are already stretched. Victims of crime pay more for their insurance and will therefore pay more in tax.

People can do nothing to avoid paying the tax if, through no fault of their own, they live in an area that is particularly prone to crime. In many areas of England and Wales, the crime rate is rising dramatically and the most vulnerable people in society will be hit by a tax which they can do nothing to avoid. Unemployed people must still insure their house, so people with little at their disposal will be hit in a way that income tax would not hit them, because income tax depends on the amount of money that people have, not simply on the fact that they happen to exist.

People are already badly hit by other taxes. They are paying VAT on fuel, increases in income tax, and will be faced with reductions in mortgage tax relief, yet the Government do not want us to discuss any of the new taxes and have only reluctantly allowed enough time to discuss this new insurance tax. People now pay more tax than they ever paid under the last Labour Government, but the crucial point is that they are getting nothing for it because the increased taxes will pay off debts that the Government ran up. A report is necessary to assess the effects on the industry and the people who pay the tax. The point of principle is whether insurance should be taxed at all. Tax will be paid on general insurance--buildings, vehicles, holidays and so on. Surely we should encourage people to insure themselves when they go on holiday because many countries have no national health service or anything like it. Even in some advanced countries, if one is run over in the street, the first thing that the ambulance driver asks is how one proposes to pay for the treatment. Now, people will be tempted to cut down on holiday insurance because of the tax. I welcome the fact that no tax will be imposed on long-term contracts, but for how long will long-term contracts of insurance be exempt? Is it only a matter of time, as with the provision for VAT, before the scope of the tax is extended to cover long- term insurance contracts for pensions, life assurance and so on? Will the Government clarify that issue? I suspect not. The 3 per cent. rate will be just the beginning. Having introduced the principle, it will not be long before the Government increase the tax to 4, 5 and 6 per cent. It is no coincidence that the tax will be

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collected by the VAT man and, in time, the Government will be tempted steadily to increase the tax from 3 per cent. to 17.5 per cent., or whatever is the prevailing VAT rate.

The issue of the long-term insurance rate is important. The Government must make their intentions clear on a point of political philosophy. I understand that private health care insurance will be caught by the tax but that, not surprisingly, the industry is already clamouring for an exemption. I want to hear a clear commitment from the Paymaster General that the Government will not give in to the clamour from an industry whose whole future is perilled on the failure of the national health service, and will not give a tax exemption to private health care insurance. In addition, I want a commitment that they will close the loopholes that currently exist within the legislation so that private health care companies cannot get around the insurance tax by changing the way in which they write their policies.

8.30 pm

In the Financial Times on 12 January, Mr. Julian Ross, a product development manager with Prime Health, a specialist medical insurer, said :

"If the whole philosophy and policy of this government is to make people more self-reliant, it seems rather stupid to penalise them for taking out private medical insurance.".

Most people want to be self-reliant, but they do not want to rely on private health insurance. They want to rely on a national health service that is there to meet their needs. That is a fundamental philosophical difference between the Opposition and the Government who have never believed in the NHS. It is clear from the way in which they look after the health service and their general approach to such matters that they are deeply sympathetic to private health insurance which depends for its existence on the NHS being unable to fulfil its obligations. Nobody would go private if they did not have to. I want the Government to tell us tonight that they will not allow the private health insurance industry to get the tax break it is seeking. We want to hear that, if private health care insurance is caught by the tax, it will remain caught and that the loophole that might be provided by schedule 1 of the Insurance Companies Act 1982 will not be used to allow companies to write their policies in such a way as to bring themselves within its protection. That protection is generally accepted in cases such as that of a company director who insures himself against catastrophic illness ; if there were no insurance, there might be disastrous consequences for the individual, the company, and its employees.

The Government must make it clear that they will have no truck with further tax breaks for private health care insurance. Every penny saved by the private health care industry will have to be paid for by those who insure their houses or their cars. If the Government give in to the industry, which has a ready ear in the Treasury, they will pay a heavy political price.

People struggling to pay their insurance premiums, perhaps those who lost their houses and possessions in the recent floods in the south of England, will not understand why they have to pay more in tax while people who take private health care insurance seek and may get a tax break for so doing.

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