House of Commons Hansard Debates for 3 Feb 1994

Mr. Clarke : The share of gross domestic product taken by the state is forecast to fall from 45 per cent., its peak during the present recession, to 41 per cent. on the plans that I have announced--that compares with 46 per cent. under Labour. The Budget demonstrated a strong control over spending. Total Government spending is forecast to rise by 1 per cent. in real terms next year--far below the level of growth of the economy. The new control total, thanks to the efforts of my right hon. Friend the Chief Secretary, will rise by an average of only about per cent. in real terms over the next three years. That is why we are forecasting that spending will be on a downward trend and that the total tax burden on the public and on the economy will also be on a downward trend.

Insurance Tax

10. Sir Peter Fry : To ask the Chancellor of the Exchequer what plans he has to extend exemptions proposed for the new tax on insurance and assurance contracts.

Sir John Cope : None, beyond those in the Finance Bill.

Sir Peter Fry : I understand the need for few exemptions, but will my right hon. Friend bear in mind the difficulties that some health care bodies will experience, such as the Hospitals Guild in Northampton, which covers my constituency? That is a

non-profit-making body, which passes on most of its surplus to the national health service and to charity. The effect of the tax will be to reduce that help considerably. Most of all, it will cause great difficulties in accounting for the tax on low premiums, some of which are as low as 20p a week. Does my right hon. Friend agree that there is a case for exempting those low premiums?

Sir John Cope : Of course I have received representations on that matter, but, as I made clear in the debate on Tuesday, we believe that it is best to apply the tax at a low rate over a wide area, rather than to pick and choose between different types of general insurance.

Ms Eagle : Will the Minister admit that the new tax is incredibly regressive and that it hits those who live in high-crime areas, who have much higher premiums as a result of suffering more crime? What can be more unfair than a tax on premiums, which taxes people's security? The Government are making money from people's fears.

Sir John Cope : As I explained in some detail on Tuesday, the tax is mildly progressive.

Mr. Shersby : Will my right hon. Friend give careful consideration to continuing the exemption of tax on premiums for private health insurance for higher rate

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taxpayers who are pensioners? Is he aware that those pensioners relieve the national health service of a substantial burden of expenditure each year?

Sir John Cope : What my hon. Friend says is quite right. However, I do not think that it affects the insurance premium tax.

Family Tax Burden

12. Mr. Eastham : To ask the Chancellor of the Exchequer how much he estimates families on 75 per cent. or less of average earnings can expect to pay in income tax and national insurance from this April ; and what the figure was for 1978-79.

Mr. Dorrell : A single earner family on 75 per cent. of average earnings will pay about £68 a week in income tax and national insurance contributions next year. That compares with about £79 a week if the 1978-79 tax regime had still been in force and indexed for inflation.

Mr. Eastham : Several times this afternoon the Minister has mentioned the direct purchasing power of the average family. May I remind him that average purchasing power, with VAT at the 1979 level, was £2.49 and that the same purchasing power for the average family with VAT in 1994-95 will be £21.92?

Mr. Dorrell : I do not think that the hon. Gentleman could have heard the answer that I gave him. He asked me how much the tax burden had gone up, by implication, as a result of the changes that my right hon. and learned Friend announced, compared with what the position would have been in 1978-79. The answer that I gave him, which he very understandably did not follow up, was that our tax burden, the direct tax burden--[ Hon. Members :-- "Ah."] That was the question which I was asked and to which I gave an answer. The direct tax burden next year, on a 1978-79 basis, would have been £79. It will, in fact, be £68.

PRIME MINISTER

Engagements

Q1. Sir John Hannam : To ask the Prime Minister if he will list his official engagements for Thursday 3 February.

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

Sir John Hannam : Does my right hon. Friend agree that the visit by Gerry Adams to America has done nothing to advance peace in Northern Ireland? Will he assure the House that the lies and evasions of Sinn Fein will not be allowed to hold up progress towards a settlement in Northern Ireland?

The Prime Minister : I agree with my hon. Friend, and that will be the overwhelming view of right hon. and hon. Members. The way to advance peace in Northern Ireland is for the IRA to end violence now. That is in its hands, and it is in Mr. Adams's hands and I believe that he could and should do it. However, progress in Northern Ireland cannot and will not wait for Sinn Fein. The Government propose

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to carry forward actively the political talks with the constitutional parties and with the Irish Government. In further meetings, my right hon. and learned Friend will be floating ideas to give further focus and direction to all three strands of the talks process. This is a democratic process. If Sinn Fein and the provisionals want to be part of it, they must renounce violence for good. The way is open to them, but it is for them to take it.

Mr. John Smith : Is it correct that the Government intend to raise prescription charges from £4.25 to £4.75--an increase of 11.6 per cent., which is more than six times the rate of inflation?

The Prime Minister : When we are in a position to make an announcement to the House about that, we will make an announcement in the normal fashion.

Mr. John Smith : Does the Prime Minister not appreciate that his likely increase, and indeed any increase, in prescription charges comes on top of massive tax increases already being imposed by the Government on the ordinary people of this country? Given all that, for once could not the Prime Minister spare the sick?

The Prime Minister : I think that, as the right hon. and learned Gentleman will recall, only those who can afford to pay prescription charges are asked to pay them. From memory, around 80 per cent. of prescribed items are now free of charge. In 1979, it was, I believe, around 55 to 60 per cent.--a significant change. There is no firm evidence in any information that we have that prescription charges deter patients from obtaining necessary medication. The right hon. and learned Gentleman knows that. He makes no ackowledgement of the fact that most people do not pay prescription charges. He should get his facts right before he pursues these matters in this fashion.

Mr. John Smith : It is quite clear from that that prescription charges are going to go up. Given that the Public Accounts Committee has identified millions of pounds that have been wasted by the Government's health service quangos, would it not make much more sense to tackle that rather than to seek to tax the sick?

The Prime Minister : The revenue from prescription charges this year is sufficient to fund around 70,000 hip replacements or 45,000 coronary artery bypass grafts. What I should like to hear from the Opposition, for all their complaints about prescription charges, is whether they would abolish prescription charges. If they would, who woud pick up the bill of over £260 million? Would it be the national health service, with fewer people treated? Would it be the taxpayer? Or would they borrow more? That is another example of the right hon. and learned Gentleman saying that he would control expenditure, yet every opportunity he gets, he asks for more expenditure to make cheap political points.

Q2. Mr. Burns : To ask the Prime Minister if he will list his official engagements for Thursday 3 February.

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

Mr. Burns : Will my right hon. Friend confirm that the Government will close any genuine tax loopholes, but will not close what the CBI has shown are not genuine loopholes, as, by so doing, they would fail to raise revenue and would merely damage the economy in general and the

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economic recovery in particular? Does my right hon. Friend agree that that blows away the smokescreen of the tax-and -spend policies of the Labour party?

The Prime Minister : On the last point, my hon. Friend is generous to assume that the Opposition have tax and spending policies. In successive Budgets, we have closed tax loopholes and tackled abuse. My right hon. and learned Friend will continue to do so wherever he finds abuse. The Labour party, with its hare-brained schemes, is not genuinely concerned about closing loopholes. It would close not loopholes but businesses. That would be the result of its policies. As the CBI says today, Labour supports higher taxes on business. That is why Labour will always be the enemy of enterprise, of employment and of British business.

Mr. Foulkes : Has the Prime Minister had a report of yesterday's debate on the Child Support Agency, during which hon. Members on both sides of the House related tales of heartbreak and hardship caused by the operation of the agency and asked the Prime Minister and the Government to undertake another review of its working? Will the right hon. Gentleman now announce such a review so that people may look forward to an end to the hardship and the heartbreak?

The Prime Minister : I read with some care yesterday's debate on the Child Support Agency, and I am glad to say that the principles behind it received a warm welcome from every part of the House. The reforms will have a significant effect once the maintenance bills of those who qualify are reduced. When the legislation was being introduced, we stated that it would be kept under review. We are still true to that pledge--it still applies.

Q3. Mr. John Greenway : To ask the Prime Minister if he will list his official engagements for Thursday 3 February.

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

Mr. Greenway : Will my right hon. Friend join me in welcoming the £26 million investment by Nestle Rowntree, at its York factory, in the new production line for Kit Kat, which is one of Europe's leading confectionery brands? Does not that illustrate very clearly the advantage, in terms of new investment, of multinational companies having a significant presence in Britain?

The Prime Minister : I believe that it most certainly does. I had hoped to visit that factory in Yorkshire last week, but, unfortunately, was unable to do so. I was looking forward to seeing the new investment and to congratulating the management and the work force on their success. What that inward investment shows is that Britain is increasingly competitive and increasingly attractive to overseas investors. That is good news for exports, good news for orders and good news for jobs. Conservative Members welcome inward investment--we do not carp at it whenever it is received.

Mr. Mallon : The Prime Minister no doubt has noticed that during his visit to the United States Mr. Adams provided some clarification by indicating that he does not accept the principle of

self-determination based on consent. Indeed, Mr. Adams said that it would be nonsense to argue for such a thing. Does the Prime Minister agree

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that that runs counter to article 1A of the Anglo-Irish Agreement, counter to paragraph 4 of the joint declaration and counter to the view of every political party in Ireland, excluding the Democratic Unionist party and Sinn Fein, and that it is not the view of the vast majority of the people of Ireland who support the joint declaration? Can he assure the House that the two Governments will jointly pursue the objectives of the joint declaration and there will be no unilateral deviation from it in the interests of short-term expediency?

The Prime Minister : We will certainly continue to pursue the objectives of the joint declaration--there should be no doubt about that. In America, Mr. Adams avoided the central issue on every occasion he could. Sinn Fein has been challenged to give up violence--it has not done so. I do not believe that I can put it any better than today's edition of the Irish Independent. I quote : "It is a disgrace that he"--

that is, Adams--

"should go on mouthing platitudes while the Provisional IRA continues its violence."

Mr. Skinner : The Prime Minister is jealous--Adams was a hit and he was ignored.

The Prime Minister : I do not believe that people in Britain or in Ireland have been deceived by Adams's performance, with the possible exception of the hon. Member for Bolsover (Mr. Skinner).

The Irish Deputy Prime Minister, Mr. Spring, yesterday posed the critical question : Has Adams got the leadership and the courage to take his people with him in carrying out his own stated commitment to peace and to going the extra mile? That is the question to which everyone awaits an answer.

Ash-cum-Ridley (Visit)

Q4. Mr. Dunn : To ask the Prime Minister if he has any plans to visit Ash-cum-Ridley.

The Prime Minister : I have no immediate plans to do so but I will keep it in mind for the future.

Mr. Dunn : Will my right hon. Friend confirm that the range and variety of schools available to parents in my constituency and across Kent exist solely and wholly because of the Government's policies and that choice and variety in education would be eliminated if the nightmare policies of the Labour party were endured?

The Prime Minister : My hon. Friend is entirely right about that. His county of Kent has self-governing schools, selective schools, maintained schools, comprehensive schools and schools that specialise in technology. That is the sort of choice that we believe it is right to offer to parents and will continue to seek to offer to parents. Most of that would be swept away by a Labour Government. They would abolish self- governing schools, abolish city technology colleges, abolish performance tables and abolish the right of parents to know precisely what is happening in the schools that their children go to. As ever, the Labour party would put dogma before common sense.

Mr. Barnes : Could I persuade the Prime Minister to go to Ash-cum- Ridley, wherever that might be, instead of to Renishaw, Holmewood, Clay Cross and areas in my constituency that have high unemployment and have been

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devastated by the Government's policies, because we think that the Government are a waste of time? There are other places that the Prime Minister should go--he could take a break and go to Ash-cum-Ridley.

The Prime Minister : If my hon. Friend the Member for Dartford (Mr. Dunn) cannot persuade me to go to Ash-cum-Ridley, I do not think that the hon. Gentleman will have much luck. As for employment, I share with the hon. Gentleman the wish to increase employment and reduce unemployment in this country. He will have noticed that it has been falling steadily for the past year in this country, unlike any other country in western Europe, and I expect it to continue to fall throughout this year.

Engagements

Q5. Mr. Oppenheim : To ask the Prime Minister if he will list his official engagements for Thursday 3 February.

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

Mr. Oppenheim : Does my right hon. Friend agree that it was not the sale of Rover to BMW that lost Britain the chance of having a genuine global player on world car markets? Rather, that chance was lost during the era of misguided Government direction, industrial practices and unfettered union power when British Leyland became the butt of international music- hall jokes. Can my right hon.

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Friend imagine at that time anyone wanting British Leyland as a gift, let alone paying £800 million for the company?

The Prime Minister : Rover certainly has been transformed, and I congratulate the work force and the management on their efforts to bring that about, as well as the investment that has been put into the company by British Aerospace. Rover now produces a world-quality product, and it is winning market shares in extremely competitive markets.

As my hon. Friend said, the contrast with the 1970s could be scarcely sharper. Mass meetings at that time were addressed by Red Robbo, and taxpayers' money was being poured into a bottomless pit. Rover is now a world beater and it will become better.

Mr. Caborn : Will the Prime Minister tell the House whether he can give assurances to individuals, companies or organisations about the disbursement of the millennium fund and the lottery fund for the construction of sporting facilities?

The Prime Minister : No, we have given no commitments on that yet. We are looking at the establishment of a committee to determine how the millennium fund will be disbursed, and it will be a considerable period before we are in a position to say what money will be disbursed and where. Consideration of the matter is still in its infancy and it will be some time before we are able to make an announcement.

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