House of Commons Hansard Debates for 27 Oct 1994

Mr. Aitken: I regard praise from my hon. Friend, who is something of a Robespierre of public spending, as praise indeed. Painful decisions have been made about the Treasury and the fundamental expenditure review, but it is worth reminding the House that the administration costs of Government and the running costs of Whitehall are approximately £15 billion per year, which is £13 of taxation for every household. It is entirely right that the Government should look hard--as they have in the past and are now doing again--at reducing that burden of public expenditure where it is prudent to do so.

Mr. Skinner: Will the Minister admit that the £35 billion referred to in the question is almost equivalent to the amount of money that could be saved if we managed to get those 4 million people who do not have jobs into work? There is another way, of course. That is to increase taxes on those who have received £50 billion in tax cuts in the last 15 Tory years, which would mean taxing people like Al Fayed and all his friends.

Mr. Aitken: I shall resist the temptation to say anything about the gentleman mentioned in the hon. Gentleman's question. The £35 billion figure is in fact the amount by which the Labour party would have increased public expenditure if it had been elected. Those were the pledges that it made. This Government have been doing their best to reduce the burden of public expenditure. We are now doing so, and we hope to bring it down to a satisfactory amount between now and the next election.

Mr. Brazier: As a fellow Kentish Member, will my right hon. Friend join me in agreeing that local spending as well as central spending must be controlled in the interests of taxpayers? Does he agree that it is quite wrong that the county that we share, which is controlled by a Lib-Lab coalition, should spend £750,000 this year on entertaining and conferences?

Mr. Aitken: My hon. Friend is quite right. The spending of Kent as a local authority under Lib-Lab control is giving great cause for concern. It seems to be a case of canape s for the boys, and that should be restrained as much as possible.

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Bank of Credit and Commerce International

8. Mr. Vaz: To ask the Chancellor of the Exchequer if he will make a statement on Government proposals for compensation for the victims of BCCI.

The Minister of State, Treasury (Mr. Anthony Nelson): While we sympathise with the plight of BCCI depositors, responsibility for their losses rests with those who committed the frauds, not with the Government. Parliament established the statutory deposit protection scheme to protect those with small deposits and to date more than 17, 800 payments have been made to BCCI depositors, totalling more than £76 million.

Mr. Vaz: Will the Minister join me in welcoming the new settlement agreement which has been reached between the creditors committee and the sheikh of Abu Dhabi? What necessary steps will the Government take to ensure that those payments are made immediately, bearing in mind the fact that the Government have done absolutely nothing to support the depositors and creditors of BCCI during the past two and a half years?

Mr. Nelson: While I vehemently reject the last part of the hon. Gentleman's question, I should like to pay a more generous tribute to the hon. Gentleman, who has shown much interest and concern for depositors who have lost out through the collapse of BCCI. The factual position is that the $1.8 billion package for the creditors has been the result of negotiations between the liquidators and the majority shareholders, and should enable depositors to win back something like 30 to 40 per cent. of their funds. It will be necessary for the creditors committees in the UK, the Cayman Islands and Luxembourg to agree on that. I believe that that has now been agreed, and the only remaining hurdle is for the courts in those three jurisdictions to agree to it. I very much hope that when that is done, the way will be cleared with expedition to pay some recompense to those who have lost out.

Mr. John Greenway: Will my hon. Friend take this opportunity, notwithstanding the claims of some of the BCCI depositors for possible compensation, to reassure the House and the country that investors who take unnecessary risks with their money should not expect to be compensated by those who are prudent in their investments?

Mr. Nelson: I strongly believe that my hon. Friend makes a pertinent point, both with regard to depositor protection and with regard to investor protection. Not just as a result of directives from the European Union on both issues, but as a result of legislation introduced by this Government on both issues, we have substantial protection schemes to protect depositors and investors. At the end of the day, however, there must be a responsibility--a caveat emptor--on those who place their funds to take some responsibility for the husbandry of their financial affairs.

Mr. Darling: Do the Government accept that the bank claims and the pension transfer claims arise from the same problem, which is that the regulatory regime in this country does not work? In the light of that, why did the Minister claim earlier this week that the financial services

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regulatory system was working well? Is he surprised that no one has any confidence in the Government's ability to make the regulatory regime work?

Mr. Nelson: I do not for a moment accept the hon. Gentleman's premise. The fact is that with regard to opt-outs and transfers of personal pensions, it is as a result of the investigations and inquiries, and the process of redress that has been put into place, that people who have been disadvantaged will have it made good. That is the result of an incisive, deliberate and determined approach of supervision and regulation which is proving its worth. It is serving the interests both of investors and of depositors. This week's announcement by the Securities and Investments Board is a good example of that.

Corporation Tax

9. Mr. Nigel Evans: To ask the Chancellor of the Exchequer what comparison he has made between the corporation tax in Britain and that of major competitors; and if he will make a statement.

Sir George Young: Levels of corporate taxes in the United Kingdom's major competitor countries are monitored continually. The United Kingdom continues to have the lowest main rate of any of the major industrial countries.

Mr. Evans: In confirming that the United Kingdom has the lowest rate of corporation tax in the European Community, does my right hon. Friend agree that it is due to the fact that we have given great encouragement to our medium-sized and especially our smaller companies? We have allowed them to keep more of their own money, thereby allowing them to reinvest it in the companies. That has allowed them to increase their productivity, especially in manufacturing, and has led to record exports being achieved.

Sir George Young: I join my hon. Friend in paying tribute to the small and medium-sized enterprises to which he has referred, which have done so well in the past few years and have created many new jobs. On the substance of his question, I recognise that this country operates in a competitive world market. We need to attract inward investment from some of the multinational companies to create secure jobs in growth industries. The fact that we have one of the lowest rates of corporation tax is a clear signal that we welcome such investment.

Mr. Andrew Smith: I congratulate the Financial Secretary on his appointment. Will he confirm that the Government have decided not to publish the report on the review of dividend taxation and related matters which was initiated by the former Financial Secretary? Given that the Government's record on investment is so poor, should not the public, industry and especially this House have the opportunity to examine the evidence for themselves on the basis of a full and comprehensive report?

Sir George Young: There never was a report in the terms that the hon. Gentleman has mentioned; nor was there ever any intention to publish such a document. There will be ample opportunities in the Finance Bill and on other occasions to debate the important issues that he has raised.

Mr. French: In comparing the tax regimes in Britain with those of other European countries, will my right hon.

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Friend confirm that he is now fully satisfied that a business that wishes to operate a pan-European mutual fund, including the provision of FCPs, or fonds communs de placement, will not find fiscal reasons for locating in Dublin or Luxembourg as opposed to London?

Sir George Young: I very much hope that that is the case. There are many letters on my hon. Friend's question and I should like to write and confirm what he has just said. Over the past year or so, a third of inward investment into the European Community came to the UK. That confirms his point: that this is an attractive location from which to base enterprise.

Manufacturing Investment

10. Mr. Byers: To ask the Chancellor of the Exchequer what is the latest figure he has for the level of manufacturing investment in this country; and what this figure was in 1979.

Mr. Aitken: Total business investment is up by more than 30 per cent. since 1979, totalling about £60 billion in the past year, of which investment in manufacturing is currently running at £11 billion a year compared to £13.6 billion in 1979.

Mr. Byers: Will the Chief Secretary assure us that next time he visits the Ritz in Paris he will consider why manufacturing jobs in this country have been lost at twice the rate of those in France? Will he confirm that, in real terms, manufacturing investment in the United Kingdom has declined by 13 per cent. since 1979? Does he agree that those figures clearly show the Government's failure to assist the manufacturing sector?

Mr. Aitken: The hon. Gentleman is being very selective in the investment figures that he quotes. Britain is doing well in terms of investment, particularly inward investment from other countries. We are attracting the lion's share of foreign investment into the European Union-- far more than France and Germany combined. If the French could see how well we are doing in that way, they would be grateful to have our good record.

Mr. Forman: In considering manufacturing investment, will my right hon. Friend always give due weight to the argument that it is much better that those decisions be taken by management and firms themselves, than distorted by tax relief, such as the 100 per cent. first year allowances, which would be a bad idea?

Mr. Aitken: I entirely agree with my hon. Friend that the Government's real priority in trying to attract investment is not to produce all sorts of Government-created advantages but to create a framework like the one that we have now, of low inflation, a flexible labour force, low costs, and a stable and prosperous economic environment in which growth is occurring. Those conditions encourage manufacturers both here and abroad to invest in Britain.

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Tax Rises

11. Mr. Austin-Walker: To ask the Chancellor of the Exchequer if he will make a statement on the relationship between the Government's imposition of new tax rises and the standard of living in the United Kingdom.

Sir George Young: Our policies of sound finance will produce sustained recovery, more jobs and further increases in living standards.

Mr. Austin-Walker: Is not the reality that, as a result of the Chancellor's Budget last year, the poor have been hit hard and those on middle incomes have been hit even harder? Is the Minister aware that, as a result of last year's Budget, a family on average earnings with two children is already £330 a year worse off and faces a further £85 loss in income as a result of inbuilt tax increases? When the Government promise year-on-year tax cuts and increases in standards of living, why do average families have to dip their hands further and further into their pockets to bail the Government out as a result of their economic failures?

Sir George Young: The actual figure for next year is not the one that the hon. Gentleman gave. The average impact of next year's increases across all households is £3 a week. A large number of households will pay less, and the figure for pensioners is 90p a week. The hon. Gentleman must put those figures in perspective. Since 1979, average families have had an increase of some £80 in real take-home pay.

Mr. Patrick Thompson: Is it not a fact that living standards in my constituency and throughout the country have risen under this Conservative Government, and is it not correct to say that the average family receives £80 more per week than it did in 1979? That is a tribute to the Government.

Sir George Young: My hon. Friend is absolutely right. Real take-home pay has increased for all earning deciles since 1979.

VAT (Books and Newspapers)

12. Ms Primarolo: To ask the Chancellor of the Exchequer how many representations he has received concerning the extension of VAT to books and newspapers.

Mr. Heathcoat-Amory: My right hon. and learned Friend the Chancellor of the Exchequer receives a wide range of representations in the run-up to the Budget.

Ms Primarolo: Is it not the case that, although the Government talk about reducing taxes, they have actually increased them, the scope of VAT having been increased 14 times since the 1979 general election? Will the Minister give an assurance today that the Prime Minister's promise at the last election not to increase the scope of tax will be honoured by the Government?

Mr. Heathcoat-Amory: I take it that the question is about VAT on books, magazines and newspapers, and I can confirm that our zero rating is proof against challenge from the European Commission. Although all other member states except for Ireland levy VAT on books, my

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right hon. Friend the Prime Minister has said that he has no plans for extending VAT in that way in the near future.

PRIME MINISTER

Engagements

Q1. Mr. Jim Cunningham: To ask the Prime Minister if he will list his official engagements for Thursday 27 October.

The Prime Minister (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.

Mr. Cunningham: Can the Prime Minister end speculation in today's London Evening Standard naming an individual as the person who either tipped the Prime Minister off or acted as the intermediary in allegations against Ministers?

The Prime Minister: As I have said on a previous occasion, the person concerned came to see me privately and in good faith. I have no intention of offering a name. The note of my meeting with my informant has been passed, as I told the House the other day, to the Director of Public Prosecutions, and the name is known to her. It is for her to decide how to proceed, and I understand that she has now passed the papers to the Metropolitan police.

Mr. David Howell: Does my right hon. Friend accept that his decision to set up an independent and powerful committee to inquire into the conduct of public life is warmly welcomed? Does he also accept that certain areas of conduct should be reserved to the House to look after? Will he therefore continue to resist most strongly the immature and inexperienced proposal of the Leader of the Opposition that the Select Committee on Privileges should meet in public, which would create a lynch trial kangaroo court atmosphere that every democrat should abhor?

The Prime Minister: My right hon. Friend speaks with great knowledge of these matters, and I share the opinion that he has expressed.

As for the committee that I have established, I have made it clear to the House that I am not prepared to see confidence in elected or unelected public servants undermined by the public parading of unsubstantiated slurs and innuendo. It is precisely for that reason that I have set up the committee on the conduct of public life. I look to Opposition Members, who, I understand, support the initiative, to join me in ensuring that the committee is able to work successfully. I also look to them to ensure the ending of the continual peddling of gossip and rumour.

Mr. Blair: Now that today we have another report by the Cabinet Secretary exonerating another Minister, can we make ourselves clear about the basis on which the Prime Minister is running the Government? A week ago, he said that there were unsubstantiated allegations against his Trade Minister and insisted that he stayed. A few days later, there were allegations that were supposed to be unfounded, as he called them, and he insisted that the Minister concerned went. Now there are new unsubstantiated allegations against the Chief Secretary to the Treasury, and he stays. What is the basis on which the

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Prime Minister decides to retain or dismiss his Ministers--the truth of the allegations or merely the number of them?

The Prime Minister: I had understood that when the right hon. Gentleman became leader of the Labour party we were going to see a new style in politics. I had not expected to see the right hon. Gentleman step down into the gutters of public life quite so soon. Let me make it clear to the House and to the right hon. Gentleman--I set out my position concerning my hon. Friends the Members for Beaconsfield (Mr. Smith) and for Tatton (Mr. Hamilton) in my statement to the House the other day and I have nothing further to say. As for my right hon. and learned Friend the Home Secretary and my right hon. Friend the Chief Secretary, the examination shows that there is nothing for them to answer to, and the right hon. Member for Sedgefield (Mr. Blair) should be ashamed of using the privilege of the House to raise those matters in this way.

Mr. Blair: As the Prime Minister knows perfectly well, I have not said that I agree with the allegations against anyone. The idea that, after the resignation of two Ministers in a week, the Opposition should not be entitled to ask questions, is absurd. Cannot the Prime Minister see that the problem will not be resolved unless he understands that the Butler reports are plainly inadequate as, on his own admission, Sir Robin Butler is not able to see the person making the complaints, Mr. Al Fayed, he has forbidden the Nolan committee to look at the allegations, the Privileges Committee is deadlocked because Conservative Members want it to sit in private-- [Interruption.] I repeat, because Conservative Members want to sit in private. The Prime Minister will take a grip on the problem only when he understands that there has to be a proper method of investigating Mr. Al Fayed's allegations that has the public's confidence, which means an open, full investigation in public view.

The Prime Minister: Now there is no doubt. We now know where we are with the right hon. Gentleman and we know precisely what way he plans to play his politics. The right hon. Gentleman says to the House that he does not believe that the allegations are substantiated, yet he is still prepared to peddle them in here. The whole House will have noticed that he is prepared to peddle them. There is only one thing stopping the Privileges Committee from proceeding: the right hon. Gentleman's hon. Friends will not attend that Committee, which is wholly against all precedent in the House. The right hon. Gentleman is a lawyer; he knows that investigations take place in private and when those matters are over, debate takes place in public. He would change that for his own party advantage. If the right hon. Gentleman had listened, he would have heard that the documents relating to Mr. Al Fayed's allegations were passed to the Director of Public Prosecutions and have now been passed by her, after examination, to the Metropolitan police for examination. Surely, the right hon. Gentleman cannot imagine that I shall add to that.

Mr. Blair: With all due respect, the Prime Minister is not being asked to add to it. It is not me; it is-- [Interruption.]

Madam Speaker: Order. I must have some order in the House.

Mr. Blair: It was not I, but the Prime Minister who dismissed two Ministers. Furthermore, the normal

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procedure in courts of law is that hearings are held in public. No Opposition Members are saying whether the allegations are true or false--merely that they should be investigated. Why will the Prime Minister not allow the investigations to be held in public?

The Prime Minister: The right hon. Gentleman says that the matters may not be true and may be unsubstantiated gossip; yet he wants them peddled in public so that people's reputations-- [Interruption.]

Madam Speaker: Order. I shall have order from both sides of the House.

The Prime Minister: Despite the fact that the right hon. Gentleman does not believe the allegations and does not believe that there is anything substantial in them, he still wants to see them examined in public. People will ask for what party political reason he wants to see them established in public. If that is to be the new, clean politics, let us have the old, dirty politics from Labour that we have been used to.

Mr. Sumberg: Has my right hon. Friend had the opportunity to read the report of the Royal Commission on environmental pollution from traffic? Does it not dictate an urgent review of the roads programme, and in particular the abandonment of the disastrous M62 relief road which has caused so much damage in my constituency?

The Prime Minister: My hon. Friend, with the ingenuity that we have come to expect of him, has continued his campaign of concern about the M62. I think that the report by the Royal Commission on environmental pollution is a useful one, and we shall be studying it closely. It contains many very helpful things--although there are some parts of it which are uncosted and which would be better for having been costed.

Mr. Ashdown: Will the Prime Minister confirm that the two Ministers who have been forced to resign from the Government in the past week will receive £3,500 each in redundancy payments for their pains?

The Prime Minister: As I understand it, the right hon. Gentleman voted for the legislation which requires that.

Mr. Walker: Does my right hon. Friend-- [Interruption.]

Madam Speaker: Order. Back Benchers are as entitled as Front Benchers to a little quiet in this House.

Mr. Walker: Does my right hon. Friend recognise that many of us believe that there is a deliberate campaign, based on unfounded allegations, to discredit this Government and him? Is he aware that one of the advantages of Select Committees sitting in private, when required, is that their discussions cannot be debated on the Floor of the House before the reports have been fully submitted and details of all the evidence made available?

The Prime Minister: It has been well understood for many years in this House that Select Committees, when carrying out investigations, sit under the cloak of parliamentary privilege. That is one reason why they have decided for many years to investigate matters in private. Of course, when the investigations are completed, it is right that the report should be published--and it will be. It is also right that the report should be debated--and it will be. All

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our predecessors in this House have always agreed, in the interests of natural justice, that those Committees should meet and examine matters in private.

Q2. Mr. Raynsford: To ask the Prime Minister if he will list his official engagements for Thursday 27 October.

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

Mr. Raynsford: As the Prime Minister confirmed on Tuesday, and again just a few moments ago, that a note of the approaches made to his office by agents of Mr. Al Fayed had been passed to the Director of Public Prosecutions, and now to the Metropolitan police, does he feel that it would be proper for the Conservative party to repay the £250,000 that it has received from Mr. Al Fayed?

The Prime Minister: I think that the hon. Gentleman has lived up to his reputation.

Q3. Mr. Spring: To ask the Prime Minister if he will list his official engagements for Thursday 27 October.

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

Mr. Spring: Is my right hon. Friend aware of just how welcome the new strategy to combat drugs is to thousands of concerned parents throughout the country? Does he agree that the way to tackle this issue most effectively is in

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local communities, to destroy the cancer of drug abuse which has tragically blighted the lives of so many young people across the industrialised world?

The Prime Minister: I know how strongly my hon. Friend feels about the appalling damage that is done to young people by drugs, and I know how much he has done in his constituency to tackle the problem. Including the costs of police and education time, we spend in total about £500 million a year on tackling drug abuse. I entirely agree that we need to ensure that those resources, and indeed all efforts, are deployed as effectively as possible. We believe that that will best be done by implementing the proposals in the report by my right hon. Friend the Lord President and by making sure that action is taken in schools and by the drug action teams.

Mr. Salmond: The Prime Minister has achieved a welcome success from his policy in Northern Ireland, which has hinged on the principle of consent--the right of people in the north of Ireland to determine their own future. For the avoidance of any doubt, will he confirm that he also believes in the right of self-determination for the Scottish nation?

The Prime Minister: Every nation has always had that right. The hon. Gentleman is clearly talking about a tax-raising devolved Parliament in Scotland, and he well knows my view about that. I am sure that he would benefit from reading the speeches that I made during the 1992 election campaign; if he had done so, he would not have needed to ask his question.

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