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Mr. John Sykes (Scarborough): The housing benefit measures are extremely good news for Scarborough and for Whitby. Is my right hon. Friend aware that hon. Members with coastal resorts in their constituencies have had dreadful trouble in the recent past with badly run DSS hostels? Artificially high rents have made hotel conversions far too attractive, and the measures will help curb the scandal of "Dole-on-sea".

Mr. Lilley: I am conscious of the problems that my hon. Friend and other hon. Members representing coastal areas have found in their areas. I hope that the measures that we have announced on housing benefit will discourage the sort of abuse to which my hon. Friend referred and which may well be more prevalent in those areas. It is only right and proper that people who are occupying properties with above-average rent should have some incentive to reduce that rent where possible, or to choose a less expensive property to live in.

Mr. Harry Cohen (Leyton): Is not the requirement of insurance on mortgages a hidden Tory tax on owner-occupiers, which the Chancellor of the Exchequer did not have the courage to announce in the Budget yesterday? Does not that insurance amount to about £25 to £30 a month on a £50,000 mortgage, a figure that will almost certainly soar at higher levels?

Mr. Lilley: The short answer to the hon. Gentleman is no. A statement from the Abbey National says that about 40 to 50 per cent. of new mortgages that it gives are covered by insurance already. It seems quite reasonable to encourage a higher proportion still to be covered by insurance, and that is the effect of the measures that I have announced.

Mr. Ian Bruce (South Dorset): Will my right hon. Friend confirm that introducing compensation in advance of VAT going up is an unusual measure for the Government, and that when RPI goes up eventually--the RPI figure will be inflated by VAT going through--additional money will come in the uprating statement when pensions go up again? Is there any suggestion yet that people are modifying their use of electricity by ensuring that they are not wasting energy which, after all, is the policy urged by all hon. Members?

Mr. Lilley: I can certainly confirm the point that my hon. Friend makes. In addition to the extra help that we shall give from April next year, there will be a further benefit to people as a direct result of VAT on fuel in the subsequent year through the natural uprating that will

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follow through. That reflects again the impact which has been, to some extent, already compensated for by earlier changes.

Ms Janet Anderson (Rossendale and Darwen): The Secretary of State said that employers who take on people who have been unemployed for two years will receive a one-year holiday from employers' national insurance contributions. Will the Government be seeking any assurance from those employers that they will keep on those workers at the end of that year?

Mr. Lilley: I do not think that that would be feasible, as it would increase the bureaucratic add-ons to the scheme and make it less attractive. In general, I do not think that employers would seek to apply the scheme in the way in which the hon. Lady suggests. I think that employers will find that, when they take on people--about whom they may have a degree of suspicion, as those people will have been unemployed for a long time--they will be delighted by the response that they will receive from those people, who will be glad to be back in work, as most people want to be. The employers will be only too delighted to keep them on at the end of the year.

Mr. Michael Brown (Brigg and Cleethorpes): Does my right hon. Friend accept that, historically, as unemployment has come down people have been caught in the poverty trap? Will he accept it from me that the measures that he announced today, alongside those announced by the Chancellor yesterday, represent important means of overcoming that problem? Does he accept, however, that those changes are only the start of the new thinking, to which it is absolutely essential that both sides of the House devote time, which is designed to try to get people back into work? Does he recognise, as a member of the No Turning Back group, that some written work has been done on that subject, which he might like to re-read as he continues his programme of radical reform?

Mr. Lilley: My hon. Friend is quite correct that, since the war, there has been a tendency for unemployment to rise in a recession and then for that rate not to come down by an equal amount during a subsequent recovery. As a result of the changes that we have made to the labour market and our trade union reforms, one of the encouraging things has been that unemployment started to come down earlier in this recession than in previous ones. We are determined to build on that improvement and to encourage unemployment to fall further so that more people can go back into work. That is what the back-to-work package in the measures that I announced today is about. I shall certainly reacquaint myself with the writings of the No Turning Back group, which are invariably stimulating and good for us all.

Mrs. Jane Kennedy (Liverpool, Broadgreen): Yesterday, the Chancellor of the Exchequer described the changes that the Secretary of State announced today to the payments of housing benefit as a new system to prevent the current system from being prey to unscrupulous landlords. What estimate has the Secretary of State made of the amount that those unscrupulous landlords have taken out of the housing benefit system

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since it was deregulated in 1988? How much does he expect to save for the social security budget as a result of the changes that he announced today?

Mr. Lilley: The hon. Lady is quite right--we expect to make significant savings at a steady rate. The direct effect is likely to be about £200 million, but the indirect effect is likely to be substantially greater than that because many people will negotiate down rents and move to more economical properties. As a result of the changes that we have made, the entire rent level may be affected, so that the long- term effect could be substantially greater than that anticipated. We do not know how much has been ripped off by unscrupulous landlords, but I am glad to note the hon. Lady's implicit support for a system that will reduce such losses in the future.

Mr. Clive Soley (Hammersmith): Does the Secretary of State understand that the £72 market rent is disguised in the areas of greatest housing demand, where the average rent is well above that sum and where the market rent is set by rent tribunals? Will he therefore refund those local authorities on the basis of the average rent in the area, because he has based his philosophy on that? Please may we not assume that people who are looking for housing can choose, because often their only alternative choice is a cardboard box?

Mr. Lilley: I can reassure the hon. Gentleman that the plan is to base the entitlement to housing benefit on the average rents for each type of property in each area and not to take a national average. It applies to those in the deregulated market where alternative accommodation is usually available, but in the event of hardship or any specific difficulties, local authorities will be funded to give additional support over and above the 50 per cent. above the average.

Several hon. Members rose--

Madam Speaker: We now move on.

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Points of Order

4.32 pm

Mr. Tony Benn (Chesterfield): On a point of order, Madam Speaker. I am grateful to you for allowing me to put to you in the House a point that I put in a letter this morning in respect of the Committee of Privileges.

You will recall, Madam Speaker, that in the debate on 31 October, I said that I intended to publish a report. I did that and I gave it to you. You made a statement on 2 November in which you drew attention to the issue raised by my action. You asked the Committee of Privileges to meet and to

"report so that the House can have an early opportunity to consider this matter in an orderly manner and to take any action that it may think fit."- -[ Official Report , 2 November 1994; Vol. 248, c. 1564.]

Normally a report of the Committee of Privileges is presented to the House by the Leader of the House, and on this occasion that would have allowed the House to consider not only the report but the alternative draft that I submitted. However, to my surprise--I make no complaint, because I was notified--the Government decided to table a motion tonight to remove me from that Committee and not to present its report. Although the motion is debatable, it cannot be debated because no time has been made available.

I am not making any complaint of sharp practice, but that decision has made it impossible for the House to have an orderly debate on the matter: it has not received the report--although it has been published--and hon. Members are not to have their attention drawn to the report for which you, Madam Speaker, asked. No time will be available tonight to debate a matter of considerable importance. I should be grateful if you could amplify the statement that you made on 2 November, to make it clear that what you expect is that the House will have the Privileges Committee report put before it and be invited either to accept or reject it, which it is perfectly free to do. I am grateful to you for allowing me to raise this point of order because, whatever the merits of the matter, it is a very important question.

Madam Speaker: I thank the right hon. Gentleman for giving me notice of his very important point of order.

The House will have noted that the report of the Committee of Privileges is a special report recommending a certain course of action. It is not a substantive report on the actual complaint that has been referred to the Committee. It is in order and, indeed, it is normal practice, for the House to deal with such a special report by way of a motion inviting the House to take the action that the Committee has recommended.

As the right hon. Gentleman has himself already indicated, any Member of the House can seek to force a debate on a motion of the kind that has been tabled today by the expedient of objecting to it after 10 o'clock.

Mr. Charles Hendry (High Peak): On a point of order, Madam Speaker. I seek your guidance on a letter that several of my hon. Friends and I received today from an Opposition Whip, the hon. Member for Ashfield (Mr. Hoon), asking whether I would give him advance indication of my voting intentions in Government votes next week. I understand why that information will be of more than passing interest to the Government Whip, but

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it comes as a bit of a surprise to find that the Opposition Whips believe that I should be accountable to them as well.

I was wondering whether you, Madam Speaker, as a former Whip yourself, would be willing to organise a training workshop for the new Labour Whips so that they understand their responsibilities more clearly, and also perhaps to tell them which Members of the House sit on which side.

Madam Speaker: As a former Whip, I think I never fell into that trap. I was always very keen to see that my correspondence went to the right recipient.

Mr. Tam Dalyell (Linlithgow): On a point of order, Madam Speaker. May I raise a succinct point of order, of which I have given you notice, relating to the new rules recently agreed by the House for sittings of the Scottish Grand Committee?

The impression was given that the Lord Advocate and the Scottish Law Officers could both make statements to the Committee and answer Adjournment debates. Indeed, that was the initial clear understanding of the Government Chief Whip's Office, the usual channels, the political correspondents and editors of The Herald and The Scotsman and parliamentary colleagues of all parties. I think that the Secretary of State would not mind if I said that he himself was very vague about it, and under the impression that the Lord Advocate could answer Adjournment debates.

However, your advisers--as usual, I do not doubt that they are right; they have a habit of being right--contend that, under the arrangements as drafted, the Lord Advocate cannot answer Adjournment debates. As it appears that it was the Government's original intention to allow such an innovation, could I ask whether you have had any approach to rectify the matter?

This is more than an academic, parliamentary, pedantic point, because it raises the subject of Lockerbie, in relation to which the view expressed by the Prime Minister in answer to questions is that the lead Department is the Crown Office and the Lord Advocate's Department. As Lockerbie was the biggest mass murder perpetrated against western civilians since 1945, and as some of us have the gravest doubts about on-going policy as to whether Libya was responsible at all, surely the matter should be ironed out.

Madam Speaker: I appreciate the fact that the hon. Gentleman gave me notice of his point of order.

The Standing Orders relating to Scottish business permit the participation of Scottish Office Ministers or Law Officers who are not members of the Committee in the business of the Committee only in the context of ministerial statements. In answer to the hon. Gentleman's direct questions, I have had no approach to change the Standing Orders. If the hon. Gentleman wishes to make changes to the existing rules, he will need to find a way to amend the Standing Orders, which, as he knows, have only recently been approved by the House.

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I was interested to hear the hon. Gentleman say that the Secretary of State or those in his office were not too clear about the matter. Perhaps the Secretary of State is grateful to the hon. Gentleman for raising the issue so that the situation has now been made clear.

Mr. Dennis Skinner (Bolsover): On a point of order, Madam Speaker. On Tuesday, immediately after the Government lost their majority, I went to the Table Office, for which ultimately you have some responsibility, and asked the Clerks about the membership of Select and Standing Committees and the number of Opposition Members as opposed to Government Members on those Committees. They said that consultations were taking place at a much higher level.

Conflicting stories and advice have come from different quarters about what happened at various times in 1974-79 when Labour was in power. It appears that, certainly at that time, Labour had no more than parity on certain Committees while on others it had a majority of one.

There is another problem to which we should turn our attention, and it relates not only to the number of Members on Committees and the fact that, on some Committees, the Opposition should be in the majority. I refer to the question of what happens in relation to the nine Tory Members who no longer have the Tory Whip. If any of those hon. Members is serving on Select or Standing Committees there is an argument about which side they are serving on. Therefore it is time that we had a statement. I have no doubt that discussions will take place.

Mr. David Shaw (Dover): The hon. Gentleman should sit on a Committee.

Mr. Skinner: I have, many times. Check the record.

This is an important issue, and I want to know exactly what will happen. The Government have deprived themselves of their majority and should now be in a minority on those Committees. The Select Committees are in chaos because some of the nine Members who have lost the Whip serve on them. Appropriate action should be taken in all those cases and it is high time that we were all given the exact picture--and not just through the usual channels--of what is to take place on these various Committees.

Madam Speaker: I have not had a request from a Minister or from the Leader of the House to make a statement on this matter. I have made my own inquiries and I understand that it is a matter for the Committee of Selection. I am sure that matters will be resolved, perhaps not satisfactorily for everybody concerned, but for the majority of hon. Members.

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Orders of the Day


Order read for resuming debate on Question[29 November].


Motion made, and Question proposed ,

That is it expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide--

(a) for zero-rating or exempting any supply, acquisition or importation;

(b) for refunding any amount of tax;

(c) for varying any rate at which that tax is at any time chargeable; or

(d) for relief other than relief applying to goods of whatever description or services of whatever description.--[ Mr. Kenneth Clarke.]

Question again proposed .

Budget Resolutions and Economic Situation

4.42 pm

Mr. Gordon Brown (Dunfermline, East): Yesterday, in what has become known as the VAT-on-fuel Budget, the Chancellor confirmed his plan to double VAT on fuel in April. That plan will mean an average 10 per cent. rise in fuel bills and it will hit the housebound, the old and the disabled. In total, the plan will mean £2 a week on pensioners' fuel bills.

The VAT rise is unfair, unacceptable and totally wrong. Hon. Members' first response to the Budget is that the Chancellor should think again. If he will not think again, the House should force him to do so. I believe that a majority of hon. Members wish to stop the increase to 17.5 per cent and that that majority should be allowed to express itself. The Government should be ashamed of the fact that they told the electorate that they would not impose VAT on fuel and are now determined to impose it at 17.5 per cent. from April. Why are Ministers so out of touch with public opinion that they think that they can get away with breaking election promises on VAT? Why are they so out of touch that they think that they can fob off millions of pensioners with a grossly inadequate compensation scheme? The Conservative party is so much the party of privilege that the Government are prepared to tax pensioners in poverty for their fuel while refusing to tax millionaire directors of privatised utilities on their executive share options--even when Conservative Members advise them that the system is indefensible.

Why is the Conservative party so much the party of the boardroom rather than the party of the people? The Government charge pensioners £2 a week more by way of VAT even as they refuse to criticise a £200, 000-a -year rise for the chairman of British Gas. How do the Government think that they can ever soften the blow with the Chancellor's announcement of £1 a week more under

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the cold weather compensation scheme? Do they think that that is in any way adequate compensation for the anger and sense of betrayal felt by British people?

The scheme excludes 8.75 million pensioners from even the ability to claim. It is available only to pensioners who are on income support, and normally for only two or three weeks in the year. It is available only if temperatures fall below zero for seven days a week. Six days of freezing weather are not enough: a pensioner ends up with no help at all. The scheme demands that, in addition to being old, one must also be penniless and freezing before a penny can be claimed. Kafka would have been proud to invent that scheme. For British pensioners it is cold comfort indeed. Pensioners cannot heat their homes with false Government promises.

Why did the Chancellor not tackle the taxation of private medical insurance, executive share options, inheritance tax abuses and offshore trusts before contemplating his tax offensive on pensioners? He is so out of touch with public opinion that he is not a reluctant convert to VAT on fuel: he is, unfortunately, an enthusiastic advocate of it. Far from wanting to leave VAT at 8 per cent. next year, he wanted it to be 17.5 per cent. this year.

The Chancellor is so out of touch that he favours in principle putting VAT on books and newspapers as well. He has voted in the House for VAT on children's clothes and has already told us that not putting it on food and transport is an anomaly. A few months ago he was unable to deny the letter that he wrote to a constituent in which he said that he had always thought that in this country we exempt too many goods and services from VAT.

The Chancellor has a dependency on VAT and he moves from one VAT high to another. He cannot explain his craving for it and under pressure he seeks to deny it, particularly at election times. But like any addict he keeps coming back to it. There is no hope for this man other than to be completely removed from the temptation by an enforced period of abstinence- -by a period of years in opposition. The Government are out of touch in what they say about VAT, and they are out of touch in talking about tax cuts when everybody knows that they are imposing tax rises. They are out of touch with the effects that their economic policies have had on millions of British people. But I do not need to explain the impact on people. John Maples, who is a vice-chairman of the Conservative party, stated last week in his memorandum to the Prime Minister that living standards would fall again in 1995 and 1996. He went on:

"We have to see this rise in living standards soon or we will have had four or even five years of recovery with no rise in living standards."

Mr. Maples is fearful that under this Government we could move from recession to recession without an intervening period of prosperity for millions of people. In offering his advice to the Government, he says that there will be no prosperity this year or next.

Many companies are going out of business, and that has been the experience under Conservative Governments not just since 1979 but since 1970. The effect on British industry can be summed up by saying that there have been four recessions and that thousands of companies have been buried. The damage to manufacturing is great because of the third of manufacturing jobs that have been lost.

What about the effect on living standards of the Budgets that the Chancellor and his predecessors have introduced? There have been seven tax rises in six

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months. Mortgage tax relief has been cut even as mortgages are rising, costing the average family £122 a year. The married couple's allowance has been cut, costing the typical family £96 a year. There is a new tax on household insurance of £7 and on car insurance of £10, VAT on fuel and an airport tax which will amount to another £10 for the typical family.

Take the case of the widow already hit by VAT on fuel, hit by the insurance tax for her home, then hit by cuts in mortgage tax relief if she owns her own home. In April, she will be hit yet again by cuts in the widow's tax allowances. Before this year she started to pay tax at £99 a week. From April, shamefully, she will start paying tax at only £93 a week. The Government have taken the widow's mite yet they ask us to believe that the Conservatives are the party of low taxation.

We have had the biggest tax rise in history--20 tax rises in two years. We have had tax rises amounting to £500 last year and £350 in the year to come. I tell Conservative Members that the total cumulative tax increase under Conservative Government since the election, as recorded in the Red Book yesterday, amounts to extra taxes not of £1 billion, £2 billion or £3 billion but of £50 billion by 1997.

At the last election, Conservative Members said that to pay for public spending plans, Labour would take more than £30 billion in taxes. The Conservatives have taken £50 billion in taxes because of their economic failure. What do they say now, after the biggest tax rise in history? Unable to say that they are cutting tax; with no record of achieving cuts in tax; with tax higher now than it was in 1979; with no specific Budget proposals to cut tax for millions of people who are hard hit because, for most of them, taxes are to rise; with the Chancellor unable even to repeat in his Budget the promise that the Conservatives are the low-tax party--as he used to say--in the medium term, because the Budget statement shows taxes continuing to rise, what do they say now? Yesterday the Chancellor said:

"Conservative Members are tax cutters by instinct."--[ Official Report , 29 November 1994; Vol. 250, c. 1102.]

Having been betrayed on action over promises, we are now asked to believe that we should trust the Government's instincts on tax. When we cannot believe what they do or what they say, we are asked somehow to believe in their instinct.

The Chancellor had chances in the Budget. He had a reduced public sector borrowing requirement. He had the option of taxing executive share options. He had the option of cutting public spending on private medical insurance. He had the option of cutting into waste. But his instinct was clear. His instinct was not to cut tax for millions of pensioners, but to raise it from 8 per cent. to 17.5 per cent. That was his instinct--not to cut taxes but to raise them for millions of people.

The Prime Minister says, in his own inimitable language, that more must be done to get back to our instinct of cutting taxes. We will treat such statements with the contempt that they deserve. So were they all men of sound instincts. After 15 years, we have a Cabinet in long retreat, from deed to intention to instinct, which cannot now talk about its achievements, only about intermittent and occasional instincts.

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What would the Home Secretary or the Prime Minister have said about the repeated offender asking for one more chance, on the strength of his instinct, to do better? Would the Home Secretary or the Prime Minister say, "Let us trust the instincts of these men"? Or would they not say, as they have, "We should condemn a little more and understand a little less"? The Home Secretary said, "The critics say give them chance after chance. I say, what about the victims?" In this sorry tale of repeated multiple tax offences, there are 50 million victims and 300-plus Tory Members of Parliament responsible. Again in the words of the Home Secretary, "We should have no truck with trendy theories on this. Those who are responsible should be held to account for their actions and punished accordingly." It would take a cut of 7p on the basic rate of income tax today just to undo the damage of the tax rises that the Chancellor and his predecessor have introduced.

The Government are so out of touch with the British people that while they talk of tax cuts they are bringing in tax rises. Not only that--they try to persuade us that they have a strategy for attacking unemployment when their proposals do not even begin to measure up to the problem.

Consider what the Secretary of State for Employment called "the Budget for jobs". The community action programme was not increased, but cut from 55,000 places to 40,000 places--not doing more for the unemployed next year but doing less. The training budget was not increased but cut--not doing more but doing less. Far from investing more in helping the unemployed, the Government propose cuts in the employment budget which will mean that £500 million less--not more--is paid out next year. The claim of the Chancellor and the Secretary of State for Employment that this was a Budget for jobs is a travesty of the truth.

The main measure for the unemployed announced yesterday--the national insurance holiday for people unemployed for more than two years--is not on offer until April 1996. If a man or woman has been unemployed for two years or more, why should he or she have to wait three and a half years before the Government begin to act? If it is right to take action, why did not the Chancellor take action yesterday rather than postponing it for 16 months? But is that not typical of the Government? They have been forced by events to admit that for 16 years they have not done enough to help the long-term unemployed. They have now had to accept the principle that action must be taken to avoid the threat to social cohesion. They have adopted one, but only one, of Labour's measures in a desperate attempt to give the impression of acting. But they cannot measure up to the problem and they take another 16 months to act.

Who will benefit from the scheme? Why has the date of April 1996 been chosen? Which redundant people are likely to be calling on the services of the scheme? Conservative Members should be interested. Will Kleinwort Benson apply for a national insurance holiday if it chooses to employ the ex-Chancellor? Does the Secretary of State for Employment merit a work trial of three weeks free of charge to let, as his statement says, a future potential employer draw conclusions about his propensity to work? If the Chief Secretary were to seek employment, no doubt abroad, would the job finder's

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grant be enough to keep him in the style to which he would like to be accustomed? What of the great scheme called workstart?

Mr. John Butterfill (Bournemouth, West): I am sorry to interrupt the hon. Gentleman's jokey line, but does he think that, if we pursued the socialist policies that he would advocate in dealing with the unemployed, we would be any better off than the French or the Spanish, who have much higher rates of unemployment and rates which are rising while ours is falling? Does he not think that we have it right here and that his remedies would not work?

Mr. Brown: The workstart scheme is specifically designed for the hon. Gentleman. I will come to the measures that we would adopt to deal with unemployment. The workstart scheme is designed specifically to cover employer prejudice against any group of people. When the time comes, perhaps all Conservative Back Benchers will be eligible for the scheme.

Let me tell the hon. Member for Bournemouth, West (Mr. Butterfill) what we would do about unemployment. We would release the capital receipts to local authorities in a phased way and let local authorities build. The hon. Gentleman, with his expertise in these areas, should be supporting us. We would expand the small business grant scheme and let small businesses employ. We would create an environmental task force and let young people have hope again. We would give employers not £6 a week under the scheme that the Chancellor proposed but a realistic figure of £75 a week to get the long-term unemployed back to work.

Mr. Butterfill rose --

Mr. Brown: I shall not give way to the hon. Gentleman again. If the Chancellor wants to know how he can pay for the first year costs of measures that would eventually save the Exchequer money, let him look at the privatised utilities. Let him look at the £1.5 billion windfall tax allowances given to the water companies, at the allowances that he is to give to the privatised British Rail, at the £3 billion windfall from the demerger of the national grid and at the excess profits among the £45 billion that the privatised utilities have made during the recession. At a time when 1 million people under 25 are out of work and more than 1 million people have been unemployed for more than one year, it is our duty to be more ambitious in our policies to help the unemployed.

Mr. David Shaw (Dover): Does the hon. Gentleman accept that his proposal to tax privatised utilities would mean taxing the savings, pension funds and life assurance companies of the 16 million savers in this country who own 50 per cent. of the shares of privatised utilities? Is not the hon. Gentleman proposing the biggest theft of pension fund money since Robert Maxwell--another socialist?

Mr. Brown: If privatised utilities can afford to pay their chief executives salary increases of up to 75 per cent., they can afford to pay a windfall tax to the Treasury on their excessive profits. I would think more of the hon. Member for Dover (Mr. Shaw) if he sought to explain to

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his constituents why he has reneged on his manifesto for the last general election, which told them that there were two vital messages to remember:

"David lives locally . . . David Shaw supports lower income tax."

I gather that the hon. Gentleman has kept one of his promises, but he will pay dearly for breaking the other promise when he faces his electorate again.

What of the long term for industry, skills and training, and investment? Public investment will be cut 9 per cent. next year and more the year after. The Government cannot help industry, improve skills or aid investment through the Department of Trade and Industry because they are divided from top to bottom. The industry budget was cut because the President of the Board of Trade and the Chief Secretary to the Treasury went to war over the cuts that were necessary, resulting in the budget being halved. We will soon find out whether regional incentives, support for small businesses, or research and development funding have been placed at risk as a result.

The employment budget was cut because, although the Chancellor may want to act, the Secretary of State for Employment doubts whether there should be a Department of Employment at all.

As to the review of dividends and savings, we know from press cuttings that Lord Hanson blocked the Chancellor. There is no long-term policy because the people who fund the Tory party are no longer interested in Britain's long-term prospects. The Government can do nothing for industry, employment or skills because the Conservative party is divided from top to bottom and cannot begin to agree the action to be taken--as with the Post Office. The Government have no strategy, policy, direction or leadership, and few followers.

A letter to Conservative supporters sent by Conservative Central Office states:

"Dear expatriate,

It is now 15 years since the general election victory in 1979." The recipient is asked to consider registering to vote at the next general election. But a problem arises in the penultimate paragraph, with which I will acquaint the House. It states:

"If you want to vote Conservative and do not have a relative or friend on whom you can completely rely to follow your wishes, tear off part 2 of the form and discard it, and fill in a `Find me a proxy' request form, sending it to us. The Conservative Party will then suggest to you a reliable Conservative who will agree to be your proxy."

To whom was that letter sent? Mr. Nadir in northern Cyprus and Mr. Bottna in Switzerland? Mr. Thatcher in Dallas--can he no longer trust his mother to exercise his proxy?--or Mr. Patten in Hong Kong? Is there no one on whom he can rely? The letter ends:

"Please be as generous as you can. It will be an investment with a real return."

The Tory party is so divided that its mind is not on the Budget, the state of the economy or even solving the VAT problem but on the war raging within it.

The Chancellor broke a number of other promises in yesterday's Budget. In the run-up to the general election, the Prime Minister said:

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