House of Commons Hansard Debates for 5 Dec 1994

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the professional magazines said that no one need pay capital gains tax again because of the 60 per cent. relief which is achieved when all of the reliefs are put together. If one is going to intervene and encourage people to save and invest--which we would certainly want to encourage--one should at least begin to point people in the right direction.

Where is the evidence that the Government want to point people to invest in those sectors that are not getting investment at present, such as high technology where there is a greater risk? Where is the guarantee that we shall not see a repeat of the business expansion scheme, where money was put into property and granny-farming, or into safe sectors in which people would probably have invested anyway? If the Government want to read a critique of the business expansion scheme and all of its failures, they could do worse than to read a pamphlet written by the Secretary of State for National Heritage. The right hon. Gentleman is not in his place, perhaps because he suspected that I might mention the pamphlet. He wrote a very telling piece criticising the Government's policy on that scheme. The Government are committed to intervention, despite what some of their right- wing adherents might say. The problem is that they do not yet know how to intervene in the public interest, although they know how to intervene in the private interest. [Interruption.] The Financial Secretary can fill in the Secretary of State for National Heritage, who has just arrived.

The Government have no sense of the long term. What about the reforms to the capital gains tax regime which we were promised? What happened to the review? In fact, the Secretary of State for National Heritage walked in right on cue. When he was still Financial Secretary, he was charged with reviewing the policy on the payment of dividends. He started the review, but Lord Hanson, who bankrolls the Conservative party--one of the few who still does--told the Prime Minister that the review would have to be stopped because the Financial Secretary seemed to be too much like a socialist. The Prime Minister, full of resolution and strength, agreed to stop the review immediately and made an announcement to that effect. Then, more and more people said that the review was necessary and, according to today's Financial Times , the review has started again. I hope that the present Financial Secretary will tell us whether the review of the payment of dividends by companies started by his right hon. Friend has been started again, whether it is still on ice or whether it has been scrapped. Perhaps we should know.

We believe that a review of the corporate tax regime is absolutely essential, which is why we propose to establish a review committee examining the whole issue of dividends and other reforms to the corporate tax structure which we believe to be long overdue and which the Government should have done.

The Government also ought to review their competition policy in the light of Mercury's announcement today and, in particular, the announcement that Mercury pay phones are to be taken off the streets. Many of us believe that the Government's commitment to competition in the private sector does not run as deep as it should do.

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The public have more sense than the Government think. They know that the Conservatives lied about tax in 1992, and about VAT, to which I shall return briefly. Many people do not make the connection between VAT and the British constitution, but it was significant that, in opening the debate this afternoon, the Secretary of State for National Heritage began by discussing the British constitution. It was also significant that, on Friday night, the Prime Minister defended the British constitution and suggested that no changes were necessary. The last time that he did that was when he thought that he was in political difficulty, and he has done it this time because he is in political difficulty. The only reason why the Conservatives have raised the issue of the constitution and criticised those who wish to amend parts of it, particularly those of us who want to see reform of the relationship--

Madam Deputy Speaker (Dame Janet Fookes): Order. I am not clear that that falls within the remit of our present subject.

Mr. Darling: The Secretary of State for National Heritage first raised the matter and I am replying to the debate. To be fair to you, Madam Deputy Speaker, he was admonished for doing so and I was simply pointing out that the matter was raised to deflect attention away from the divisions on VAT and, of course, on Europe.

We need a Government who are committed to the long term. For example, the Government's track record on investment is poor. In the course of his Budget statement, the Chancellor said much about the finance initiative which his predecessor and then he announced some two years ago. Let us look at the facts. Of the 78 projects announced two years ago, only 12 have got off the ground. Although £5 billion of private money has been levered into those projects in the past two years, £4.5 billion has been cut from public spending. So there has been a net reduction in the amount of investment at the very time when we need it.

In the Budget, the Chancellor announced a cut in rail investment. We know the problems with a lack of a link between the channel tunnel and the rest of the rail network. We have had problems with the Northern line and there are problems with the Heathrow express, where the most visible sign of activity is parts of Heathrow slipping into the mud. We believe that the private finance initiative needs fresh impetus. The Treasury is now reviewing each and every project. Some of us believe that that will lead to greater delay, although there is certainly a need for more clarity and openness.

There is also an urgent need for the Government to make real proposals to tackle the problem of long-term unemployment, such as we have proposed. That is important for both economic and social reasons. We should spend some time--perhaps not tonight--reflecting on the more unpleasant changes in society that the Government have brought about. The Chancellor talked of his concern about a deprived underclass. Many Opposition Members and, I suspect, many Conservative Members know that that underclass is already here and has been here for some time. We should all be concerned about the fact that a second generation of unemployed people with no prospect of work is now appearing in towns and cities.

There have been lower living standards for a growing number of the population. It has been estimated that almost a third of the population has seen no increase in

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standard of living for the past 14 years. Above all, there is a perceived lack of fairness from the Government. Many people believe that the true Tory instinct is not tax cutting--in fact, Tories increase taxation--but lack of fairness.

A minimum wage would begin to put right the problem that is now arising because the Government are driving down wages. We cannot compete with the developing world on low wages; we can compete on quality. To get quality, we need a highly skilled, highly motivated work force and anyone who fails to see that is doomed to economic failure. For society as a whole, what happens to our neighbour matters in a social and economic sense.

The Government need a positive attitude to Europe. What happened to the Prime Minister's slogan that we must be at the heart of Europe? We shall see in the next two or three days.

On education and skills, is it not astonishing that, with nearly 3 million people unemployed, many parts of the country have skills shortages because the Government will not face up to the fact that it is necessary to invest in education and skills if we are to compete with the rest of the world? We have had none of that. Instead, we are confronted by a Government party deeply divided--so divided that I see today that the Secretary of State for Social Security had to call on his faction to rally round the Prime Minister on the vote on VAT tomorrow night.

This year's Budget is fascinating because it reveals the Government's true problems--their divided philosophy and their uncertainty as to why they are there or what they want to do. They are united only in the interests of keeping themselves in power. They are torn between competing philosophies. They end up pleasing no one because they do not know which way to follow. They have no idea why they are in power other than the fact that they want to stay there. There is no purpose other than trying to be re-elected. Everything, it appears, is now pinned on tax reductions in 1996. That will not work, because the Government have lost the trust of the people, and no party will ever win unless people trust it.

The Government seem to have nothing else to say. They have no long-term view, no ideas for reform, no idea of social justice and no concept of society. The Government have run their course. They are out of touch; they are remote. People are looking for a change, and they will get that under Labour.

9.30 pm

The Financial Secretary to the Treasury (Sir George Young): The debate has been first class, and I shall try to answer the many points that hon. Members on both sides of the House raised. I begin with what I thought was the saddest remark in the debate--a remark by the hon. Member for Thurrock (Mr. Mackinlay), who explained why he attended an Adjournment debate last week: "I never go home." Having answered more Adjournment debates in the House than any other Minister, I have to say to the hon. Gentleman that, confronted with the wide range of entertainment available in the capital, as outlined by my right hon. Friend the Secretary of State for National Heritage in his opening speech, to choose to attend an Adjournment debate in the House exhibits unparalleled

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commitment. Looking around the Chamber tonight, I see that some other hon. Members are not confronted with the same problems that have confronted him.

I shall deal straight away with an issue mentioned by the hon. Member for Edinburgh, Central (Mr. Darling), on passenger transport. During the day, the Opposition have criticised the removal of VAT zero rating for transport provided as part of entertainment services. It is typical that they have concentrated on scaring people rather than putting forward the facts, and they talk about closing loopholes but oppose the Government when the Government do so. I want to put the record straight.

The measure that the Opposition have mentioned during the day restricts zero rating for passenger transport to what any reasonable person would call passenger transport and to what Parliament intended when the relief was first introduced, so it stops favourable tax treatment for trips in hot air balloons, round trips in Concorde over the bay of Biscay, and so on. Zero rating will continue for independent coach travel to football matches organised by supporters' clubs, mountain railways, steam train rides that are complete in themselves rather than, for example, part of the entrance to a museum, and so on. The tax treatment of canal boats--an issue that seems to have assumed dramatic proportions--should remain unchanged. The attack on VAT on fuel made by the hon. Member for Islington, South and Finsbury (Mr. Smith) has been made less effective by the interview that he gave with Green Magazine in February 1993, when he said that Labour had been thinking of a number of

"small but effective tax measures"

which included

"increasing VAT on environmentally unfriendly products". Then he was demolished by my right hon. Friend the Secretary of State for National Heritage when he started championing loopholes. My right hon. Friend pointed out--

Mr. Chris Smith: Will the right hon. Gentleman give way?

Sir George Young: May I just finish this point? Then I will give way.

Mr. Smith rose --

Sir George Young: No. I will finish this point and then I will give way.

On loopholes, my right hon. Friend pointed out that the Labour party voted against a loophole on capital gains tax in last year's Budget--a loophole that the Government have closed, bringing in revenue of £300 million in a full year.

Mr. Smith: I think that the interview in Green Magazine has now been quoted about five times by Conservative Members in the House, and every time I give the same reply, because they do not appear to listen or understand. As I clearly said, we were talking about small matters, such as VAT on unleaded batteries. If the

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right hon. Gentleman cannot tell the difference between a leaded and an unleaded battery and someone's fuel bill, he is even more stupid than I think he is.

Sir George Young: I have to say that that would be a rather ineffective response to the environmental challenge that I thought that the hon. Gentleman took seriously when he had an environmental responsibility.

However, the astonishing climax came at the end of the speech of the hon. Member for Islington, South and Finsbury, when he accused us of "paralysis". Four per cent. growth, the highest rate of growth in Europe, record exports, an 11 per cent. increase in business investment next year, unemployment falling--he calls that paralysis. We can be grateful that he chose a career in politics rather than in medicine.

We welcome my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) to the Government Back Benches and the liberation that that can bring with it. He rightly focused his remarks on the needs of pensioners and drew on his experience as Secretary of State for Social Services to stress that we must safeguard the interests of those who have retired in the context of the benefits of the recovery. I am sure that my right hon. Friend has noticed that in the Budget we have over-indexed age allowances in recognition of the very factors that he mentioned.

The hon. Member for Burnley (Mr. Pike) alleged that our plans are unsustainable because they rely on the proceeds of privatisation. If he studies table 4.5 on page 69 of the Red Book, he will find that next year privatisation will provide the resources for less than 1 per cent. of Government expenditure, falling to a third of one per cent. in 1998-99. There is no over-reliance on privatisation proceeds in our forward plans.

My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) focused on the cost of servicing the national debt. I know that he will welcome the £42 billion reduction in public expenditure over four years which has been achieved. My right hon. Friend will be interested to know that that will save over £3 billion a year at current long-term interest rates. He was good enough to compliment my right hon. and learned Friend the Chancellor of the Exchequer on achieving the goal of growth with low inflation.

The hon. Member for Bath (Mr. Foster) was rather condescending about part- time jobs. It is worth noting that a recent survey showed that 85 per cent. of those with part-time jobs wanted part-time jobs. The Liberal Democrats now oppose the imposition of value added tax on fuel, yet they produced a policy document entitled "Costing the Earth", in which they stated that they

"advocate as a first priority the imposition of a tax on energy . . . The UK is unusual amongst EC members in not applying even standard rates of VAT to domestic fuels . . . If it proved completely impossible to persuade our international partners to adopt energy taxes, we would nevertheless press forward, but phase them in at lower levels than otherwise--for example, by ending the anomalous zero-rate of VAT upon fuel".

The hon. Member for Bath moved on to education and the revenue support grant statement that was made on Thursday by my right hon. Friend the Secretary of State for the Environment. My right hon. Friend said that there is always concern at this time of the year about the prospective reduction in the number of teachers for the

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following year. He demonstrated, however, that such fears have proved groundless and that the number of teachers employed has increased from year to year.

My right hon. Friend the Member for Brent, North (Sir R. Boyson) said that the Government were too big and that there were too many Ministers. He will not expect a sympathetic response to that from the Government Front Bench. Of course, since my right hon. Friend left the Administration, more Ministers are required to do the same amount of work. He made an ingenious suggestion to exempt the elderly from VAT. There are some administrative difficulties in his suggested solution as well as scope for abuse. For example, an electricity account could be put in the name of a pensioner if a pensioner was a member of the household. My right hon. Friend's solution would not meet our requirements.

The hon. Member for Motherwell, South (Dr. Bray) made a serious speech, as one would expect from him. Instead of talking about this Budget, he talked about the next Budget. Not only that, he told us what would be in it. He then went on to tell us that we could not afford it. He forecast the date but not the result of the next general election.

The hon. Member for Motherwell, South wanted further steps taken to reduce unemployment. He will know that unemployment has been falling for some time. The Government's priority was to ensure that the welcome fall in unemployment reached those who, for whatever reason, had remained outside the job market over the past two years. As the hon. Gentleman knows, we have done that through a number of measures, with incentives for employers and employees. Some of those measures will be implemented next year, and one in April 1996. The measure to be introduced in 1996 will be relatively inexpensive compared with those that are to be implemented next year. The most expensive measure in terms of revenue forgone is the reduction in national insurance contributions, which will begin next April.

My hon. Friend the Member for Twickenham (Mr. Jessel) gave the debate a nautical flavour, introducing the theme of "Steady as she goes." Unusually for a Conservative Member, he made a plea for higher taxation--higher taxation on tobacco. As he knows, the Government are committed to real increases in the cost of tobacco, explicitly for the health reasons that he rightly mentioned. I shall write to him about the points he raised on auction houses.

The hon. Member for Warwickshire, North (Mr. O'Brien) made a rather grudging speech, recognising that things were looking slightly better but giving the Government no credit for that. Let me quote from the Co- operative bank's 1993 report: if the hon. Gentleman does not take it from me, he may take it from the bank. The report states: "if the Government can continue to fund and reduce its borrowing requirement whilst maintaining low inflation, low interest rate environment and establishing steady growth, then the prospects for many of our UK customers will be better than at any time during the last five years."

If that does not work, how about the annual report of MAI, a well-known public company with a well-known socialist as its chairman? Its 1994 annual report stated:

"All of the markets in which the group operates are characterised by great opportunity, rapid change and increasing competition . . . The outlook for television advertising, and motor car and information sales is encouraging."

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I see from that latest annual report, however, that the company's chairman made no political contribution in 1994.

Let me take up a technical point put to me by the hon. Member for Warwickshire, North about funding the public sector borrowing requirement. He is right: we have sold £18.7 billion worth of gilts already, and there are £10.5 billion to go.

My hon. Friend the Member for Hazel Grove (Sir T. Arnold) raised an important procedural point: how does the House monitor the expenditure incurred by the Government, and how does it monitor economic policy now that the Budget and the Queen's Speech are so close together? He will understand that replying to those questions goes way beyond my negotiating brief, but I know that my right hon. and learned Friend the Chancellor and the Leader of the House are aware of the issues, and that they are being discussed through the usual channels.

The hon. Member for Londonderry, East (Mr. Ross) reminded the House of the opportunities to promote further economic recovery in Northern Ireland on the basis of the welcome political stability that we are now seeing. He approved of nil PSBR, and of the measures that we have taken to balance our budget; however, he drew back from an important component of that strategy- -the imposition of VAT on fuel--making it clear that he and his party had always resisted that measure. My hon. Friend the Member for Beverley (Mr. Cran) put the Budget in a broader perspective, reminding us that internal discipline--getting a grip on public expenditure--was as important as the external discipline imposed, as he put it, by the exchange rate mechanism. He welcomed the determined and considered policies of my right hon. Friend the Secretary of State for Social Security to curb the rise in social security expenditure, and made it clear that he was against high taxation.

I listened with interest to the speech of the hon. Member for Birmingham, Northfield (Mr. Burden). As he said, I was a housing Minister, and spent some time in Birmingham taking a close interest in the problems that he described. He did not mention the extra help that his city is given through the housing action trust in Castle Vale, which means that the Government are directly bearing a responsibility that would otherwise have fallen on the shoulders of the city council. The area is also helped by city challenge, and by the work of the development corporation. As for housing, I am sure the hon. Gentleman knows that the Government have more than kept their manifesto commitment in regard to the number of new lettings. My hon. Friend the Member for Corby (Mr. Powell) rightly pointed out that low interest rates could be as important as low tax rates. He then made what I am sure all who heard it would agree was a brave and honest speech, in which he shared his dilemma with the House. On one hand, he made it clear that he disliked the imposition of VAT on fuel; on the other, he recognised the wider implications for the Government that would follow if we did not proceed with the measure. He said that he would consider his position before tomorrow's vote. I hope that the wider implications for the Government as a whole will be at the forefront of his mind in coming to a decision.

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The hon. Member for Lewisham, West (Mr. Dowd) brought some colour to an otherwise colourless speech by quoting from the Maples memorandum, a document about which we have heard even more than the interview of the hon. Member for Islington, South and Finsbury with Green Magazine. We move from the Maples memorandum to the Melton memorandum, an ingenious plug for a publication that my hon. Friend the Member for Rutland and Melton (Mr. Duncan) has recently produced. He put in a broader context, the context of what has been happening for decades, the Budget strategy of getting public funds on a sound basis and coming to terms with the economic cycle. He mentioned the disarray that could follow if the VAT on fuel decision were reversed. He also said that what is right is not always immediately popular. I think that all Conservative Members are conscious of that. I shall write to my hon. Friend about his specific point on widows' pensions.

The hon. Member for Southampton, Itchen (Mr. Denham) focused on the income support changes on mortgage interest. He was wrong to describe it as a new tax, because under the current system the taxpayer is funding over £1 billion of income support in the circumstances that he described. We are seeking to move from a tax to insurance, placing the liability where it rightly belongs. The hon. Gentleman will know that there is no change for existing claimants. For existing borrowers who claim in future, there are some modest changes which would add, on average, £600 to the amount of debt outstanding. I doubt that that would oblige any building society or bank to foreclose. A new regime which will come in next year is designed to promote a new market in insurance. As I have said, we propose to place the responsibility for insurance where it rightly belongs. My hon. Friend the Member for Bury, South (Mr. Sumberg) made a courageous speech. He was the only hon. Member in the debate to focus on help for businesses through transitional relief. He was right to focus on that because it is one of the more generous measures in the Budget, albeit a one-year measure. It will be greatly welcomed by many small and large businesses. My hon. Friend made a constituency point, on which I know he feels strongly, when he mentioned the reduction in investment in roads and hoped that it would see the end of the road which I know he has strongly opposed in his constituency. He reluctantly concluded that he would be unable to support the Government in tomorrow's vote. His reason was that the policies have worked and he painted a rosy picture of economic prospects and used it to justify reversing the decision. But prospects are rosy precisely because we took difficult decisions last year to get the public finances in balance. We risk forgoing that rosy picture if we begin to unpick the foundations of the successful recovery. My hon. Friend the Member for Hendon, South (Mr. Marshall) said that capital gains tax was too high and that he would like to see it reduced. He outlined measures to fund that reduction. I understand that he was supported by my hon. Friend the Member for Fulham (Mr. Carrington).

I regret missing the speech by the hon. Member for Motherwell, North (Dr. Reid), but I shall read it with interest, not least because he is my pair and I should like to know exactly what he is getting up to.

My hon. Friend the Member for Gravesham (Mr. Arnold), who has sat through more of the Budget debate than many other hon. Members, said that import prices

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are buoyant. A year ago, import prices were rising faster than inflation and everybody thought that that would inevitably feed through to the retail prices index. In practice, that has not happened, partly because of competitive retail pressure, and we hope that that will continue. However, it is right to put down a marker. My hon. Friend made an important point about the tax treatment of married couples. A married couple will still pay less tax than two individuals with the same income, so there is an inbuilt bias in the system towards those who are married. My hon. Friend said that the reduction in the MCA has somewhat eroded that advantage over recent years.

There has been some inconsistency in Opposition speeches over the past four or five days. First, Opposition Members say that we have taxed too much and, secondly, they say that we spend too little. But taxes and spending are two sides of the same coin. When one presses Opposition Members they come up with a variety of solutions, such as windfalls, loopholes and the spending of capital receipts. I am bound to say that their arguments lack credibility. We cannot fund continuing revenue commitments with windfalls or one-off receipts. Even if we had the one-off receipts in year one, they would not pay for the revenue commitments in year two.

Listening to Labour Members trying to justify their spending aspirations by referring to windfalls and loopholes is like watching a very large lady trying to get into a small dress--there is simply inadequate cover for all the liabilities. Spending the capital receipts, which would not have even existed if we had listened to the Labour party, would lead to an increase in borrowing and public expenditure.

At some point during the five-day debate, in which nine Opposition spokesmen have taken part, the House is entitled to a few answers to some fairly basic questions. I do not mean the details given by my right hon. and hon. Friends in the "Financial Statement and Budget Report" but simply a rough idea of where the Opposition are going. As my hon. Friend the Member for Gravesham said, they can no longer hide behind the skirts of the Commission on Social Justice.

Would the Labour party spend more or less than a Conservative Government? Would it raise more or less in taxation? Would it borrow more or less? Would its inflation target be higher or lower? A party that can produce page after page of turgid, multisyllabic prose on contemporary economic theory should be able to answer, in a few monosyllables, the key questions that any responsible party should answer.

I want to say a word about the work incentives package, to which a number of my hon. Friends have referred. It is one of the exciting themes running through the Budget. As everyone has recognised, unemployment has fallen significantly as the recovery has gone from strength to strength. However, long-term unemployment is still too high. Our priority must be to help people who have been out of work for long spells to get back into work.

We want to ensure that no group is excluded from the benefits of recovery. That is why we are introducing a £680 million package of measures to improve the incentives for the unemployed to get back into work. It is an innovative, well-thought-out package, which has been well received by commentators on the Budget.

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We arrived at the package by listening to the unemployed and to the employers. We discovered the real problems that deterred people from taking work and employers from offering them jobs. We have done more than listen; we have done something about it. We are encouraging employers to give the unemployed a further chance by making them cheaper to employ with the cut in national insurance contributions for the lower-paid and, eventually, a national insurance contributions holiday. We are also giving employers the chance to try out people in a job before deciding whether to take them on permanently.

We are ensuring that the unemployed are not temporarily left hard up for money when they leave benefit to start work. We are paying them the benefits to which they were entitled if they take a low-paid job. We are also giving them more help with initial work expenses, such as clothes and tools. We are giving help to the many unemployed people who say that they have to have a full-time job to meet their financial needs. We are giving people with children who work full time an extra £10 a week in family credit. We are introducing new incentives for people who have not been able to find a full-time job to use part-time jobs as a stepping stone to full- time work. We will improve the chances of the unemployed to find a job by keeping them in touch with the world of work. We will be giving them work experience and advice on how to look for work effectively through community action. We are giving 18 to 24-year-olds intensive help in how to search for work. We are trying out new ways to help unemployed people who do not have children--the biggest group of people out of work for a year or more. We are piloting new benefits for people without children who take low-paid work. That is a major innovation in social policy.

Mr. Darling: Will the Financial Secretary answer my question about the review of dividend payments started by his predecessor? Is the report in today's Financial Times that the inquiry has restarted true? If so, who is conducting that review and when will the conclusions be published?

Sir George Young: My right hon. and learned Friend the Chancellor made it clear in his Budget statement that the industrial finance initiative underpinned a number of his Budget proposals, particularly in the provision of finance for small and medium enterprises. Finance for industry remains an important issue, as stressed in the competitiveness White Paper. As to dividends, my right hon. and learned Friend announced no change in the value of the tax credit or in the rate of advance corporation tax for 1995, but those items will, as usual, be kept under review.

More generally, the formal consultation associated with the industrial finance initiative has drawn to a close, but the results will inform Government decisions in future, and will be announced as and when appropriate.

Mr. Darling: I gained the impression from the press report that the consultation had restarted. Until now, the Government's official position has been that the review was scrapped because Lord Hanson told the Government to stop it. The Minister appeared to confirm that the whole consultation has finished, and that the results will not be published because they might be embarrassing.

Sir George Young: That should come as no surprise to the hon. Gentleman, because I announced that in Treasury

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questions, and my right hon. and learned Friend the Chancellor made it clear in his speech to the Confederation of British Industry. There never was going to be a formal White Paper, but the consultation was a valuable exercise that will continue to inform Government decisions.

The Government are committed to reducing fraud and to improving compliance. We want to bring to book people who try to escape the true extent of their tax liability. If we are successful, that will benefit the wider tax-paying population. The Government's yield from compliance work in 1993-94 was equivalent to 2.5p in the basic rate of tax.

My right hon. and learned Friend's Budget statement mentioned that we have instituted a programme of closer working between the Inland Revenue and Customs and Excise. As part of that, those organisations will remove many of the restrictions that currently limit the flow of useful information between their local offices. That will allow tax officers in both organisations to enjoy a better overall picture of taxpayers' affairs and help them to combat non-compliance more effectively.

Although taxpayers are expected and encouraged to comply voluntarily with their tax obligations, some choose to pay less than their full duty or nothing at all. The Inland Revenue looks to investigating a wide spectrum of individuals, companies and businesses to maintain compliance across the board. More than 90 per cent. of cases taken up for investigation result in additional duties being assessed.

The Revenue's total compliance yield in 1993-94 amounted to £4.7 billion. That covers all aspects of its compliance work, from inquiries about the technical merits of an account to in-depth investigations. The Revenue, in the drive to improve its compliance activities, keeps resources under review, redeploys staff as and when necessary, and monitors the quality of investigation work. In the 1993 public expenditure survey, the Government arranged an increase in compliance work staffing equivalent to more than 100 fully trained inspectors.

The hon. Member for Edinburgh, Central asked about executive pay, board pay and the rest. My right hon. Friend the Prime Minister has made it clear that he does not agree with excessive and unjustified pay increases. He

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made it clear also that prices charged by utilities are a matter for the regulators. Boardroom pay is a matter for shareholders, as in all companies.

Shareholders already have the ability to exercise influence by raising questions at annual general meetings or, in the case of institutional holdings, by exerting behind-the-scenes pressure. I welcome the reports of the National Association of Pension Funds, which is minded to take a more aggressive approach at AGMs, using its considerable voting power to ensure that any abuses are restrained. Ministers are always ready to consider ideas for improving shareholders' powers and information. It was announced in the White Paper on competitiveness that the Government have been reviewing a number of aspects of company law, including directors' duties. Those and other matters fall within the remit of Cabinet Sub-Committees. It is especially interesting that some hon. Members are clearly worried that taxes may, at some point, come down. As Labour has put so much energy into attacking any tax increases, I hope that we shall not have any nonsense from Labour Members if and when taxes come down. What this country now wants are solutions and not sound bites. What this country wants are policies and not pantomime. What this country wants are remedies and not rhetoric. What this country wants are goals and not gimmicks. What the people will get from the Conservatives are remedies, goals, policies and solutions. All they will get from the Opposition are sound bites, pantomime, rhetoric and gimmicks.

It being Ten o'clock, the debate stood adjourned .

Debate to be resumed tomorrow .

PETITION

VAT on Fuel

10 pm

Mr. Max Madden (Bradford, West): I present a petition on behalf of my constituents. It declares:

the Government's decision to increase VAT on domestic fuel from 8 per cent. to 17.5 per cent. in 1995 will place a heavy financial burden on pensioners and others on low incomes which they will find hard to meet. The Petitioners therefore request that the House of Commons votes down this proposed increase.

The petitioners hope that all hon. Members, especially Conservative Members, will tomorrow night vote according to their convictions and not the diktat of Tory party Whips, so enabling the House to stop VAT on power increasing next April.

To lie upon the Table .

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Bosnia (Corporal Stott)

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Andrew Mitchell.]

10.1 pm

Mr. Graham Riddick (Colne Valley): One day last March, the life of Corporal Stephen Stott was changed dramatically when a mortar shell exploded in Bosnia. Corporal Stott, who has been in the Army for almost 10 years, had been in Bosnia with his regiment, the Duke of Wellington's, for only 10 days when the explosion took place. The shell blew a hole in his right leg, as well as causing injuries to his back and arm.

Corporal Stott was brought up and educated in Colne Valley and his parents, who live in Marsden in my constituency, have brought his situation to my attention. His parents understandably believe that Stephen should be able to claim some compensation for the injuries that he sustained while working for the United Nations. My inquiries have uncovered a number of issues that I wish to raise in the Chamber this evening.

I am grateful to my hon. Friend the Minister of State for the Armed Forces for his presence here this evening. He knows that I have been in correspondence with his colleague, the Under-Secretary of State for Defence. He will also know that I have been in touch with his office to inform him of some of the issues that I intend to raise tonight.

The Ministry of Defence has told me that if Corporal Stott was invalided out of the Army, he would immediately qualify for a pension along with a tax-free lump sum equal to three times the annual rate of the pension. I do not for a moment dismiss the financial support that would be available through the pension. The problem now, however, is that Corporal Stott's earning power in civilian life could be seriously diminished.

Corporal Stott had intended to apply to join the police force on leaving the Army and his income as a policeman would have far outweighed the income from the pension arrangements. As a result of the injuries he has sustained, he would clearly not now be sufficiently fit to join the police service or, indeed, the fire service, another career that he had been considering.

I discovered that had Corporal Stott been injured in Northern Ireland, he would have qualified for compensation under the criminal injuries compensation scheme. That is because terrorist activity in Northern Ireland is classed as a criminal act and service men injured there would therefore be entitled to claim compensation under the scheme. However, soldiers serving in Bosnia are deemed to be operating within a war zone and if injury or death is sustained, that is as a result of military activity.

I believe that that is a somewhat tenuous distinction. The reality is that the soldiers will see no difference whatsoever between doing their duty in Northern Ireland and doing their duty in Bosnia. Of course, we all desperately hope that the peace process brought about through the sterling efforts of my right hon. Friend the Prime Minister is sustained in the long term and that no more British soldiers will be injured or killed in Northern Ireland.

I have learnt that the MOD pays compensation when soldiers are serving abroad in certain circumstances under the criminal injuries compensation (overseas) scheme. That scheme pays compensation to service men when they

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suffer injury in circumstances similar to those in respect of which compensation would be payable under the criminal injuries compensation scheme in the United Kingdom.

My interpretation of that is that if, for example, British troops had been involved alongside American troops in Haiti, compensation would be payable because any injury sustained would have been as a result of terrorist and criminal activities rather than as a result of military activity between warring factions. Therefore, a soldier injured while doing his duty in Northern Ireland or Haiti would receive compensation; a soldier injured doing his duty in Bosnia would not receive compensation. That is a clear anomaly which I believe the Ministry should address.

Corporal Stott is a professional soldier and he has made it quite clear to me that he is fully aware of the risks associated with being a soldier in Her Majesty's forces and that if he had suffered his injuries as a result of fighting for his country during, for example, the Falklands war, he would not have expected to receive any compensation beyond what he would have received through the pension arrangements. However, he does feel--I agree with him--that it is a somewhat different matter when the British Army is operating on behalf of the United Nations.

I want to ask my hon. Friend the Minister of State for the Armed Forces whether there is any possibility that the UN could arrange compensation for soldiers injured or killed while serving with UN forces. Indeed, I shall make my hon. Friend the Minister aware of the comments made by a spokeswoman at the UN headquarters in Austria when Corporal Stott's case first became public. My local newspaper, the Huddersfield Daily Examiner --

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