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The hon. Member for Workington (Mr. Campbell-Savours) came up with a bright scheme for harmonisation of tax regimes. The trouble is that the cost in revenue of harmonisation with, say, French rates will amount to between £3 billion and £4 billion, which
Column 869needs to be set against estimated bootlegging costs of some £65 million. Revenue loss of that magnitude would have to be made up elsewhere, with massive increases in other taxation.
My hon. Friend the Member for Croydon, South (Mr. Ottaway) made some good points on the need to be responsible in increasing interest rates. He said that it was right to increase them by 0.5 per cent., because the warning signs of inflation were there. There have been rises in the cost of raw materials and in commodity prices. My hon. Friend's view was that of my right hon. and learned Friend the Chancellor and that of the Governor of the Bank of England. I deplored the speech of the hon. Member for Warwickshire, North (Mr. O'Brien), who said that the Chancellor had taken a complete panic measure, and that it was all due to Steady Eddie. The decision to raise interest rates on 7 December was taken on the basis of an assessment of the inflation outlook which had been considered carefully for some time. It reflected economic and political considerations. The Government are determined to take no risks with inflation. It was wrong for the hon. Gentleman to say what he did.
Mr. Mike O'Brien: I am grateful to the Chief Secretary for giving way. Is he trying to tell the House that the panic telephone calls just after the vote, whereby the meeting was brought forward by 45 minutes, had nothing to do with that vote? That beggars credibility. It was, of course, a panic measure and people are paying higher interest rates because the Chancellor made a bad judgment about being able to persuade the House to accept the proposal.
Mr. Aitken: The hon. Gentleman is talking ignorant nonsense. First, he should consider that, throughout the night after the vote, the international markets, including the Tokyo market, remained calm and steady because they were assured by my right hon. and learned Friend's statement at the Dispatch Box that evening. Secondly, the meeting was brought forward by some three quarters of an hour, but it was to do with an auction of gilts that was to take place at 10 o'clock. We wanted to make the announcement at the earliest possible time.
My hon. Friend the Member for Ribble Valley (Mr. Evans) concentrated on cross-channel smuggling and emphasised the need for a stronger and greater intelligence effort. I assure him that we shall increase the intelligence effort because, nowadays, the detection of smuggling is a game not of numbers of uniformed officers at ports but of impressive intelligence effort. That effort is already showing some good results and has achieved some considerable coups in catching smugglers. A major announcement was made only the other day.
I shall also respond to some points made by my hon. Friend the Member for Hastings and Rye, who produced a great deal of anecdotal evidence on smuggling. I was especially impressed by the story of her constituent who makes a regular £150 a week in that way. She said that she wished that the Government would not use excise duties as the milch cow. I assure her that we would much rather not have gone to those particular cows or those particular dairies, but there is no such thing as a free rebellion on a Budget vote and that is what we have to cope with.
Column 870I deal briefly with the speech of the hon. Member for Londonderry, East. I am glad that a voice from Northern Ireland was heard and that the hon. Gentleman mentioned the investment seminar on Northern Ireland, which was opened by my right hon. Friend the Prime Minister. The peace process grows steadily and quietly and, as it does so, the prosperity of Northern Ireland will grow with it. The inward investment record in Northern Ireland has already been good for many years. In the past five years, total inward investment from the United States has been £536 million. Some 10 per cent. of all employment in Northern Ireland is provided by American-owned companies, which shows that there is a good chance that the momentum will grow.
My hon. Friend the Member for Aylesbury (Mr. Lidington) made an excellent speech, in which he was right to warn us that international competition in technology could cause a revolution of falling expectations. He is right to alert us to the magnitude of these challenges but also to point out that we have record-breaking exports and inward investment and that we are a world trading nation and a world financial centre. These successes depend on sound financial judgment, our excellent supply side reforms and the growing success of Britain's economy, all of which are underpinned by the excellent Budget.
I deal now, as I have been longing to all evening, with the extraordinary speeches of the Opposition's spokesmen. As usual, at least half the speech made by the hon. Member for Dunfermline, East (Mr. Brown) was taken up with completely phoney proposals for taxes to fill the gap which he thinks could have been filled in a better way. We have already demolished his windfalls and his loopholes and I now want to do a demolition job on his share options proposal. He went on about tax avoidance and he attacked Lord Young, Sir John Nott and some poor man from PowerGen who had bought some share options in his company. I shall deal with Labour's continuous attack on share options, and the party might learn a thing or two.
The hon. Member for Dunfermline, East worked himself into a lather of indignation during his denunciation of share options. His thesis is that they are a scandal and a wicked windfall for the undeserving rich. He intends to raise £200 million in new taxation by abolishing them. I have three serious criticisms of the hon. Gentleman for his stance on share options.
The first criticism is the familiar one that the hon. Gentleman has got his sums completely wrong. He claims that £200 million could be saved by abolishing share options, which is a typical exaggeration. As my right hon. and learned Friend the Chancellor told the House on Thursday and today, the actual cost of such an abolition--even if one includes the spouses whom the hon. Gentleman invented--would be around £50 million, so he got his sums wrong by a multiplier of four, which is about par for the course for him and his voodoo mathematics. My second criticism is that the hon. Gentleman has completely misunderstood his target. In any sensibly run company, share options are offered to and usually taken
Column 871up by key employees at all levels, including clerical staff, secretaries and junior and middle executives as well as company directors.
The fundamental point is that it is a good practice, because share options give employees the chance to have a stake in the business in which they work. If their company does well, perhaps a few years later they can make a profit on their options. They have to pay capital gains tax, and in some circumstances they might have to pay income tax on them, but it is a way for them to receive a reward for their contribution to making the company in which they work a success. The Conservatives fully support fair share options schemes of the type that I have described. It is typical of the politics of envy of the Labour party that so many of its Front-Bench spokesmen denounce them as a scandal.
That brings me to my third criticism of Labour's attack on share options, which is its barefaced hypocrisy and humbug. I am now going to reveal something to the House, something about some prominent Labour supporters, close friends and advisers to the Leader of the Opposition, who have done extremely nicely out of a certain share option scheme and who have used their profits from those options in an extremely nice political way for the benefit of the leader of the Labour party. I stress that I am talking here about extremely nice people. They appear in columns with headlines such as, "Who's who on the new Socialist social list?" More recently, they have been appearing under headlines such as, "Blair challenged to reveal source of his £79,000 leadership campaign," or as The Independent on Sunday headlined it, "How London Weekend Television men funded Tony." Those reports, which I see are making Opposition Front-Bench spokesmen uneasy--
Mr. Gordon Brown indicated dissent .
Mr. Aitken: --are all about three London Weekend Television men and their share options. First, there is Mr. Barry Cox, who is described in the press as "running the Blair show" and the "mastermind of fundraising". Secondly, there is the well-known broadcaster, Mr. Melvyn Bragg, who was quoted as saying, "It is quite flattering at my age to be called a Labour luvvie." Then there was Mr. Greg Dyke, who was last month's guest speaker at the annual dinner of Labour's Fabian Society.
Those three friends and advisers of the right hon. Member for Sedgefield (Mr. Blair), the leader of the Labour party, forked out most of the cash or fund-raised it to finance his £79,000 leadership election campaign. There is nothing wrong in that, although I can probably see somewhere a sour face being pulled by the right hon. Member for Derby, South (Mrs. Beckett), who had to run her leadership campaign on a shoestring budget of merely £17,000. The deputy leader had to run his campaign on an even shorter shoestring of £13,000. The one thing that those three former London Weekend Television
Column 872executives have in common, besides, of course, being good, down-to-earth socialists and good Blair men, is that they made millions out of share option schemes.
Mr. Barry Cox, who, as I was saying, runs the Blair show, made a profit of £1.2 million on his share options. Mr. Melvyn Bragg, the "Labour luvvie", made a profit of £2.2 million on his share options. That Fabian socialist, Mr. Greg Dyke, made £5.3 million profit on his share options. No doubt the shadow Chancellor had such instant media millionaires in mind when he ranted at the Labour party conference in Blackpool and said:
"I am serving notice on executive share option scrounging, on the something-for-nothing elite . . . the undeserving rich, who in pursuit of short-term gain, largely for themselves, have starved the country".
He may have added the words, if he had been truthful, "and they have fattened up the coffers of the Labour party".
But we Conservatives are not the party of the politics of envy, so we say, well, good luck to those instant media millionaires, even if their share option schemes seem to bear more than a passing resemblance to the national lottery. It brought them bigger and faster bucks than almost any other share option scheme in Britain because of some rather strange devices called golden handcuffs. Perhaps those golden handcuffs were the sort of thing--
Perhaps they were the sort of thing that the Leader of the Opposition had in mind when he replied--
Mr. Aitken rose --
Mr. Salmond: On a point of order, Mr. Deputy Speaker. I am having-- [Interruption.] I am having extreme difficulty in hearing. I could not make out whether the Minister was referring to the undeserving rich or the undeserving Ritz.
Mr. Aitken: I can see what the Labour party cannot stand about the interesting story that I have been telling about everyday Labour folk. It is what I think the House and the country cannot stand, either--the bare- faced humbug of a shadow Chancellor who has been trying to
Column 873make a sanctimonious scandal out of share options. Fair and legal share option schemes that are acceptable to the friends of the Leader of the Opposition should also be acceptable to the working business people of Britain. So let us have no more double-talk and double standards on taxation gimmicks such as windfalls and loopholes and share option schemes. They will not work. Taxing them will not raise serious revenue.
Being thoughtful for a moment, these exchanges show that there are perhaps two fault lines running through British politics at the moment: the unity gap on the Conservative Benches and the credibility gap in the Labour party. Both gaps are bad for the country.
Mr. Aitken: In the long run, when the general election comes around in two years' time, it will be Labour's credibility gap that will prove to be the greater and more enduring liability. The greatest and most depressing feature of our six days of debates on the Budget resolutions has been the complete absence of answers, let alone serious alternatives and policies, from the Opposition Front Bench.
As The Sunday Times said in its editorial last Sunday, in words which must have chilled the Opposition:
"A 39.5 Labour opinion poll lead will not last long if it rests on a policy vacuum."
What an incredible vacuum it is, and how cruelly Labour has been exposed in these debates. So much so that the national society for the prevention of cruelty to shadow Chancellors almost had to rush in the stretcher bearers last Thursday when my right hon. and learned Friend the Chancellor attacked the hon. Member for Dunfermline, East.
As everyone knows, my right hon. and learned Friend the Chancellor made mincemeat of the hon. Member for Dunfermline, East. He chopped him up into little pieces and finally held aloft to public ridicule the one and only remaining portion of his anatomy, which he called the hon. Gentleman's brass neck.
However, my right hon. and learned Friend understated his case. What we have on the Opposition Front Bench is not one brass neck, but a brass band of brass necks. They cannot play a tune. They do not understand the instruments of economic policy. Even their negative
Column 874noises of discord fall into embarrassed silence whenever they are asked serious questions about the economy.
For example, we can ask the following questions: do the Opposition think that the present and planned levels of borrowing are too high or too low? Would they put taxes up or down? Do they think that public spending is too high or too low? Will they give a figure to define the full employment that they so glibly promise--
Mr. Deputy Speaker: Order. The hon. Member for Renfrew, West and Inverclyde (Mr. Graham) has been leaping up and down for the past 12 minutes. It is clear that the Chief Secretary to the Treasury does not intend to give way.
Mr. Aitken: I have a couple more embarrassing questions. At what figure will the Opposition set the minimum weekly wage which they have undertaken to introduce? Will it be more or less than the £60 price of the Leader of the Opposition's haircut? What is their estimate of the number of jobs that will be lost as a result of what the deputy Leader of the Opposition euphemistically calls the "shake-out" in employment that the minimum wage policy will create? We hear no answer to those questions. When we ask the shadow Chancellor those questions--he is not just soundbite man, he is soundbiteosaurus rex of the air waves--he becomes Dumbstruck of Dunfermline. That is why today's credibility gap in Labour's economic policy will become tomorrow's vote-losing chasm.
By contrast, this Government and this party are united in support for the commitment to sound finances of my right hon. and learned Friend the Chancellor. We are united in our determination to continue the reduction in public borrowing so that we can get back to our core belief of reducing taxation as soon as it is prudent to do so. We are united in our determination to back a Budget that will sustain and strengthen Britain's growing recovery. That recovery is showing some of the most impressive signs and statistics seen in Britain for many years--inflation at 2 per cent.; unemployment coming down for the past 20 months, month after month; and 450,000 people have come off the register since December 1992.
What the hon. Member for Dunfermline, East said at the beginning of the debate on the 1993 Budget resolutions bears repeating:
"I make one Budget forecast--that, after the Budget, unemployment will rise this month, next month and for months afterwards."--[ Official Report , 17 March 1993; Vol. 221, c. 289.]
He was wrong that month, next month, the month after and the month afterwards. The unemployment figures fell by 45,000 in the month of October, they fell by 28,000 in
Column 875the month of September, and they are coming down by 1,000 a day. The feel-good factor might not be here yet, but the feel-safe factor is here. People feel safer because of my right hon. and learned Friend's excellent Budget, which will stand the test of time and sustain the recovery. I commend my right hon. and learned Friend's Budget to the House.
Question put, That the amendment be made:--
The House divided: Ayes 274, Noes 317.
Division No. 20] [22.00 pm
Column 875Abbott, Ms Diane
Adams, Mrs Irene
Ainsworth, Robert (Cov'try NE)
Anderson, Donald (Swansea E)
Anderson, Ms Janet (Ros'dale)
Banks, Tony (Newham NW)
Beckett, Rt Hon Margaret
Beith, Rt Hon A J
Benn, Rt Hon Tony
Bennett, Andrew F
Bray, Dr Jeremy
Brown, Gordon (Dunfermline E)
Brown, N (N'c'tle upon Tyne E)
Bruce, Malcolm (Gordon)
Campbell, Mrs Anne (C'bridge)
Campbell, Menzies (Fife NE)
Campbell, Ronnie (Blyth V)
Campbell-Savours, D N
Clark, Dr David (South Shields)
Clwyd, Mrs Ann
Cook, Frank (Stockton N)
Cook, Robin (Livingston)