House of Commons Hansard Debates for 17 Jan 1995

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Points of Order

3.31 pm

Mr. Joseph Ashton (Bassetlaw): On a point of order, Madam Speaker. Is it not a long-established practice in the House that, when a Member raises an issue affecting another Member's constituency, he writes to tell that Member that he intends to raise it? As the town of West Bromwich also forms part of your constituency, do you not agree that it would have been common courtesy for the hon. Member for Norfolk, North-West (Mr. Bellingham) to inform my hon. Friend the Member for West Bromwich, East (Mr. Snape), in order to give him the right of reply?

Madam Speaker: I make it quite clear that I am the Member for West Bromwich, West--the better part of West Bromwich. In all seriousness, I received a similar request yesterday which I am looking at and I hope to make a statement to the House fairly soon about those matters.

Mr. D. N. Campbell-Savours (Workington): On a point of order, Madam Speaker. You will know that the Nolan committee is carrying out an inquiry into conduct in public life and that many hon. Members are giving evidence to that committee. They wish to give evidence in some detail about the relationship between lobbying companies and Ministers of the Crown, and over a period, I have tabled a number of questions on that issue.

Before Christmas, I tabled a question to the President of the Board of Trade asking on how many occasions he or his departmental officials had met representatives of Messrs Ian Greer Associates. I was told that I could not be given that answer, for a reason that you will understand, Madam Speaker: Ministers regularly cite disproportionate cost as a reason for not answering questions. The problem is that I know--as you do, Madam Speaker-- that Nolan himself is in a position to secure that information from Government. Yet I, as a Member of Parliament, am not allowed to seek the information because Ministers will not answer questions. As the whole country is observing what is going on in the Nolan committee, will you express the view on this occasion that Ministers should answer questions, not on the detail of meetings but on when they met lobbying companies, thereby enabling Members of Parliament to speak responsibly about those matters when they appear before Nolan? If we are not in a position to do so, we shall find it difficult to substantiate our claim to the Nolan committee that it should consider the matter in some detail.

Mr. Peter Bottomley (Eltham): Further to that point of order, Madam Speaker. If a question has been answered

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with the response that to obtain the information would cost too much, and later on that information is supplied to some other body, surely it would be a courtesy for the Government Department concerned to write to the hon. Member saying that the information is now available.

Madam Speaker: The hon. Gentleman has made a wise suggestion in that respect.

The hon. Member for Workington (Mr. Campbell-Savours) began by saying that I know that hon. Members are giving evidence to the Nolan committee. I do not know who those Members are, but he has raised a serious point with me. Perhaps I can look at the responses that he has received and see whether I can be helpful in that respect.

Mr. Roger Berry (Kingswood): On a point of order, Madam Speaker. In his reply to a question, the Prime Minister said that the Government's Disability Discrimination Bill contained provisions relating to education and transport. As that is not the case, would you consider inviting the Prime Minister to apologise for again misleading the House?

Madam Speaker: That is not a matter for me, but concerns political exchanges across the Floor of the House. The proceedings were perfectly in order. If the hon. Gentleman wishes to pursue the matter, he can find opportunities to do so, either with the Ministers concerned or with the Prime Minister himself.

Ms Angela Eagle (Wallasey): Following the event at Downing street yesterday, which was clearly party political, and especially given the present financial condition of the Conservative party, I wonder whether Parliament can take a view on whether 10 Downing street is to be used for party political fund-raising events at any time in future.

Madam Speaker: There has been no breach of our procedures here, which are a matter for me. Proceedings which take place outside the House are not my concern.

STATUTORY INSTRUMENTS, &C

Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.),

Unlicensed Television Services

That the Broadcasting (Unlicensed Television Services) Exemption Order 1994 (S.I., 1994, No. 3172) be referred to a Standing Committee on Statutory Instruments, &c.-- [Dr. Liam Fox.]

Question agreed to.

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Building Societies (Joint Account Holders)

3.36 pm

Mr. Douglas French (Gloucester): I beg to move,

That leave be given to bring in a Bill to secure the rights of second-named account holders in Building Society joint accounts; and for connected purposes.

The Bill addresses the problem which arises whenever there is a takeover or merger by a building society which involves a bonus payout to members. It applies currently in the case of the takeover of the Cheltenham and Gloucester building society by Lloyd's bank. It will apply in respect of the proposed merger of the Halifax building society and the Leeds Permanent, and any others that may follow. The combined effect of schedule 2(7) and section 100(9) of the Building Societies Act 1986, is that any distribution of bonus to savers who have investment accounts--that is, members who hold shares in the society--can be made only to a sole account holder or to the first-named person of a joint account, and in both cases only to those who have invested continuously for two years.

The requirement to have invested continuously for two years is a very wise provision, because it seeks to reward loyalty for long-term saving and not to reward those who open accounts in anticipation of a takeover and a windfall cash distribution.

The restriction to first-named joint account holders, however, discriminates against categories of saver who ought to be entitled to benefit. The most unfairly treated category of all is widows who have had a joint account with their husbands and whose husbands die during the qualifying period.

The husband's name may be deleted from the existing account, or the balance may be transferred to a new account in the widow's name only. Either way, the counting of the two-year qualifying period has to begin all over again. It makes no difference how many years previously the wife has contributed to the account: she gets no credit for it, because it is deemed to be in her husband's name. The problem is well illustrated by my constituent Mrs. Wiltshire, of 52 Mayfield drive, Hucclecote, Gloucester. As long ago as 1964, she opened an account with the Cheltenham and Gloucester in her first married name of Mrs. Wellington. In 1966, her first husband having died, she remarried, and her account was amended to the name of Mr. and Mrs. Wiltshire.

Sadly, Mr. Wiltshire died in 1993, and the account was transferred back to Mrs. Wiltshire's sole name. She is therefore a continuous saver of more than 30 years' standing, but she does not qualify for a cash distribution under the C and G takeover, because she was not the first named account holder for two years prior to the qualifying date--in this case, 31 December 1994.

The same problem arises with newly marrieds. A single woman who has a building society investment account may on marriage choose to redesignate the account jointly in the name of her new husband and herself. By doing so, she loses the rights that may have accrued to her when the account was in her own name. Her new husband must

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begin the two-year qualifying period in his name alone. A similar disadvantage can arise in cases of divorce, when a woman must reopen an account in her name alone.

Those examples show that the 1986 Act unwittingly enshrined a degree of sex discrimination. It is virtually always the woman, whether a widow or newly wed, who suffers, because the normal convention in the English language is to designate an account Mr. and Mrs. To open an account using Mrs. and Mr. would be thought rather odd. Consequently, the woman is invariably the second-named account holder and cannot accrue any rights in relation to a two-year qualifying period while she remains the second-named person. That problem has been much in the news recently, but it is not new. It was identified as early as 1988, when the Abbey National building society decided to convert to plc status. In making share allocations, the Abbey National found that it was precluded from conferring any benefit on second- named account holders. Six years later, that problem remains unresolved.

My hon. Friend the Minister of State, Treasury is well aware of the problem, and I pay tribute to him for the time and trouble he has taken to consider possible solutions. He is currently engaged in a full review of building societies' powers, and hopes to present a range of measures in due course. The trouble is, as my hon. Friend pointed out in his letter to me of 14 December 1994, that he sees little possibility of bringing forward any legislation before 1996--and even then, the 1986 Act's takeover provisions are not his prime concern. My Bill singles out for earlier treatment one point that must surely be perceived as an injustice by whoever considers it.

The Bill does not attempt to tackle every related problem. For example, individuals who switch from a deposit account to a share account during the qualifying period also exclude themselves from any entitlement--but that is a more complex matter, which falls outside the Bill's scope.

In my opinion, the flaw in the 1986 Act was to assume that eligibility for bonus payments must be based exclusively on voting rights. Second and subsequent joint account holders were not given voting rights, because members could then have exercised multiple votes simply by adding extra names to joint accounts. That is why only one vote attaches to one account. However, exclusion from voting need not in every case be accompanied by exclusion from bonus entitlement. One bonus payout should attach to each account where either the first named account holder or a second or subsequent account holder meets the two-year qualifying period for continuous saving.

If my Bill becomes law, it will be for the Cheltenham and Gloucester to decide whether to take advantage of the legislation to benefit its members. A vote on the takeover's current terms is due at the end of March, and the two-year qualifying period ended on 31 December 1994. It would be open to the C and G to make the operative date later. It has already postponed it once, and could do so again. I hope that the society will so decide. In any event, the Bill protects against a similar problem arising in future takeovers. The Bill does not attempt to change the two-year qualifying period or to give joint account holders more than their fair share or to alter voting rights. All it does, by two small amendments to the Building Societies Act,

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is give credit for the savings record of the second-named account holder, and by so doing, fairness and justice to thousands of people. I commend it to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Douglas French, Mr. Matthew Carrington, Mr. Geoffrey Clifton-Brown, Mr. Simon Coombs, Mr. Quentin Davies, Mr. John Greenway, Mr. Nick Hawkins, Mr. Roger Knapman, Mr. Peter Luff, Mr. Paul Marland, Mr. John Townend and Mr. Nigel Waterson.

Building Societies (Joint Account Holders)

Mr. Douglas French accordingly presented a Bill to secure the rights of second-named account holders in Building Society joint accounts; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 3 February, and to be printed. [Bill 35.]

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Orders of the Day

Finance Bill [Relevant document: The Third Report from the Treasury and Civil Service Committee on The 1994 Budget (House of Commons Paper No. 79).]

Order for Second Reading read.

3.45 pm

The Chief Secretary to the Treasury (Mr. Jonathan Aitken): I beg to move, That the Bill be now read a Second time.

All Finance Bills are vigorously debated, and I am sure that this Bill will be no exception, but I shall begin by commending to the House a procedural innovation affecting this year's debates, which may well improve the quality of our proceedings. As my right hon. Friend the Leader of the House announced in his business statement on Thursday, it would be proposed that the Standing Committee on this Bill would not be required to sit long into the evening or, indeed, into the night. In accordance with the spirit of the Jopling reforms, it is proposed that the Committee will sit in the mornings and afternoons, thus ending more than a century of a tradition of nocturnal sittings.

I take this chance to pay tribute to both sides of the usual channels and also to thank the Opposition for their co-operation in making the reform possible. It is a sensible modernisation of our antediluvian procedures, and it has been generally welcomed not only by hon. Members from all parties, but by the many outside bodies which like to attend the debates in Committee, including representatives of the professions, the unions, industry and the press. Apart from a few incorrigible Westminster night owls, almost everyone will be grateful for this new procedural move in favour of daylight debating time.

As the House knows, the Finance Bill is the annual legislation which enables the Government to complete their virtuous circle of sound public finances by aligning what goes out in public spending with what comes in in taxation. I am not at all sure that the Opposition understand that such a circle exists or that it needs to be virtuous, or, indeed, that there needs to be any sort of alignment between taxation, expenditure and borrowing.

The problem is not what the Opposition say. The deputy leader of the Labour party was flattering his team of Treasury spokesmen when he ticked them off recently in the middle of their shambolic disarray over VAT on education with the rebuke:

"I think we have been so long in opposition that we tend to be a little bit loose with our language."

Not for the first time, the deputy leader of the Labour party got it wrong. The real problem which we are likely to face in the course of debate on this Bill is not Labour's loose language, or even its loose purse-strings on expensive policy commitments such as new bureaucracies to handle the break-up of Britain, new quangos and the job-destroying minimum wage legislation. No, the real problem that the House and the country have with the Opposition on economic policy is the problem of their evasive silences.

Up to now, the shadow Treasury spokesmen have performed a passable imitation of four Trappist monks in a Harold Pinter play. Whenever they are asked

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fundamental questions on vital economic policies--such as, do they think that the present levels of borrowing are too high or too low, do they think that the present levels of public expenditure are too high or too low, would they put taxes up or down, or at what figure will they set the minimum weekly wage that they have undertaken to introduce--consistently, answer comes there none. All we get are these uncomfortable Pinteresque silences, which are even being written up and noticed by the critics.

For example, this week's Economist published a perceptive article headlined "Labour's Profit Phobia" in which it asked:

"Is Labour really committed to a dynamic modern market economy?" The report continued:

"But no one knows. There is considerable disagreement over economic policy within the Labour party, even among those who seem Mr. Blair's keenest supporters . . . there remain huge differences of opinion, for example, about the residual role of public ownership, about public spending and public borrowing and, most important, about profits and rewards."

I am delighted that The Economist and other parts of the media are waking up to Labour's yawning credibility gap on these issues. Conservative Members know where we stand on these important matters because one of the cardinal features of this Finance Bill is that it demonstrates our commitment to strengthening Britain's dynamic modern market economy. I shall refer to specific clauses that are dedicated to that purpose later in my speech.

However, let me focus for a moment on the phrase "dynamic modern market economy" because that phrase, and the commitment to it, came from the lips of no less a personage than the Leader of the Opposition during his ill- fated speech in Brussels on 10 January.

Mr. Andrew Smith (Oxford, East): Ill-fated?

Mr. Aitken: I hear a muttering of dissent from the hon. Member for Oxford, East (Mr. Smith). I called that speech "ill-fated" because, as has been well reported, the Leader of the Opposition's speech was torpedoed that same morning by the Guardian advertisement which attacked Labour's modernisation plans. That advertisement was placed by the majority group of 32 Labour MEPs who were later castigated by the Leader of the Opposition, with true brotherly charm, as "infantile incompetents".

Where was the shadow Chancellor of the Exchequer in that divisive rumpus created by Labour's "infantile incompetents"? I have a fascinating revelation to make. The House will be interested to know that the source of the hostile Guardian advertisement was an office with a most intriguing address. The address was published in the advertisement, and it was 25 Church street, Inverkeithing, Fife. Guess whose office that was; guess whose office the anti-Blairite MEPs were using as their base from which to attack the Leader of the Opposition? The astonishing fact is that the anti- Blairite MEPs were using the shadow Chancellor's constituency office as their launch pad for that hostile Guardian advertisement.

Well, well, well; talk about getting wires crossed; talk about political schizophrenia and the right hand not knowing what the left hand is doing. We have always known that the Labour party is a divided church. Now we know that, even in the shadow Chancellor's own office, Labour is divided at 25 Church street.

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I cannot think how the Opposition are going to manage their party, in respect of the Finance Bill, with that kind of unity. Imagine the scene when a new Labour well-wisher visits the office of the shadow Chancellor to offer advice on this admirable piece of legislation which promotes a dynamic modern market economy--after all, that is what the Leader of the Opposition wants--and what happens? He comes face to face with the old Labour's infantile incompetents tendency and the brothers who do not even approve of a market economy, and certainly do not want to see it modernised, dynamised or even endogenous-zone-ised.

My advice to the warring parties in "Blair Wars" is that they should at least compromise by declaring the Dunfermline, East constituency office a demilitarised zone. Joking apart-- [Hon. Members:-- "Oh."] Well, we like to have light and shade in such speeches. My colleagues are enjoying themselves. I am sorry that Opposition Members are so discomfited.

Sir Peter Tapsell (East Lindsey): While we are on the subject of joking, is my right hon. Friend certain that The Guardian had not stolen the writing paper?

Mr. Aitken: I am tempted to avoid those matters, as they are probably sub judice.

As I was saying, those schizophrenic splits and silences within the Opposition are quite rightly going to come under intense scrutiny during the debates on this Bill, as the whole purpose of our legislation is to consolidate and strengthen Britain's growing economic success story, underpinned as it is by the Government's resolute commitment to sound public finances.

Mr. William O'Brien (Normanton): Will the Minister address the situation that is facing the charity organisations, whereby the excess which they must pay on VAT is in the region of £300 million a year, which is 10 per cent. above the income they receive? Does the right hon. Gentleman say that that is how the Government are building the economy, or does he agree that charities should be given special consideration?

Mr. Aitken: Charities have long been given special consideration under our taxation law, and they will continue to be so. The hon. Gentleman might be referring to a wholly erroneous report in one of the Sunday newspapers, which was completely misleading about that aspect of the Bill. It is such a detailed point that we had better keep it for discussion in Committee, but I assure the hon. Gentleman that he is going down a wrong road. The Government are all in favour of some special concessions remaining for the taxation of charities.

Mr. Alan Howarth (Stratford-on-Avon): Does my right hon. Friend accept, however, that, notwithstanding the very valuable incentives that the Government have provided to charitable giving, charities face a burden of more than £300 million on irrecoverable VAT? Does he agree that, given that the Government are increasingly looking to charities to play a part in the provision of public services, it is important that the tax regime reflects coherent and consistent encouragement for charities? Therefore, before the measure is considered in Committee, will my right hon. Friend undertake to consider scope for a VAT refund scheme for charities?

Mr. Aitken: I know of my hon. Friend's great interest in and support for charities. I assure him that there is no

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sinister hidden agenda in the Bill somehow to do down charities in relation to tax. It is worth mentioning that charities already receive £1.4 billion of tax relief each year. Therefore, any criticism of anything in the Bill--I am sure that such matters will be debated fully in Committee--must be seen against that background. My hon. Friend's point must be seen in the clear perspective of the £1.4 billion of tax reliefs, but we will certainly consider it in Committee.

Dame Elaine Kellett-Bowman (Lancaster): Is my right hon. Friend aware of the grave danger of a Labour Government--if by some mischance Labour formed the Government of the day--removing charity status from schools, and of the problems that that would pose to Church schools and Church colleges, particularly those whose buildings were donated many centuries ago?

Mr. Aitken: I am grateful to my hon. Friend for making that point. However, one of the temporary, at least, productive signs of the power struggle between old Labour and new Labour is that the sword of Damocles of VAT on Church schools and others--

Dame Elaine Kellett-Bowman: Charities.

Mr. Aitken: It is all part of the package which was announced by the Labour education spokesman, and which was then smartly repudiated. He had that agenda in mind, but, if I can follow the gyrations and acrobatics in Labour policy making, it has been repudiated. However, that question is not for me, but for the Opposition. I hope that my hon. Friend's fears are misplaced.

Mr. John Sykes (Scarborough): Perhaps, in view of what my right hon. Friend has said, my hon. Friend the Member for Lancaster (Dame E. Kellett- Bowman) should direct her inquiries to Inverkeithing rather than to Walworth road on this matter.

Mr. Aitken: Perhaps Church street looks after Church schools--we will see.

Sound public finances are the foundation of the Bill. I remind the House that, in his Budget statement, my right hon. and learned Friend the Chancellor announced that we will reduce public expenditure by £28 billion over the next three years. Moreover, by a combination of encouraging economic growth and keeping such firm control on public expenditure, the Government will halve the public sector borrowing requirement between last year and next year from £45 billion to £22 billion. We project that we will nearly halve the PSBR again in 1996-97.

Opposition Members apparently do not approve of that, but my hon. Friends certainly do, and so do Britain's companies, Britain's inward investors and the international financial markets. The widespread approval of our policy of sound public finances and the decisions that flow from it have produced some remarkable results. I hope that all hon. Members will welcome the fact that the economy has performed way ahead of expectations over the past year.

The British economy has now been growing for two and a half years. Growth last year was more than 4 per cent., the fastest in the European Union, and exporters have led the way. Exports are up 13 per cent. on a year ago, and are at record levels. Some forecasters are making

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clear predictions that Britain's balance of payments may be in surplus this year and next. Certainly the House should welcome the fact that the current account is in surplus for the first time since 1987. After decades of decline, the United Kingdom's share of world trade in manufactured goods stabilised in the mid-1980s, and we are now selling more goods and services abroad than ever before. Just one example of the remarkable success being achieved by British business is Japan--a nation to which we extend our heartfelt sympathies for the tragic earthquake it suffered today. On the general picture of British-Japanese business relations, many people would consider it remarkable that it appears that in recent months Britain has moved into current account surplus with Japan. That is surely a success story of which it is worth being proud.

In manufacturing, output is up by 5 per cent.; productivity is up by 6 per cent.--the fastest rise since April 1989--and unit wage costs are falling. Recent CBI surveys show that the manufacturing sector is expected to grow strongly.

It is also becoming widely recognised that Britain is one of the best places in the world to do business. That is certainly well recognised by our competitor countries, even if not by the Labour party. The United Kingdom has attracted the lion's share of inward investment to Europe, with more than 40 per cent. of United States and Japanese investment in the European Union coming here. After America, Britain is now the world's second most popular inward investment destination. In 1993-94, almost 100,000 jobs were created or safeguarded by inward investment. Since 1988, overseas investors have backed Britain to the tune of £4 billion with projects such as the Nissan factory, which created more than 4,000 jobs in County Durham; Honda, which created 2,000 jobs in Swindon; Motorola, which created 250 jobs in East Kilbride; and Samsung, which created more than 3,000 jobs in Wynyard. Those developments are a real vote of confidence in the British economy and in British workers.

Mr. Alex Salmond (Banff and Buchan): Before Budget No.1, the Scottish media told us that Scottish Office Ministers had made representations to the Treasury team to put off the second tranche of VAT on fuel. Those representations were obviously ignored by the Treasury team but subsequently accepted by the House. Before Budget No. 2, did Scottish Office Ministers make representations to put off the increases on fuel and whisky--two further anti-Scottish measures? Were they ignored again, or did they not bother to make any representations?

Mr. Aitken: The hon. Gentleman knows perfectly well that Scottish Ministers fight their corner admirably, in Whitehall and everywhere else. Inevitably, such representations and communications with Ministers are not published; they are all part of the collegiate discussion. I assure the hon. Gentleman that the Scottish Ministers fought their corner admirably at all stages of the Budget discussions.

The successes that I have listed have been due to two main keys. The first was the supply side reforms introduced by the Government over several years. The second, which is important for creating jobs and remaining competitive in world markets, is keeping a tight lid on inflation. Inflation is low--indeed, it is lower than

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the European Union average. It has now been below 3 per cent. for 14 months running, something not seen since 1961, when the Leader of the Opposition was still receiving his private school education at a school free of VAT.

Against that background of low inflation, the present economic environment of a good performance by exporters, solid growth by industry, encouraging trends in investment and prudent stewardship of finances by Government, will definitely be strengthened by the Bill.

Mr. Malcolm Chisholm (Edinburgh, Leith): Does the right hon. Gentleman think that it is an encouraging trend that the level of business investment last year was only 2 per cent.? Has he taken heed of what the Select Committee said in its report this week--that it does not really accept the Treasury forecast of an 11 per cent. increase in business investment in the year ahead? Is that not a problem area for the economy? Will not the position be made worse by the interest rate rises, in view of the capacity shortages in the economy?

Mr. Aitken: The hon. Gentleman is in danger of being a doom-monger, and I shall tell him why. First, the latest data show that investment in plant and machinery in the third quarter of 1994 was up 5.3 per cent. on a year ago. Therefore, the latest figures suggest that the rate of investment is accelerating. The Treasury is forecasting a 10.75 per cent. growth in business investment in 1995, but that is a rather lower figure than the CBI forecast, which is that manufacturing investment in 1995 will rise by 11.25 per cent. If the hon. Gentleman is not convinced by either of those forecasts, perhaps he would care to take a backward look and be reminded that, during a number of recent years, annual business investment growth has been running at more than 10 per cent. For example, it was 10.9 per cent. in 1984; 13.3 per cent. in 1987; 14.9 per cent. in 1988; and 11.3 per cent. in 1989. As the hon. Gentleman may realise, I was looking forward to an intervention on the pessimistic view of investment. A much more optimistic view exists. It should, and I hope will, prevail on the basis of the facts that I have given.

Mr. Thomas McAvoy (Glasgow, Rutherglen): I am grateful to the Chief Secretary to the Treasury for giving way. He has been generous with his time, and I am grateful to him for that.

The right hon. Gentleman mentioned investment projects into the United Kingdom, which of course includes Scotland, and the Government's so-called prudent stewardship of public finance. In his list of investment successes, he notably failed to mention Health Care International private hospital in Clydebank. The Secretary of State for Scotland poured millions of pounds into that failed project, yet he is still promising a further £4 million of public money to any private investor who steps in to try to rescue that project. How does that square with the Government's image of their stewardship of public finance?

Mr. Aitken: The very nature of investments is that they are sometimes risks. Not every investment works out as a tremendous success. Apparently, another foreign investor is thinking of investing in that hospital, which was a risk that was clearly misjudged at the time. Nevertheless, it is

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probably a good hospital building, and I hope that, under new ownership and new management, it will still provide a good service to the patients of Scotland.

I do not want to get into too much detail on any one investment project. I was giving the broad picture, which is extremely encouraging. I was anxious to turn to the contents of the Bill, which I can best summarise by concentrating on two major themes that emphasise the purpose of the Government's tax policies. The first is the encouragement of enterprise in employment, and the second, clearly linked to the first, is deregulation and simplification of our taxation system.

As my right hon. and learned Friend the Chancellor of the Exchequer made clear in his Budget, the Government are especially keen to help small businesses to grow and to flourish. They represent the very lifeblood of Britain's commerce. It is a notable statistic that 96 per cent. of all firms employ fewer than 20 people, and that there are now 1 million more small businesses than there were when Labour left office in 1979. That represents a 50 per cent. increase in small businesses.

There has also been an excellent increase in self-employment, which has increased by 35 per cent. in the past 10 years. Those trends are steadily improving, as National Westminster bank's latest review of small business trends, published last week, clearly emphasises. As a Government, we try to listen carefully to what small businesses tell us. We respond to their priority requests to help on matters such as cutting the cost of taking on new staff, easing the cost of business rates, raising new capital for expansion, cutting red tape and simplifying the tax system. All those requests have met a positive response in the Budget and the Bill.

For example, we have cut the cost of taking on new staff by our measures to reduce each of the lower rates of employer's national insurance contributions by 0.6 per cent. That will cut the cost of employing anyone who earns less than £205 a week. We have also announced a one-year holiday for employers' national insurance charges when an employer recruits as a new member of staff someone who has been unemployed for more than a year. On average, that will save employers more than £300 for each person they take on, at a total benefit to employers of £45 million a year.

Those two measures will boost output and help with the reduction of unemployment, which has fallen by more than 500,000 since its peak in December 1992, and which in recent months has been falling at the rate of more than 1,000 people coming off the unemployment register per day.

Sir Mark Lennox-Boyd (Morecambe and Lunesdale): Before my right hon. Friend leaves the subject of small businesses, will he comment on the excise duty on video games, which affects several small businesses in my constituency? Many small business operators who have been to see me fully recognise that video games should fall within the tax net, but the proposals in the Bill will kill the goose that lays the golden egg, and prevent the operation of many video machines, which in a constituency such as Morecambe and Lunesdale provides many jobs for my constituents.

Mr. Aitken: From a constituency point of view, I have some sympathy with my hon. Friend's point because amusement machines seem to be concentrated not only in

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coastal locations such as Morecambe and Lunesdale but in Thanet. I have received some vigorous representations on the matter-- [Interruption.] So, I can hear, have my right hon. Friend the Member for Worthing (Sir T. Higgins) and my hon. Friend the Member for Scarborough (Mr. Sykes). We shall have some interesting debates on the matter. It is not a new tax but an extension of an existing tax. We have broadened the boundaries. The amusement machine licence duty will broaden the tax base and protect long-term yield in an evolving market. Amusement machines without prizes will be taxed at a lower rate of duty. Payment by instalments will be available to ease cash flow. We will probably have a good debate in Committee on what I realise is for many of my hon. Friends a sensitive constituency issue.

Mr. Nick Hawkins (Blackpool, South): Will my right hon. Friend give way?

Mr. Aitken: For the last time.

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