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House of Commons

Thursday 2 March 1995

The House met at half-past Two o'clock


[ Madam Speaker-- in the Chair ]


City of Westminster Bill

[Lords] ( By Order ) Order for consideration, as amended, read.

To be considered on Thursday 9 March.

Queen Mary and Westfield College Bill (

By Order ) Order for Second Reading read.

To be read a Second time on Thursday 9 March.

Oral Answers to Questions


Income Tax

1. Mr. Hendry: To ask the Chancellor of the Exchequer what plans the Government have to extend the 20 per cent. income tax band.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): The Government are committed to low tax rates, and will continue to move towards a 20 per cent. basic rate of income tax when it is prudent to do so.

Mr. Hendry: I am grateful to my right hon. and learned Friend for that answer. Will he confirm that 5 million people now pay tax at the lower 20 per cent. rate? Does he agree that an extension of the 20 per cent. rate is a clear example of the way in which Conservative tax cuts help those on lower incomes, especially pensioners, as well as all other groups in society?

Mr. Clarke: I agree entirely with my hon. Friend. As he says, the 20 per cent. band has been widened every year since it was introduced, and nearly 5.5 million taxpayers now pay tax of only 20 per cent.

Mr. Gordon Brown: On the taxation of income of executive share options and the abuses in the privatised utilities, on Tuesday the Prime Minister threatened legislation, and on Wednesday the Secretary of State for Employment, the President of the Board of Trade and, indeed, the Chancellor rebuffed it. Will the Chancellor admit that he was wrong in ruling out legislation in the past? Give that 150 directors of privatised utilities have £100 million in shares--

Madam Speaker: Order. I have had occasion earlier this week to call attention to the fact that a supplementary question was not related to the substantive question on the Order Paper, which today concerns the 20 per cent.

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income tax band and its extension. Would the hon. Gentleman care to relate his question directly to the substantive question on the Order Paper?

Mr. Brown: On the loss of income tax revenues because of what happens in the case of executive share options, will the Chancellor tell us that in the Budget Finance Bill he will introduce new measures to curb executive share options and tax them as income?

Mr. Clarke: I have just told the House that 5.5 million people now pay tax at only 20 per cent. The hon. Gentleman has so little to say on behalf of the Opposition about reducing the burden of tax on those on lower incomes that he keeps dragging out his complaints about a handful of people whom we are all agreed have taken too much out of the industries for which they work.

My right hon. Friend the Secretary of State for Employment and I spoke yesterday. I did not see what my right hon. Friend the President of the Board of Trade said, but I assume we all said what the Prime Minister said on Tuesday. I certainly did, and so did the Secretary of State for Employment. The Greenbury committee has been set up and has promised to report to us with recommendations on how best practice can be improved and on any measures that need to be taken. We all agree that the Government will certainly take whatever action is necessary when we have the Greenbury report.

The hon. Gentleman is using his protracted concern about the share options of a handful of people to disguise the fact that he has nothing whatever to say about the total burden of taxation on ordinary men and women.

Direct Taxation

2. Mr. Jenkin: To ask the Chancellor of the Exchequer what assessment he has made of the relationship between reductions in direct taxation and the performance of the economy; and if he will make a statement.

The Chief Secretary to the Treasury (Mr. Jonathan Aitken): It has long been our assessment that high direct taxes damage the performance of the economy. That is why substantial reductions in direct taxation have been made since 1979 and why we hope to make further reductions when it is prudent to do so.

Mr. Jenkin: Is it not evident that countries whose Governments take a higher proportion of the national wealth in taxation than our Government tend to have slower growth rates? Have we not achieved a major structural shift in competitiveness, to the advantage of the United Kingdom, by holding down the share of wealth that is taken by the Government, unlike many of our European competitors whose Government expenditure now exceeds 60 per cent. of gross domestic product?

Mr. Aitken: I am grateful to my hon. Friend for stressing the importance of the connection between tight control of Government expenditure and good economic growth and competitiveness. He was right to make the point that the share of output spent by our Government is lower than that of any of our major European competitors. I should also note that, as we are a world trading nation, we must keep up the pressure to maintain tight control of Government expenditure because the ratio of Government expenditure to gross domestic product in other competitive nations, in areas such as the Asian Pacific region, and even in mature economies such as the United

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States of America and Japan, is still lower than it is here. We are, however, winning the prize in relation to our European competitors.

Mr. Malcolm Bruce: Why is only one of the Chancellor's five wise men forecasting that he will achieve his inflation targets by the end of this Parliament? Does the Chief Secretary think that that may be because they anticipate irresponsible and premature tax cuts that prejudice the national economy for short-term political advantage?

Mr. Aitken: I shall not second-guess any wise men, whose forecasting record has not been any more impeccable than anyone else's sometimes, but I reject the notion that some irresponsible activity is going on in the Treasury and that it will lead to higher inflation. My right hon. and learned Friend the Chancellor has shown his determination by a series of moves to keep inflation tightly under control and we will continue to do that.

Mr. Anthony Coombs: Does my right hon. Friend agree that we welcome progress so far, but it is precisely those developed countries such as Japan, Switzerland and the United States of America that have the lowest proportion of taxation as a proportion of gross net product--it is below 30 per cent.--and the best unemployment figures? In the past 15 years, fresh progress has been made in the United Kingdom to reduce the tax burden on a direct basis. Does my right hon. Friend agree that we need to get the total tax burden below 30 per cent. of GNP to match the achievement of those other countries?

Mr. Aitken: My hon. Friend makes a good point. As I said in my first answer, Britain is doing well in relation to some of our European competitors, but if one looks around the world one finds that we have some way to go, both in terms of taxation reductions and of Government expenditure reductions, to maintain our momentum of competitiveness. We are doing well. The trend of Government expenditure and taxes is aiming to come down, but we must keep that pressure up.

Mr. Andrew Smith: Following the publication on Tuesday of the report and study by Oxford and Warwick universities showing that no connection exists between the performance of companies and of the economy and the tax breaks given on executive share options, will the Chief Secretary give a commitment to tax those options as income? Does he not understand that the public are sick and tired of being taken for a ride by the excesses of some people in privatised boardrooms, and that it is not enough for him, the Prime Minister and his right hon. Friends to call this distasteful? The public want action and they want it now.

Mr. Aitken: The hon. Gentleman's continual attempts at bogus indignation on this point are synthetic. If a company is successful and the executives of that company are performing well, there is no reason why they should not receive good rewards. Like everyone else, however, the Government are opposed to and critical of corporate greed, wherever it materialises. We reject the continued attack on share options that, in many companies, are well earned and well deserved, as are the rewards. I do not agree with the hon. Gentleman that all share options

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should be regarded in a hostile and negative light just because there are a few abuses. That is not the correct stance.

Insurance Tax

3. Mr. Ainger: To ask the Chancellor of the Exchequer how many representations he has received on the new insurance tax.

The Paymaster General (Mr. David Heathcoat-Amory): I have received a number of representations.

Mr. Ainger: Does the Paymaster General accept that since 1979 burglaries and car thefts have more than doubled and that since 1987 there has been an increase of more than 20 per cent. in the price of insurance premiums? Why then, given that information, have the Government decided at this stage to penalise the victims of crime even further and, in many cases, to impose an additional tax on people who have no source of defence other than their insurance? Why has the Paymaster General carried on with this, bearing in mind the representations that he has received?

Mr. Heathcoat-Amory: The incidence of crime is certainly one factor in the level of insurance premiums, which is why it is good news that the latest figures show that, over the past 12 months, recorded crime has dropped by 5.5 per cent. and burglary and theft by rather more.

In answer to the second part of the hon. Gentleman's question, I believe that a 2.5 per cent. tax on insurance premiums does not deter people from taking out prudent insurance, bearing in mind the fact that this sector is historically undertaxed to the extent that insurance premiums do not bear value added tax.

Taxation, Scotland

4. Mr. Jacques Arnold: To ask the Chancellor of the Exchequer what estimate he has made of the effect on the Scottish economy of an increase in taxation equivalent of between 3p and 19p in the pound; and if he will make a statement.

Mr. Aitken: Such an increase would be unnecessary and would make the Scottish economy less competitive.

Mr. Arnold: Does my right hon. Friend agree that the vast sums of money currently being paid to Scotland should perhaps be considered the English subscription to the United Kingdom? Is it not perhaps more important to consider that payment as a transfer payment thought necessary because both England and Scotland are part of a single currency--the pound?

Mr. Aitken: My hon. Friend is right to draw attention to the factual position which is that Scotland today receives 21 per cent. more public expenditure than England--worth approximately £13 per head--but that is because of decisions taken by the elected and accountable Government of the United Kingdom. Whether future proposals for a single currency with fiscal harmonisation would or would not lead to higher levels of public expenditure in various parts of the European Union is one

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of the many difficult matters that we should have to assess when we considered whether a single currency might at some stage in the future be in Britain's national interest.

Mr. Salmond: The Chief Secretary is making it very clear why he was laughed at by the business men at the Scottish Council Forum last week. When will he educate his hon. Friends about the huge hidden subsidies that pour into the south-east of England and, more directly, about the fact that, over the past 16 years, the Government have been bankrolled by Scottish resources to the tune of £100,000 million of oil revenues, or £20,000 per head for every man, woman and child in Scotland? When will he start educating Conservative Back Benchers about the true fiscal position?

Mr. Aitken: The sort of rubbish that the hon. Gentleman has just uttered shows why, by contrast, I was warmly applauded when I spoke in Scotland. The fundamental point that I made, with which the business community agreed, is that a tax-raising Scottish Parliament would be an expensive self-indulgence which would scare away inward investors, cost a single man as much as £6.35 a week in tax and cost Scotland jobs, employment and competitiveness. Only the hon. Gentleman would wish to pursue such a path of folly.

Sir Donald Thompson: Is my right hon. Friend aware that my constituents do not care how much goes to various parts of the United Kingdom and that my people in Yorkshire think that a strong Scotland is a strong England and, therefore, a strong Yorkshire and object to this spurious devolution nonsense?

Mr. Aitken: My hon. Friend articulates the view that all our colleagues share--that a strong Union is good for Scotland, good for Britain and good for all parts of the United Kingdom, including Yorkshire.

Brewing Industry

5. Mr. Sheerman: To ask the Chancellor of the Exchequer what recent representations he has had from the brewing industry regarding levels of excise duty.

Mr. Heathcoat-Amory: I received several representations from the brewing industry prior to the last Budget. Since then, various members of the brewing industry have written or made representations to me and other Treasury Ministers.

Mr. Sheerman: The Opposition are never sure which of the Treasury Ministers are good Europeans but, given that many of them indulge in a drink, may I ask the Paymaster General whether he is concerned about the fact that the brewing industry is being harmed by the duty differential and the high level of illegal importation, or smuggling? Is it not about time that he and his colleagues did something to protect an industry that is a job creator and a wealth creator and deserves his attention and help?

Mr. Heathcoat-Amory: Brewing is indeed an important industry, and we wanted to keep excise duties stable in the Budget. It was when the hon. Gentleman and his hon. Friends voted down the second stage of the imposition of value added tax on domestic fuel that my right hon. and learned Friend the Chancellor sought to recover the revenue by increasing excise duties on tobacco, alcohol and road fuels, which was very much a

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second-best option. The brewing industry may well want to know why the hon. Gentleman forced that option on the Government, against our original intentions.

Mrs. Lait: When does my hon. Friend expect the European Commission to publish its paper on excise duties on tobacco and alcohol? Does he expect our continental neighbours to engage in constructive discussions on the subject?

Mr. Heathcoat-Amory: I cannot say when the discussions will be properly under way, but my hon. Friend knows, I hope, that we believe that other member states should increase the minimum rates of duty to help to close the gap between our higher duty rates and theirs. That gap is the cause of much of the cross-border shopping, and some of the smuggling, that is currently taking place.

Tax Evasion

6. Ms Lynne: To ask the Chancellor of the Exchequer what steps he is taking to gather information on the sums of money lost to the Exchequer through tax evasion.

The Financial Secretary to the Treasury (Sir George Young): There is no reliable way of measuring the extent of tax evasion. What is important is for the Inland Revenue to investigate suspected evasion across all areas of taxation--which it does--and to collect tax that is payable.

Ms Lynne: Is the Minister aware that £4 billion is lost each year in uncollected tax? Meanwhile, the number of Inland Revenue support staff is being cut by a further 25 per cent. Is it not madness to cut staff numbers when the uncollected tax bill is soaring?

Sir George Young: The reduction in the number of Inland Revenue staff is being paid for, or secured, by a move to self-assessment and the introduction of information technology. The important point, however, is that counter-evasion work is not being cut. On the contrary, over the next five years the Revenue will put more resources into such work from routine processing.

Mr. John Townend: Does my right hon. Friend agree that the lower the levels of taxation, the less will be the incentive either to evade or to avoid tax? The loss of revenue will also be much lower.

Sir George Young: My hon. Friend makes a crucial point. When tax rates were approaching 100 per cent., the incentive to avoid or evade tax was relatively high; now that we have reduced tax, with the highest rate at 40 per cent., the incentive to engage in the creative accounting referred to by my hon. Friend has, of course, been sharply reduced.

Mr. Maginnis: Does the Minister agree that there is every incentive for people to avoid paying tax, given the profligate way in which the Secretary of State for Northern Ireland spends taxpayers' money? He has embarked on a door-to-door drop, delivering to every house in Northern Ireland the Government disinformation that is contained in the framework document.

Sir George Young: I am not sure that the Financial Secretary to the Treasury is the best person to respond to

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that question, but I am sure that there was value for money in every action taken by my right hon. and learned Friend the Secretary of State for Northern Ireland.

Ms Primarolo: In the context of tax evasion and loss of money to the Exchequer, is the Financial Secretary aware of last week's National Audit Office report, which showed that £800 million of VAT had had to be written off because his Department had not collected it? People will be shocked to hear that, at a time when the Government are imposing VAT on fuel and proposing to cut the number of VAT offices collecting the money. What steps will the Government now take to ensure that money is collected from businesses and individuals alike when it is owed, rather than extending the scope of VAT on fuel?

Sir George Young: Both Customs and Excise and Inland Revenue have a very good record of collecting tax that is due and payable to them, but if there is no money to be collected because, for example, the business is insolvent, clearly the money cannot be collected. The bulk of write-offs to which the hon. Lady referred were because, in fact, the cash was not there to pay the bill.

Mr. Clifton-Brown: Pursuant to my right hon. Friend's answer, if it follows that when the top rate of tax was reduced from 98 per cent. to 40 per cent. the tax take went up, it also follows that the amount of evasion went down. Does it not therefore follow that if the Labour party were to put up tax rates, the amount of evasion would increase?

Sir George Young: My hon. Friend is absolutely right in his last point and, crucially, in his first point, too. Although we have reduced the top rate of tax, higher earners are now contributing a bigger percentage of the total tax bill than they were in 1979.

House Prices

7. Dr. Lynne Jones: To ask the Chancellor of the Exchequer if he will make a statement on house prices.

The Minister of State, Treasury (Mr. Anthony Nelson): The Department of the Environment house price index shows that house prices increased by 2 per cent. in the year to the fourth quarter of 1994.

Dr. Jones: How does the Minister reconcile the need for price stability in the housing market with his Government's policies on assistance to house buyers, especially the million trapped by negative equity?

Mr. Nelson: The hon. Lady should draw some encouragement from the fact that the number of people with negative equity has fallen by nearly a half and, indeed, the value of that negative equity has fallen by nearly two thirds. I immediately acknowledge, however, that there is a real problem and a concern, particularly for those who want to move and suffer from negative equity. In the Government's view, the best prospects for a gradual revival in house prices will be served by continued economic growth and increased prosperity, rather than a short-term inflationary boom.

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Single European Currency

8. Mr. Gordon Prentice: To ask the Chancellor of the Exchequer what discussions he has with EU leaders about the introduction of a single currency and its link with political union.

12. Mr. Welsh: To ask the Chancellor of the Exchequer what recent representations he has received advocating a single European currency; and if he will make a statement.

14. Mr. Heppell: To ask the Chancellor of the Exchequer what discussions he has held with the Economic and Finance Council about a single European currency.

Mr. Kenneth Clarke: I hold regular discussions with my European colleagues about a wide range of issues, including those relating to a single currency.

Mr. Prentice: What are the constitutional impediments, if any, of Britain joining a single currency? Is the issue really a matter of practice rather than principle, as asserted by the Prime Minister yesterday?

Mr. Clarke: The Prime Minister, other members of the Government and I set out yesterday the way in which the country should exercise the judgment that we have allowed it to make by the negotiations at Maastricht. We discussed this comprehensively yesterday and the Prime Minister came to the sensible conclusion--indeed, the obvious, commonsense conclusion--that we should take advantage of that option by taking a hard-headed judgment of British interest when the time comes, if it ever comes, for us to make up our mind.

Mr. Welsh: Did the Prime Minister agree to or in any way alter the words of the Chancellor's speech on 9 February, in which he said that monetary union would not necessarily be a huge step on the road to federal union in Europe? If the Prime Minister agreed with him then, why will he not back the Chancellor's words now? Is there a massive policy gulf between them or, indeed, between them and the previous Chancellor, who disagrees with them both?

Mr. Clarke: The Prime Minister answered that question yesterday in a way with which I totally agree. The Prime Minister said:

"With one important qualification: I believe that it is possible to move forward to monetary union without necessarily moving forward to political union . . . the qualification depends on the nature and style of monetary union".--[ Official Report , 1 March 1995; Vol. 255, c. 1067.]

He went on to deal with that. It is absurd nit-picking textual analysis to try to separate members of the Government from that. That position leads, as I have just said, to the plain and obvious commonsense conclusion that we will make our minds up on the best judgment of British interests in 1999, or thereafter, whenever this proposition comes before us. To most people in the country, that, I think, is the sensible way in which to approach this important issue, compared with the rather lightweight way, with uncertain support behind, which the Opposition parties have demonstrated.

Mr. Heppell: Is the Chancellor aware that yesterday the Prime Minister significantly decided not to endorse the Chancellor's view on a European currency that it

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would not be a serious constitutional issue? In view of the Prime Minister's lack of support, does the Chancellor feel that his position is unassailable?

Mr. Clarke: I can only assume that the hon. Gentleman was not here yesterday. If he had been, he would have enjoyed an extremely interesting debate which, in my opinion, was won hands down by my right hon. Friend the Prime Minister. I can also assume that the hon. Gentleman did not listen to my first two answers to questions on this subject. It is quite obvious from his misquotation that he has not read the speech that I gave a few days ago. I suggest that he studies what is coming from those on the Government Benches explaining the difficult choice that the country may face and how we propose to tackle it. He will then be better informed on all aspects of the subject.

Dr. Hampson: Did my right hon. and learned Friend notice a piece in The Observer a few months ago which argued that commitment to a single currency and the associated restrictions on public spending and inability to devalue were inherently in conflict with the Labour party's commitments on economic policies? The author of that piece was the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who claimed that 67 other Opposition Members supported him. Is it surprising that the title of the piece was "Labour all at sea over Europe"?

Mr. Clarke: I failed to see that article, but I am familiar with the views of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who is in his place again today. The right hon. Gentleman was a member of Labour Governments who seemed to their opponents to use devaluation as an instrument of policy from time to time which, as a deliberate instrument of policy, I do not think that we should. My hon. Friend the Member for Leeds, North-West (Dr. Hampson) is quite right. At least 60 Opposition Members do not agree with a word of the comments made by the Leader of the Opposition yesterday. The Leader of the Opposition yesterday put forward an incredible position in comparison to my right hon. Friend the Prime Minister, who made it quite clear that he was going to concentrate on the national interest if and when the decision had to be made.

Dame Jill Knight: Is it not the case that there is now clear evidence that other members of the European family, notably Germany and Ireland, have stated that they recognise the dangers, not only of rushing prematurely into the EMU, but of saying at this stage in the proceedings that they intend to go into the EMU or indeed stay out of it?

Mr. Clarke: My hon. Friend is right. Although the debate may be lively in this country, it is becoming more intelligent and more informed and it is somewhat in advance of that taking place in some other countries on the continent. I have heard the German State Secretary and the Irish Finance Minister say that they see no prospect of economic and monetary union before 1999. I have seen reports of the Portuguese Finance Minister saying that he would expect the Portuguese to exercise an option, despite the fact that they failed to negotiate such an option for themselves in the Maastricht treaty.

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The Prime Minister, the Governor of the Bank of England and I have begun to set out the argument at greater length in this country. All of us, including myself, have set out clear circumstances in which we would be opposed to going into economic and monetary union because there are circumstances in which it might not be to our advantage. We in Britain are in one of the best positions in Europe. We have sensibly reserved for ourselves the opportunity to make a contribution to designing the thing and then to make our own decision in due course about where our national interest lies.

Mr. Forman: Is my right hon. and learned Friend aware that all Conservative Members, except possibly one right hon. Member, felt that we were completely convinced by the clarification provided by my right hon. Friend the Prime Minister on this question yesterday? Is it not a fact that, since the Maastricht treaty, the European Union has become much more of a hybrid organisation with more intergovernmental characteristics? Does my right hon. and learned Friend agree that we should not fall for the argument from some of our continental partners that we are going to be the victims of institutional determinism?

Mr. Clarke: I agree with my hon. Friend and I do not think that we are going to be the victims of institutional determinism. I also agree with him that neither of us, nor the Conservative party, wishes that. My hon. Friend is quite right. Ever since Maastricht, with the second and third pillars moving forward on an intergovernmental basis, there have been changes from the old blueprint days inside the European Union. Yesterday, the Prime Minister clarified the position not by giving silly simple answers to very glib questions, but by setting out the serious economic and political considerations on which we have to concentrate and then reserving to the Government of this country the right to make up their mind in due course on a hard-headed judgment of the national interest.

Mr. Gordon Brown: Although the search to find Mr. Leeson is now over, the search is clearly still on to discover the Government's European policy. On the single currency and the referendum, yesterday the Prime Minister said that a referendum may be necessary and desirable. Does the Chancellor now regret saying, as he did, that a referendum was totally a non-issue and that those who thought that constituents desired it were slightly up the creek? Does the Chancellor agree with the Prime Minister that a referendum may be necessary and may be desirable?

Mr. Clarke: Well, there were better jokes yesterday from the Leader of the Opposition and from the hon. Member for Livingston (Mr. Cook). The search is now on for some Labour party policy on the subject which might hold together people as disparate as the hon. Member for Workington (Mr. Campbell-Savours) with the right hon. Member for Bethnal Green and Stepney, and the hon. Member for Workington with the hon. Member for Bolsover (Mr. Skinner), pointing out some rather serious divisions behind the hon. Member for Dunfermline, East (Mr. Brown).

Our position is clear: that when the time comes to make a decision, the Prime Minister left open the question of a referendum. If and when we do reach the stage at which a single currency is on the agenda and ready for national decision, that is obviously again something that we have

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left open for the British Parliament at the time to consider when it decides how to address the question of the national interest.

Mr. Haselhurst: Does my right hon. and learned Friend think that the increased usage of the ecu as a common currency would help to clarify some of the practicalities and dispel some of the myths attaching to a possible future single currency?

Mr. Clarke: I do, but I think that it is going to be rather difficult to move there from the Maastricht position. The British Government, with hindsight, were proved right in pursuing those ideas, as indeed we did in the run-up to Maastricht. If it came back as a real possibility, I agree with my hon. Friend that it might well be a very sensible way to proceed, but all these matters now might or might not emerge in the debate over the next four, five or however many years in which we are going to play an active and constructive role.

Teachers' Pay

9. Mr. Betts: To ask the Chancellor of the Exchequer if he will agree to fund fully local authorities and schools for the cost of the teachers' pay settlement in 1995-96.

Mr. Aitken: No.

Mr. Betts: Does the Chief Secretary accept that the only help that the Chancellor has so far offered to schools and councils facing education budget cuts is that they can enter into sale and lease-back deals with their own assets? Does the right hon. Gentleman accept that sale and lease- back deals under the Local Government and Housing Act 1989 have to be offset completely against the credit approvals of local authorities and therefore cannot add one penny to their revenue budgets?

If that is true, is not the advice so far offered to schools and local authorities unhelpful and misleading? What will the Chief Secretary do to help schools, governors and parents facing massive increases in class sizes, or will he, like the Chancellor, stand on one side while education standards in our schools decline because he and his colleagues will not fund the pay settlement for which they are totally responsible?

Mr. Aitken: I am certainly prepared to tell the hon. Gentleman what I would do to help schools in Sheffield. I would encourage Sheffield county council to stop being extravagant and profligate with taxpayers' money. I would stop it wasting money, by keeping open 12,000 surplus school places. I would be very critical of a council that, when it was under the hon. Gentleman's leadership, wasted tens of millions of pounds of taxpayers' money on the world student games for Sheffield. Instead of coming up with bright wheezes for spending taxpayers' money, it is about time that Sheffield and a few other councils got their act together and kept taxpayers' money under good tight control.

Mr. Devlin: Is my right hon. Friend aware that Cleveland, one of the most left-wing authorities in the north of England, has announced that it will fully fund the teachers' pay increase from its own reserves? If a

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well-known left-wing authority such as Cleveland can do that--like Sheffield, it has built up enormous debts--why cannot other authorities do that?

Mr. Aitken: I am grateful to my hon. Friend for his praise, which comes from an unexpected quarter, for a council that is doing the right thing. All over Britain there are schools with current cash balances of more than £700 million, and local authorities are awash with cash of about £2 billion. Against that background, it is ludicrous for some councils to claim far too easily that they cannot possibly afford to fund what is admittedly a tight local government settlement to help schools.

Mr. Clapham: Is the Minister really aware of the pressure on local authorities? For example, in Barnsley over the past five years we have had to absorb a 57 per cent. increase in the number of children on free school meals, a 54 per cent. increase in the number of children who receive grants for clothes and a 200 per cent. increase in the number of children needing special education. Clearly, the local authorities need help--

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