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Mr. Forman: Is not my right hon. Friend saying something even more significant than he has let on? Is not he saying that, if monetary union over any area within the 15 member states of the European Union is to succeed in the longer term, it must be made reversible in some sense?
Sir Terence Higgins: As I was saying when I gave way to my hon. Friend, no one seems to have analysed that properly. As I said before, the idea that one can establish a single currency in the whole of the European Union--especially now that, I am happy to say, it has now been expanded--is wholly unrealistic on any conceivable time scale. In the context of the Bill, I think that the Chancellor needs to be encouraged to bring a sense of realism to such matters and a sense of the dangers of proceeding in the way in which Mr. Lamfalussy, for example, envisages.
I was in other parts of the European Union last week and found that increasing concern of the type that I have just expressed was very apparent. After all, other members of the European Union are proceeding against a background of growth rates worse than ours. I am thinking of, for example, Germany.
It is important to bear in mind the implications of the problems that I have outlined for the balance between fiscal and monetary policy. Effectively, we are creating an ever tighter fiscal policy but with total disregard for the economic situation. That is very strange. I am sure that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) will not be able to recall any Government saying that they were going to cut Budget deficits with no account being taken of the level of unemployment or what stage of the economic cycle they were in at the time. Regardless of where we are in the economic cycle, the idea recently has been that we must cut deficits.
I view with perhaps more equanimity than the Chancellor the extent of the Budget deficit when we are in an economic situation such as this. Clearly, inflation is now well under control, but I am worried that the rate of growth is not as fast as it could be. Of course, when the Budget was announced, many people thought that the growth rate predicted by the Chancellor was unlikely to be achieved unless there were also cuts in interest rates. I am glad that the Chancellor subsequently cut interest rates, and I believe that the Budget and the Bill provide a good background for him to make further moves in that direction.
The relationship between the deficit, the money supply and the rate of interest is complex, but a further tightening of fiscal policy should enable the deficit to be reduced and be financed at lower interest rates without generating further inflationary pressures or an excessive increase in the money supply. I hope that in this context, too, the Chancellor will consider timing and balance.
I wish to say a word or two about the comments of one of my successors as a Treasury Minister, the right hon. Member for Llanelli (Mr. Davies). I have much sympathy
with what he said. The first time that a draft clause was added to a Finance Bill for a particular tax change was in connection with value added tax. I commend that to my hon. Friends on the Front Bench as it is a good innovation.
One of the effects of the timetable change to our Finance Bill debates this year and for the previous couple of years is that there is very little time for consultation between the Budget being announced and the Finance Bill being published. Most of the available time is taken up by the Christmas and new year holiday. At this point, it might be worth commenting in passing on our economic statistics on growth. The entire country effectively goes on holiday for two weeks at Christmas and new year. Two weeks is quite a high percentage of the year as there are only 52 weeks in one year--perhaps we should adjust the gross national product figures accordingly.
The so-called unified Budget has been introduced, but we still have no opportunity to debate expenditure in any great detail. We shall grind through the Committee stage on the Floor of the House, the Committee stage upstairs and the Report stage, all of which deal with taxation, but there is still no time to discuss the expenditure side of the equation. Having said that, I believe that the Budget was an appropriate one.
It is a matter of some concern to our constituents that when they see our proceedings on television there appear to be very few of us in the Chamber. That has been exacerbated by the fact that many hon. Members now have a direct feed line from the Chamber to their offices. One is sometimes surprised when, once one has finished speaking and gone to the Tea Room, colleagues there say that they wholly disagree with what one has just said although they were not in the Chamber to hear the speech. The only solution is to have cameras facing in the other direction too so that the public can see hon. Members busily signing their letters while watching proceedings in the Chamber.
Mr. Ian Pearson (Dudley, West):
Writing nearly 300 years ago, Pope could have been talking about the Government and the Bill when he wrote of the "wounded snake" that
At 408 pages long, the Bill represents a 15 per cent. rise in output from the combined talents of the parliamentary and private sector drafting staff compared with the previous year. It has a third more clauses, adding to the 1,500 pages of primary tax legislation already introduced in the past five years. However, its size cannot obscure its failings.
This is a wholly inadequate Bill. Never before has such a big fig leaf been used to cover so little. The simple truth is that it does nothing to encourage investment and jobs,
nothing to provide opportunities for all and nothing to curb the excesses of the privatised utilities or improve the profitability of small businesses.
The Bill does nothing to close tax loopholes. Because of the Government's incompetence, taxpayers are subsidising corporate raiders--like Granada in its bid for Forte and National Power in its offer for Southern Electricity--to the tune of hundreds of millions of pounds through a loophole involving the use of special dividends in takeovers. When will the Government act in the public interest and end this scandalous state of affairs? This fig leaf of a Bill hides a Budget packet of minuscule proportions, and everyone knows it.
The CBI said of the Budget that it
The Federation of Small Businesses is on record as saying that it was "extremely disappointed" by the Chancellor's speech and that
Its chairman said:
I think that she is right. Opinion polls also show that the British people have rumbled the Budget and the Government.
Even Government Back Benchers have twigged that the Budget is not up to much. The hon. Member for North-West Surrey (Sir M. Grylls), who is not here at the moment, is the chairman of the Small Business Bureau. He was reported in The Daily Telegraph of 29 October as saying that he was
He is right to be disappointed. The United Kingdom is currently 11th in the European Union in terms of investment per head of population--that is not nearly good enough. Nearly three years ago, the then Chief Secretary to the Treasury, the right hon. Member for Enfield, Southgate (Mr. Portillo), who I understand is feeling persecuted these days, optimistically claimed that the 1993 Finance Bill was
Parliamentary rules and natural politeness prevent me from saying exactly what I think of that claim. Suffice to say, I have not met a single business man who thinks that there is less red tape today than there was three years ago. Nor have I seen a single credible survey of businesses which suggests that the regulatory burden has decreased.
Speaking in the debate on the previous Finance Bill, the right hon. Member for South Thanet (Mr. Aitken), last year's Chief Secretary--who could also be forgiven for thinking "infamy, infamy, they've all got it in for me", to quote the late Kenneth Williams--said:
I am still relatively new to the House, but I recognise absolute rubbish when I see it. I trust that this year's Chief Secretary will have none of it, and that in Committee he
will devote his full attention to the many inquiries we will make and amendments on which we will probe him, rather than be diverted by a certain inquiry elsewhere.
In speaking in favour of the Opposition amendment, I must point out that the Government ignore at their peril the overwhelming public support for welfare to work measures, for tackling the privatised utilities abuses, for implementing Greenbury in full, for cutting VAT on domestic fuel and for measures to stimulate long-term investment.
People and businesses in Dudley, West wanted a very different Budget. I shall highlight three areas on which, should I be appointed to serve on the Standing Committee, I intend to consider tabling new clauses. First, I remain as convinced as I was last year that there is a compelling case for specific, limited tax breaks to help hard-hit high streets that have been devastated by major, out-of-town retail developments such as Merry Hill in my constituency. I also believe that the Government could be far more imaginative in using tax breaks to encourage investment and economic regeneration.
Secondly, changes are needed to the tax treatment of retained profits in privately owned businesses. The tax system discourages retained profits, as it is more tax efficient to withdraw capital and invest it in another's business. That needs to be changed.
I would also like the small firms loan guarantee scheme to be reformed. It is not particularly popular in the market, and it is certainly not a competitive package when compared with that offered to German or Japanese firms. We must seriously consider adopting the German and Japanese models of encouraging long-term investment. As a recent 3i report says, Britain's small companies have the
The report also states that they have
That must be changed and the reform of the small firms loan guarantee scheme could play a role in that.
" drags its slow length along."
"would have preferred to see more measures to encourage investment."
"there has been absolutely no encouragement for growth".
"I doubt whether the speech will win many votes from our members".
"disappointed at the absence of measures to encourage investment, particularly among businesses in the £3m to £50m a year turnover bracket."
"putting in place the biggest ever deregulatory package for small businesses."--[Official Report, 26 April 1993; Vol. 223, c. 731.]
"As for simplifying the tax system, the unwelcome size and weight of the Finance Bill highlights the strange paradox that simplification can be a complicated business, at least in terms of legislation."--[Official Report, 17 January 1995; Vol. 252, c. 596.]
"shortest financing horizons in Europe".
"inherently more risky capital structures".
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