| Previous Section | Index | Home Page |
Mr. Forman: Is there not one group of pensioners, about whom both my hon. Friend and I should still be concerned: the very elderly pensioners who are, say, over 75 years old? They are disproportionately reliant on the state pension, and income support where that is necessary. It is a priority for future public expenditure rounds to try
to target some help at that group since, as my hon. Friend has just said, the general group of pensioners in Britain is very well off compared with those in other countries.
Mr. Butcher: I agree entirely with my hon. Friend. When I think of that £90 billion social security budget and I listen to my colleagues quite rightly talking about targeting and focusing, that particular category of people comes to mind. If any group needed targeting, it is that one. I have great difficulty believing that we cannot adjust budgets of that size to cater for a dwindling number of people who are probably in greater need than most categories of folk. I hope that colleagues will take note of that comment and consider virement in the context of pensions and the social security budget.
This is the worry: what if we integrated our money into a common currency--or a core currency as I think it was called earlier--and, through majority voting, were unable to prevent the integration of social security systems? As I say it today, it sounds as if it might never happen, but we know from the way in which Europe, the Commission and voting procedures have worked in the past that it is not impossible.
If the social chapter were the background to that scenario, there would be a danger that prudent British pensioners would subsidise, through common mechanisms, the imprudent southern European pension funds and those of France and, say, Belgium. I say again that even to make the point today sounds slightly hysterical, but points made 10 years ago, which sounded equally hysterical, have turned out to demonstrate proven fears of a reality that came to pass. The issue of pensions relates to insecurity and the creation of jobs helps us to ease that. Honesty in our dealings with inflation will improve the security and peace of mind of our people.
I shall briefly raise two more points. I welcome the commitment from the Prime Minister downwards to the eventual abolition of capital gains tax. I happen to co-chair the all-party manufacturing group. Like every all-party group, it agrees, usually, on the objectives it wants--in this case the full health of the manufacturing sector, especially small and medium-sized enterprises-- but it rarely agrees on the policy that would achieve that objective.
One of the areas of disagreement concerns the treatment of capital gains tax. We all know the problem. Unquoted companies--small and medium-sized companies--employ, typically, between 20 and 200 people. Their only access to finance is the local clearing bank. They have very little access to real risk capital without a great on-cost. The abolition of capital gains tax would put in place a significant piece of the jigsaw to help the sector of the country's economy which needs it most. What defines manufacturing, as opposed to a service sector activity, is that it is capital intensive, so any measure that releases a flood of capital--which I believe the abolition of capital gains tax would--would have a disproportionate benefit.
That highlights another problem in the House. Historically, the Conservative party is allegedly the party of capital and the Labour party is allegedly the party of labour, although everything is getting rather fudged and, shall we say, muddled at the edges of late, which is not a bad thing in some ways. I wonder whether the House has the wit to agree that the abolition of capital gains tax would cause the biggest job creation programme since 1945.
Abolition would have a marked impact on solving the problem for small companies, which are the generators of jobs--the big companies are not since they are shedding labour. If Britain, uniquely in Europe, had no capital gains tax, it would give us a Lee Kuan Yew Singapore-style renaissance in key sectors of our economy. I simply ask the House to consider whether we could break out of our straitjacketed way of thinking. If the Leader of the Opposition decided that he was a Thatcherite to that extent and abolished capital gains tax, he could cause us some real problems--but I do not think that he will abolish it.
There is another contrast between the Conservatives and the Labour party. If we are to be honest, let us consider the information elicited in hostile questioning of the hon. Member for Blackburn (Mr. Straw) in the mid to late 1980s when he was a Treasury spokesman. He was talking about the tax take which accrued to the nation as a result of the reduction of the top rates of income tax. Month after month there was persistent interrogation of Treasury Ministers; month after month the reply showed that, as the top rates came down to 60 per cent. and then 40 per cent., not only did the cash take from the top 10 per cent. go up, but the proportion of the total tax paid into the coffers by the top 10 per cent. went up. In other words, supply side economics works.
If those are the facts--and they are--and if the Labour party, behind all the verbiage, is working out a deal to do something for industry and manufacturing, it must know that the lads will not wear it if the top rate of tax remains at its present level. The Labour party will have to jack up the top rate--perhaps to 50 per cent. to start with and then 60 per cent.--and provide a sop for the CBI and other corporate stakeholders, to whom it now wishes to be in thrall, by giving them capital allowances. The odd hints from Dudley, West and elsewhere are that capital allowances will be the concession for the manufacturing sector. It is a double-edged package.
If the tax take goes down as a result of those two measures--which it will, as was shown in the reply given by the hon. Member for Blackburn--where will the Labour party get the extra money? It will have to go back to the same old milch cow, the middle income groups. That really will spell trouble because such a triple whammy will attack and deflate the wealth creating sector.
I had hoped to say something about a core currency, but I shall not. Instead, I shall end by saying that we now have a chance to secure an economic miracle. The problem with economic miracles is that, as in the mid-1980s, they can easily be blown away. We over-egged the pudding and then slammed on the brakes too hard by joining the ERM straitjacket. That is history and we have learnt from it. Now, we have a real opportunity. However, economic miracles are not cataclysmic explosions; they are not dynamic happenings over a short period of time. In fact, they are boring, steady, slow and incremental. We need an incremental lead over our competitors in a variety of factors to achieve an economic miracle. We are now going through just that process.
Mr. Barry Legg (Milton Keynes, South-West):
Several hon. Members have already expressed concern about the procedures of the House. The right hon. Member for Llanelli (Mr. Davies) made an interesting speech and looked back to the spectre of the 1970s and the formulation of tax legislation. He was concerned that the House was moving towards a nine-to-five four-day week. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) also said that the procedures of the House needed to be examined.
The procedures that the House has adopted tonight and the way in which political debate is developing in the country show that this place is a disappointing forum for the discussion of United Kingdom economic and financial policies. The age of the soundbite has arrived.
The last time we held an economic debate was at the beginning of December. The soundbite that the Opposition used before the debate was the 10p tax rate, but when it came to the debate they did not want to talk about it. They have taken the same approach today--they floated a soundbite but have come to the House not wanting to talk about it. Last week's soundbite was the stakeholder economy and the Leader of the Opposition went all the way to Singapore to make his comments. He talked about the stakeholder economy in a forum where he would not be questioned. Today, we are holding a major debate on the economy--we are not likely to have another one for six months--but the shadow Chancellor of the Exchequer cannot even be bothered to attend and listen to the contributions from his shadow Treasury spokesmen.
Mr. Alistair Darling (Edinburgh, Central):
The hon. Gentleman would do well to observe the courtesies of the House, which are sometimes worth maintaining. My hon. Friend the Member for Dunfermline, East (Mr. Brown) accepted a long-standing invitation to address an audience in Wales this evening. As the hon. Gentleman well knows, the business of the House is arranged on a weekly basis. Indeed, one of his hon. Friends has apologised to me as he cannot be here for the whole of the debate because of a prior constituency engagement. The hon. Gentleman may by all means attack us on any perceived political points, but his attack on my hon. Friend has no place in a civilised debate.
| Next Section
| Index | Home Page |