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Mr. Sykes: It would be a pity to leave the subject of capital gains tax without my hon. Friend commenting on the following point. Does he think that it is a shame that the hon. Member for Newham, North-East (Mr. Timms) has illustrated his lack of understanding about business? The hon. Gentleman should be calling for the abolition of capital gains tax, because that is exactly what business needs to be able to expand. Family companies are desperate for the Government to abolish capital gains tax. Is that not an illustration of new Labour, old tricks?
Mr. Shaw: My hon. Friend speaks with considerable authority about family businesses. Indeed, he has experienced building a business, establishing a number of jobs and ensuring not only that those jobs are secure and safe, but that more will be available in the future. Anybody who has any experience whatever of job creation knows that capital gains tax is one of the taxes that damage job creation. If the Labour party were serious about wanting to create employment and reduce unemployment, it would also be calling for the abolition of capital gains tax.
Getting income tax rates down is very important.I believe that we should be looking seriously at the flat rate tax that has had an airing in the United States. It could not be introduced in the short term in this country, but if the economy continues to grow under a Conservative Government, there will be opportunities around 1999 seriously to consider its benefits. If we had a £7,000 exemption or an allowance of £5,000 per person, we might be able to have a flat rate tax of 15 per cent. That would benefit many people, and would take many others out of tax altogether.
I know that the Treasury's initial costings, which my hon. Friend the Financial Secretary to the Treasury produced, suggested that it could be quite expensive to bring a flat rate tax into being, but I point out to my hon. Friend that, when the Treasury did the costings, it did not envisage abolishing all the allowances that it would be possible to abolish if we had one tax allowance at the start of the assessment for flat rate tax of £5,000 to £7,000 per person or per household.
I believe that the cost of introducing a flat rate tax could be well below the initial figure of £26 billion which the Treasury produced if we abolished more allowances, by giving a generous allowance on the flat rate tax, and by having a rate of no more than 15 per cent. We should encourage serious debate on that.
The debate must be more serious than Labour's proposals for a 10 per cent. income tax. We have never seen Labour's proposals; they were a soundbite in a speech, then they vanished from the airwaves. I hope that the 10 per cent. income tax soundbite will be explored vociferously by my hon. Friends, because I would like to know what has happened to the 10 per cent. basic rate of tax.
Where is Labour's proposal on that? Why can we not see some costings? I am sure that the Treasury would co-operate by making its computers available to cost Labour's 10 per cent. income tax proposal. We should hear how the proposal would be put into effect, because so far all we have heard is a short wave soundbite, rather than a long wave policy. We have not even heard any guidelines, let alone an explanation of the policy itself.
The economy is improving enormously, day by day and month by month. There is no doubt that the United Kingdom is now getting overseas investment in record amounts. We are seeing unemployment fall substantially, on a regular and sustained basis. We see some of the best good news features that we have seen for some time.
There are still some problems; I referred to the fact that the flexibility required in the labour force today is different from what was required before. People must adapt to the changed labour market, but those who can and do adapt--those who have been on Government retraining schemes and those who are taking time out to learn new skills, to get up-to-date information technology and to learn all the requirements of the labour market--have great opportunities under a Conservative Government in the rest of the 1990s.
Mr. Jim Cunningham (Coventry, South-East):
I had hoped, certainly in the interests of the 65 million people of this country, that the level of debate among Conservative Members would be higher. I had hoped that, regardless of party politics, the Government would put the country first, and would start to outline the true state of the country's economy and how they intended to remedy it. In fact, all we got was a little bit of knockabout from the Chancellor instead of constructive ideas and constructive proposals.I have sat here since 3.30 pm, thinking that the debate is all stage-managed to lift the morale of the Tory party, with an eye on the by-election in South-East Staffordshire.
I must respond to some of what has been said in the debate, especially what has been said about 1979, to which I shall come in a little while. The hon. Member for Dover (Mr. Shaw) said that a Labour candidate for the European Parliament had talked about a reduction in beer tax to French levels. I do not know about the French levels, but I remind the hon. Gentleman that I and a number of his colleagues listened to evidence in the Select Committee that considered beer tax. We looked at the effect of the import of French wines and beers on this country, especially in terms of the black market, and we discussed the consequences for the north of England,
where people were threatened to make them sell imported wines and spirits. If the hon. Gentleman has a good look round the north of England, he will be aware of the protection rackets there, and he may change his mind. He may then not pour ridicule on the proposal. I do not necessarily agree with it, but I know that there are serious concerns. I suggest that the hon. Gentleman has a good look at the report and takes a more serious interest in it.
Conservative Members extolled the Tory party's virtues in terms of its management of the economy. They said that we managed our economy better than any other country on the continent and, by implication, better than the Japanese and the Americans. I am reminded of when I went to Germany and looked at the tramline system in Frankfurt. When I arrived, some Germans who spoke impeccable English said, "How is the weather on the islands?" I said, "I do not come from the Scottish islands. I come from mainland Britain." One of the Germans said, "That is the point." The moral of the story is that the Tories are saying exactly what the Germans said to me. They are supposed to be co-operating in the single market, yet they do not believe in it.
Another theme running through the debate--it came up during the Chancellor's speech and we never got a response to this point--is the question of insecurity, which also predominates in the Tory party's sister party in the United States. There is insecurity among middle-class and working-class people today, on both sides of the Atlantic. People feel as if they do not have a future. Newt Gingrich has gone on record as saying that the American Congress should debate the matter and that it will be a major issue during the next presidential election. The Tories should not pour ridicule on that. If they want to talk about the feel-good factor, they must address themselves to the problem of insecurity. They did not address the problem tonight, although it affects the well-being of the 65 million people of this country. We are not talking about little sections of this country. If we cannot address the issue, we have a major problem. Certainly, Conservative Members have a major problemin lifting the morale of their party. That is not a task for me.
Mr. Sykes:
Will the hon. Gentleman give way?
Mr. Cunningham:
Not for the moment.
Equally, I was interested that Conservative Members poured ridicule on France, despite the fact that a sister party is in power. One can assume only that the French Government are pursuing the same economic policies as this Government. The same people poured ridicule on Germany and said that we would now outstrip Germany. However, it is only 20-odd years ago that the Conservative party, under a previous Prime Minister, told this country that if Britain got involved in Europe, we would get more holidays, better pensions and a number of other benefits. That was a version of the social chapter from which the Tories have systematically run away during the years since Maastricht. What hypocrisy. The Tories run away and pick only what suits them. When something does not suit them, they take another road.
We have referred tonight to middle England. I represent a constituency, Coventry, South-East, which is part of middle England; it is part of the west midlands which is, in turn, part of middle England. The west midlands was noted as the engine house of the British economy, but we
can see what the Tories have done to it over the past16 years. One can go further. The Tories mention the winter of discontent in 1978-79, but they fail to say that there was also a winter of discontent in 1970, with the advent of a Tory Government. What happened when that Government took office? If I remember correctly, house prices doubled. I remember the three-day week, the Conservatives' equivalent of the 1978-79 winter of discontent. In addition, there was a summer of discontent last summer. The House will remember the nurses' pay dispute and parents marching to demand better teachers and classroom facilities.
The Government have betrayed Coventry's young people. Nearly one third of the city's 16 to 25-year-olds are unemployed; in the west midlands as a whole, the figure is 21 per cent. for the same age group. Many of them have no formal qualifications--that is not surprising, given that 30 per cent. of Coventry's 16-year-olds are not in full-time education. The figure rises to 51 per cent. of all 17-year-olds. With their cuts in youth training and services, the Government have betrayed the hopes and life chances of a generation. Youth unemployment on such a scale represents a massive waste of talent and ability, a waste that we cannot afford financially or socially.
Youth unemployment is personally disastrous and socially destructive, and helps to produce crime and the decay of our very social fabric. What many people in Coventry will find most disturbing is the fact that 16 to 24-year-olds account for 51 per cent. of the convictions in the city. That is a result in part of the failure of the education system, created by the Government, the lack of youth training and the decimation of the job opportunities that are open to young people. The responses to a crime survey in Coventry demonstrated that many people have realised that fewer facilities for young people contribute to rising crime in the city, and the Government must accept responsibility for that.
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