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Sir Cranley Onslow (Woking): Is my right hon. Friend aware that evidence given to the Select Committee on Trade and Industry this week suggests that London Electricity would cut its investment programme if it faced a windfall tax?

The Deputy Prime Minister: I am extremely aware of exactly the dangers that my right hon. Friend has pointed out. The fact is that either prices would go up or investment would be cut as a result of the imposition of the windfall tax. There is no loose cash sitting about with no purpose in the pockets of British companies. A windfall tax would affect prices or jobs, or both. That is its only consequence.

I know perfectly well that it is the determination of the Labour party to give the impression that it is a painless tax, but to answer no questions about it. I am certainly not the first person to ask those questions. In July this year, the Leader of the Opposition was interviewed on "The Financial World Tonight" and he was asked, for example, whether British Telecom and British Gas would pay the new tax. He said:

"we are not going to start specifying particular sums of money from particular utilities."

That did not get us very far, so the interviewer tried again:

"Is it all of the utilities that would come under a windfall tax?"

The Labour leader replied:

"Well, as I say, Gordon has said that we are not going to start specifying at this point in time that there are particular utilities who are going to pay particular sums of money or whatever".

The interviewer was singularly unimpressed, and tried a third time, by asking:

"Why won't you give them that detail?"

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The right hon. Gentleman replied:


"Well, with all due respect, we are giving that detail. I mean, we have simply said that in relation to specific utility companies we're not going to say specifically how much money companies are going to pay . . . at this moment".

That from the party which claims it is fit to govern the country. The Opposition have had four years to plan their policy and to show they know what they are talking about, and still there are no answers to the basic questions.

It is no surprise that concern about and criticism of the windfall tax has percolated through to the upper reaches of the Labour party. Alert as ever, the deputy leader of the Labour party has got wind of it first, so he has come up with a wheeze. We are told by the Financial Times that he has held a series of meetings with the utilities executives to discuss their involvement in local job creation and regeneration projects, funded by the tax on their excess profits. One might say that that is a worthy vision.

Off the right hon. Gentleman goes to the shadow Chancellor to set out his proposals. He says, "Look, shadow Chancellor, we've got a bit of a dog's breakfast here, left over from the old heady days when you and I were still recovering from peddling the myth that Neil and Roy were the dream ticket. Well, we've all come a long way since that, and I suggest that we hypothecate"--I do not think that the right hon. Gentleman would have used that word--"and use some of the windfall revenue for worthy schemes."

The shadow Chancellor was, to put it bluntly, unamused. In fact, he took off into outer orbit. He has already spent the money about 35 times over, but there was his right hon. Friend threatening to give the whole bloomin' lot away before he even gets his hands on it.

We should at least give the deputy leader of the Labour party his due. He cannot answer any of the questions, but, my word, he can certainly spot a question coming his way when he has had four years to think about it.

I must tell the Opposition that they cannot go on running from the questions. They must set out the basic principles on which the tax would be based. Tell us which companies would be affected and what criteria would be used. Tell us how big the bill will be for pensioners, customers and shareholders. Is it £5 billion, £6 billion, £7 billion or £10 billion? But then, on second thoughts, why bother? There will not be a windfall tax under the next Government, because the next Government will be a Conservative one.

4.57 pm

Mr. John Prescott (Kingston upon Hull, East): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"notes the plight of unemployed young people and the long-term unemployed and welcomes the Labour Party's initiatives to deal with these problems, to be financed by a windfall levy on the excess profits of the privatised utilities."

The Deputy Prime Minister sought to prove that consumers, shareholders and pensioners will suffer from Labour's windfall levy. That is the Government's case. We did not hear one word from him about the excess profits that have been made by the privatised utilities. There is no doubt that they have made such profits; even the regulators have recognised that and taken action. I thought that the right hon. Gentleman's speech was rather

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tired. It contained an awful lot of tired questions and was not even helped by the humour in a couple of set questions with set answers.

The Deputy Prime Minister made much play of the question whether we are proposing a levy or a tax, and no doubt we will hear an awful lot more about that. Perhaps those words do not come easily to him.

The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): What is the difference between them?

Mr. Prescott: That question was first asked by the first Government to levy a windfall tax, a Tory Government. The then Chancellor of the Exchequer said:

"I should require the banks to make a special fiscal contribution."--[Official Report, 10 March 1981; Vol. 1000, c. 773.]

What is the difference between a tax, a levy and a "special fiscal contribution"?

Mr. David Shaw (Dover): Will the right hon. Gentleman give way?

Mr. Prescott: I shall give way, in time. I always give way to fools such as the hon. Gentleman.

There has been an awful lot of rhetoric. We want to direct the attention of the House and the country to the fact that excess profits have been made. Let us not argue about the terms. There have been excess profits, and we intend to recover them, to put our people back to work. That is the difference between us and the Tories, and that is the point that we want to make.

The hon. Member for Sheffield, Hallam (Sir I. Patnick) quoted a letter from Yorkshire Electricity. He did not tell us about the letter from Yorkshire Water, but I shall leave that issue aside for now. The person at Yorkshire Electricity who wrote to the hon. Gentleman is one of the people who have benefited greatly from privatisation. Since privatisation, annual boardroom pay has increased by 565 per cent., and board members have £2.7 million in share options outstanding. I would write a letter to the hon. Gentleman if I thought that those privileges were under attack.

Sir Irvine Patnick: The right hon. Gentleman has a copy of that letter--unless he has not had time to read it.

Mr. Prescott: I have a copy of the letter. I want to deal with the arguments made by the Deputy Prime Minister about the effects of a windfall tax on consumer prices, investments and pensions--which is the Government's case--but I wanted, first, to make those remarks, to deal with the points made by the Deputy Prime Minister in his speech.

Despite the protestations of the Deputy Prime Minister, the privatised utilities were sold off cheaply, weakly regulated and allowed to make excess profits. Labour plans to raise a levy to help put the unemployed of Britain back to work, because we believe that that is social justice.

The British people have paid a high price for privatisation. As I said, the privatised utilities were sold off cheaply and regulated weakly. That was done deliberately, to allow the City to make a financial killing,

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which it did. Moreover, often the utilities were provided with financial sweeteners, such as the £14 billion of written-off debt and tax allowances that were given to the water companies alone. Water companies' profits have rocketed, water bills have increased by 83 per cent., boardroom pay has soared, and there have been record share options and other perks. The British public are picking up the bill for privatisation, and we think that that is wrong.

Mr. Rod Richards (Clwyd, North-West): The right hon. Gentleman has told us that the windfall levy would be used to put people back to work. Will he tell the House whether Labour's plan would also include capital projects?

Mr. Prescott: I am sorry; I did not hear the last part of the hon. Gentleman's question.

Mr. Richards: I asked whether the Labour party's plan would include capital projects. If so, perhaps the right hon. Gentleman will outline some of them for us.

Mr. Prescott: I shall deal with how we will use the money when I come to that part of my speech.

Mr. Shaw rose--

Mr. Prescott: I shall give way to the hon. Gentleman, who seems to think that I will not deal with it.

Mr. Shaw: Will the right hon. Gentleman tell the 3 million small business owners in this country and the 2 million other employers what is the Labour party definition of "excess profit?" Under Labour's definition, how many extra pounds in tax will small business people have to pay?

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