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Mr. Spearing: We are talking about precision in the next financial year. The Secretary of State says that more resources will be available, but in view of the fact that the accumulated deficit is at least £125 million--it could be as much as £200 million--is it possible that the budget may not be greater? The Chancellor may provide more money, but because of the deficit, actual delivery may be the same or even less. Is not that the precise nature of the problem?
Mr. Dorrell: The hon. Gentleman tabled a question about the expected deficit of health authorities at the end of this financial year. He was given the figure of just over £100 million, but he now doubles that to £200 million. An increase in the national health service's budget next year of £1.6 billion may go some way towards covering a deficit of £100 million.
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Labour's health policy remains a vacuum--an empty space that is incapable of sustaining intelligent life. Nye Bevan must be turning in his grave. The true scandal is that not only the Labour party's health policy is in disarray, but the whole of the economic base on which, as the right hon. Member for Derby, South rightly said, its capacity to deliver rising living standards and improving public services will depend. The Labour party cannot agree either about its health policy or about almost anything else.
The taxation of utilities is in the right hon. Lady's current sphere of activity. That tax was first proposed four years ago. We are told that it will be the cornerstone of a Brown Budget, if such a thing ever comes into existence. It was a subject of some interest in this week's New Statesman, which devotes two pages to the tax that dare not speak its name. They are headed:
The first and most basic question about any tax is who will pay it. There seems to be considerable uncertainty about that. In July, in the "Road to the Manifesto", we were told to expect
Mr. Dorrell:
The right hon. Lady tells us to wait and see. We cannot go into an election on the basis that we have to wait and see about the cornerstone of a Brown Budget. Does the right hon. Lady expect the British people to put up with that? We must wait and see about the cornerstone of the first Brown Budget. In an earlier interview with New Statesman, the right hon. Member for Dunfermline, East said that that tax would be the basis on which he would rebuild the welfare state--and we are asked to wait and see.
Mrs. Beckett:
I gently remind the Secretary of State that the Budget requires us to wait and see, because it depends on closing tax loopholes that last year the Chancellor said did not exist.
Mr. Dorrell:
The right hon. Lady avoids the issue. In a few months' time, she will ask the British people to vote for a party whose first Budget will be built on a cornerstone about which she invites them to wait and see. There is uncertainty about whether the tax applies to monopoly utilities.
Mr. Kevin Hughes:
Will the right hon. Gentleman give way?
Mr. Dorrell:
No, I will develop my argument.
Mr. Hughes:
It is about the windfall tax.
Mr. Dorrell:
I am on the windfall tax, too.
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Does the windfall tax apply to monopoly utilities or to any privatised utility? On 16 November, the right hon. Lady's scope was broader. She said:
Will the windfall tax apply to privatised utilities, as the policy document says, to monopoly privatised utilities, as the leader of the Labour party and Mr. Alastair Campbell say, or to any privatised company, as the right hon. Lady says? Which is it to be? We are entitled to know. More particularly, the people charged with running those companies are entitled to know.
Mr. Kevin Hughes:
Will the Secretary of State confirm that when the Government imposed a windfall tax on banks in 1981, no one knew which banks were involved and how much the tax would be until they had made their decision and published it? What is the difference between the Labour party's proposal and what the Government did in 1981? The answer is that there is no difference.
Mr. Dorrell:
With respect to the hon. Gentleman, the difference is well understood by the banks and by the potential subjects of the undisclosed taxing ambition of Labour Front-Bench Members. The difference is that the windfall tax on banks applied to a discrete group of five banks, which knew from the day that it was announced that it applied to them. The windfall tax that the Labour party is threatening is an indistinct tax. Every time the right hon. Lady answers questions about it, she throws the net, and therefore the threat, wider.
As New Statesman makes clear, we do not know how the tax will be levied. Will it be on pre-tax profits, after-tax profits or, as some people say, on market capitalisation on turnover? What will it be used for? We are told that the deputy leader of the Labour party
Most of all, we need to know how much the shadow Chancellor anticipates that that tax will raise. In 1994, he put a figure on it: he said £3 billion. Now he says that it is £5 billion, and he does not contradict people who say that it could be £10 billion. We do not know whether it is a one-off tax or a tax that will be imposed year after year.
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There is only one certainty about the Labour party's plans for a windfall tax: the certainty that the consumers will end up paying. As John Kay said in his description of the British tax system:
The right hon. Member for Dunfermline, East is embarrassed by the fact that what he thought was a nice little earner has now rebounded on him. It is not the fat cats who will pay; it is the pensioners, the wage earners and the families of Britain who will pay Labour's taxes, as they always do.
Not a week goes by when the Labour Front Bench does not make another pledge to increase Government borrowing. The shadow Chancellor says that he will increase it by cutting VAT on fuel bills, which is a cool £500 million. Then he says that he will increase public borrowing by cutting the starting rate of tax to 10p, which is a cool £8 billion. This weekend, we were asked to believe that the Labour party has suddenly taken an interest in the middle classes and will raise the threshold for upper-rate tax to £30,000. My right hon. and hon. Friends will be pleased to hear that that would cost £1.4 billion. Those spending pledges should be coupled with the £30 billion that the Labour party is already committed to spending, which my right hon. Friend the Chief Secretary has itemised. Labour's Front-Bench spokesmen are committed to £40 billion of extra borrowing and there is not a penny for the growth of NHS patient care. Labour has no intention at all of cutting tax. It is utterly incapable of the spending discipline that is a necessary precondition for that.
As the weeks go by, the choice becomes ever clearer. New Labour offers an old and familiar cocktail. Spending would rise as it has risen in the town halls. Borrowing would rise and, belatedly, tax would rise. But that is not all, because as borrowing rose, inflationary pressures would rise and we would be back into that familiar cycle. Most damaging of all, Labour would impose extra costs on British business through the minimum wage and the social chapter--importing everything that is wrong in many of the European economies. The Government offer measures that are decisively different.
"Labour's first-term fiscal policy is largely dependent on the windfall tax. So why can't the party's leaders agree on what form it will take?"
The article asks some pretty basic questions, to which we look forward to hearing answers from the right hon. Lady, if she can speak on behalf of the shadow Treasury team.
"a one-off windfall levy on the excess profits of the privatised utilities".
By the time the Leader of the Opposition talked to the Labour party conference, that had changed. It was now a tax on monopoly utilities. Will it be a tax on all privatised utilities, or on the monopoly utilities?
"We don't rule out any of the privatised companies."
She does not even limit it to the utilities. Does she include British Airways? Will British Airways be subject to Labour's utilities tax? What about Rolls-Royce? What about the Rover Group--will Labour go to BMW and say, "You're very welcome to invest in the west midlands, and we shall impose a windfall tax"? Is that what the right hon. Lady has in mind? I shall be happy to give way to her if she can clarify that point. This is turning into an opportunity for her to clarify Labour's tax policy.
"has been campaigning inside the shadow cabinet for his view that some regional utilities should be given concessions on the tax in return for expanding their training and job-creation plans. . . Other shadow cabinet members"--
we should know whether the right hon. Lady and the hon. Member for Islington, South and Finsbury are among them--
"have simply sought to re-assure local companies . . . that the tax is not intended to hurt them."
The right hon. Lady may go round Derby saying that it does not apply to the electricity and gas companies that serve her constituents. Does it apply to Derby, but not to Islington? Which shadow Cabinet members have given their local interests an exemption from that tax? We need to know.
"There is no such thing as a tax on firms: the effective incidence of all taxes is ultimately on individuals."
The amount of money that Labour Front-Bench Members want for their spending ambitions must come from higher prices, lower investment or lower returns to savers. People want to know whom the Labour party is targeting. It has an ambition to spend, and it proposes an indistinct tax, the scope and incidence of which is unclear. Most important, it is unclear who would end up paying the tax.
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