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Dr. Norman A. Godman (Greenock and Port Glasgow): The right hon. Gentleman mentioned 1987. If the Government had maintained their 1987 share of North sea oil and gas profits, the Treasury would have received an extra £12 billion in tax revenues between that year and 1994.
Mr. MacGregor: Labour's commitment to expenditure per year in 1987 was a good deal higher even than that figure. That is why Labour Members were devastated when the total costing was done.
Where does the Labour party stand now? It has made certain commitments. The first is the windfall tax, which should be known as the pitfall tax because so many pitfalls have been demonstrated. The biggest pitfall is that it is a one-off tax to meet a spending commitment on employment that everyone knows will last for more than a year. There is bound to be a continuing commitment, for which the windfall tax would produce no revenue. The implication is that Labour is making a much heavier spending commitment for the lifetime of a Parliament.
Labour's next specific commitment is to abolish the assisted places scheme and tax relief on health care insurance for the over-60s. I supposed that the Labour party now supported public-private partnership, of which those are both good examples. I go further: it is very damaging that the Labour party has chosen to try to abolish those two schemes.
Perhaps I should declare an interest in the assisted places scheme, in that my wife is a member of the council of the Girls Public Day School Trust, which benefits from
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The Labour party proposes to remove tax relief on medical insurance for the over-60s. I thought that it, too, understood, in view of the enormous and increasing commitments involved in dealing with an aging population, that we need to bring in more private finance to tackle those issues during the next 10 years--yet it proposes to abolish the tax relief.
Those two proposals will not yield much in terms of revenue forgone, but they will be damaging.
It has just been announced that Labour would reduce VAT on fuel. I would like to ask the hon. Member for Edinburgh, Central (Mr. Darling), who I understand is to wind up the debate on behalf of the Opposition, whether Labour, in addition to making that commitment, which would reduce revenue by about £500 million, proposes to claw back previous additional spending on social security and other benefits which were made to compensate those on social security for the increase in VAT. If Labour intends to claw back the additional spending, I do not see the point of clawing it back from those who are least well off; but if Labour does not claw it back, that will be another spending commitment of £500 million.
I want to concentrate on the debate. The game was given away when my right hon. and learned Friend the Chancellor asked the deputy leader of the Labour party a question relating to the public sector borrowing requirement. My right hon. and learned Friend suggested that the PSBR could be reduced by raising taxes or by reducing expenditure, and challenged the right hon. Member for Kingston upon Hull, East (Mr. Prescott) to say what Labour would do. The right hon. Gentleman refused to answer, but one need only read speeches made from the Opposition Front Bench, including his today, to realise that Labour would raise both taxes and expenditure.
The speech of the right hon. Member for Dunfermline, East (Mr. Brown) was without solid foundation--an edifice constructed on quicksand which would collapse within weeks of a Labour Government being returned to power. The entire Labour party approach is intellectually and politically dishonest. The right hon. Gentleman devoted his speech to criticising us for the tax increases in the Budget and those introduced previously. The implication was that each of those increases was wrong, that Labour would not have introduced them, and that Labour would reverse them.
At the recent conference of the Confederation of British Industry, the right hon. Gentleman hinted--perhaps it was more than a hint--that capital allowances should be doubled. That was another clear implication of a further £750 million in tax forgone. The Opposition's approach is to criticise every tax increase, with the implication that they would never have imposed it and would reverse it, but they do not quite say so.
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On expenditure, the hon. Member for Peckham (Ms Harman) criticised the changes to the one-parent benefit and the lone-parent premium. The implication was that she would reverse those changes. The right hon. Member for Kingston upon Hull, East today made a clear commitment on overseas aid. When he complained vigorously about pensions being linked to prices rather than to earnings, it was not clear whether that was a commitment by the Labour party to link pensions to rises in earnings. I understand that it is not, but there is a clever innuendo in the right hon. Gentleman's substantial criticism of a measure that was taken some time ago in the context, he said, of hitting pensioners.
Mr. Prescott:
Causing poverty.
Mr. MacGregor:
The clear impression was given that the Labour party would reverse the measure. I ask the Opposition whether they would do so and, if they would not, what was the point of the right hon. Gentleman's remark?
Mr. Prescott:
The measure causes poverty.
Madam Deputy Speaker (Dame Janet Fookes):
Order. If the right hon. Gentleman wants to intervene, he is at liberty to do so.
Mr. MacGregor:
As the right hon. Gentleman feels so strongly about the matter, would the Labour party restore the link between pensions and earnings, rather than prices? If not, he is making a bogus point and misleading a great many people.
The issue was most clearly demonstrated in Hansard last Wednesday, 27 November, when my right hon. Friend the Secretary of State for the Environment made his statement on local government finance. The hon. Member for Holborn and St. Pancras (Mr. Dobson) gave the Labour party response at column 343. His first point was a huge criticism that the Government's target for council spending next year was £2 billion short of what councils are spending this year. We all know the debates and arguments about that. The clear implication was that Labour would reverse that and add £2 billion to the local government settlement.
Next, the hon. Gentleman complained that there were no allowances for inflation, pay increases and so on. The clear implication was that Labour would have made such provision. He then suggested that, in education, there should be additional spending of £41 per pupil, which would cost £750 million. The implication was that the Labour party would commit itself to that expenditure.
The hon. Gentleman went on to criticise the capping levels on many authorities, with the clear implication that Labour would remove the capping limit. He referred to massive cuts in the housing investment programme, with the clear implication that Labour would restore those cuts. He criticised the need for other sources of income to enable local authorities to meet their spending commitments, including many charges. The implication was that the Labour party would find, from central Government sources, the income that local authorities were being asked to provide.
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There, in one column, was an enormous list of criticisms, with the clear implication to local councils all round the country that the Labour party would not have gone down that route and would add considerably to the grant from central Government to local authorities.
Mr. Darling:
Was there not a clear implication at the last election, when the Prime Minister said that he would not extend the scope of value added tax or the rate, that he would not do so? If that was the case, why did the right hon. Gentleman vote with the Prime Minister to increase and extend the scope of VAT?
Mr. MacGregor:
After the election, as we moved into the recession, it was clear that certain changes had to be made. We are discussing the economy as it is now.
The message that went out to the massed ranks of Labour local councillors all around the country was clear. Yesterday, in my own county, Norfolk, members of the Norfolk Labour party were extremely critical of the amount of money available for education. They floundered only when they were asked whether it would be any different under Labour. Plainly they were critical because they had listened to what the hon. Member for Holborn and St. Pancras had said, and they believed that matters would be different under Labour.
In his winding-up speech tonight, the hon. Member for Edinburgh, Central must make it clear to the massed ranks of Labour councillors all round the country that he disowns what the hon. Member for Holborn and St. Pancras said last week, and that he will stop the hon. Gentleman criticising the levels of local authority expenditure and encouraging Labour councils to spend more. If he fails to do so, the IOUs will come back from Labour councils if the Labour party is elected at the next general election.
I have given my reasons for believing that tax and expenditure will be a big issue in the coming election. Unless the issues that I have highlighted, particularly those connected with local government spending, are addressed by the hon. Member for Edinburgh, Central tonight, the Labour party's so-called prudent messages to City audiences are not worth the breath used to utter them.
Those messages and the speeches that we hear so often from Members on the Labour Back Benches demonstrate that changing the habits of Labour Members and persuading them to accept vows of expenditure prudence is like changing the habits of rabbits and persuading them to accept vows of celibacy. At least in the past the Labour party was honest about its expenditure programmes. Now it is not.
My right hon. and learned Friend's Budget was sound and unspectacular. That is exactly what we needed. My first point is that it was right to be fiscally prudent and tight, given the prospects for the economy in the coming year. Growth will be up, consumer spending is up, investment is up, additional money is available for consumer spending as a result of building society flotations and other factors, and without doubt there is a feeling of growing consumer confidence. The housing market is improving, as we can see in certain parts of the country, but the improvement is spreading to other parts.
The danger, especially in relation to the housing market, is a return to the excess boom of 1987-88. Everyone agrees that we must avoid that. The Chancellor
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Secondly, I warmly welcome the steps being taken to bring into balance certain benefits for single parents and married couples. I hope that we will go further in that direction in future Budgets. I pay particular tribute to my right hon. Friend the Secretary of State for Social Security, who has done a superb job of reducing the social security budget over the past four years. I hope that the Government will go further in future Budgets and provide greater tax relief to married couples with children. I believe that we made a mistake in reducing the married allowance, and I would like to see that error redressed.
Thirdly, I welcome the proposals to deal with smuggling from the continent. That is obviously having a serious effect on business--particularly small businesses--and on tax revenues. I recognise that that is one of the effects of the single market, from which we benefit so much in other areas. Ease of communications within the single market and different tax levels in France have tempted many people to try to import large quantities of alcohol and tobacco into this country. The Chancellor has acknowledged that there is a genuine problem and I think that he is correct to tackle the smuggling aspect. If the measures do not work, we must face the fact that we may have to harmonise our excise duties--at least on wine, beer and spirits--with those of other countries in the single market. That could be achieved gradually in future Budgets.
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