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6.29 pm

Mr. John Butterfill (Bournemouth, West): The hon. Member for Gordon (Mr. Bruce) made a fascinating speech setting out the Liberal Democrats' economic policies. I was particularly interested in his response to my question about the Liberal Democrats' big ideas for reducing public expenditure in the areas that "really matter"--as the hon. Gentleman put it. The only idea that I could adduce was that the Liberals would reduce the number of consultants employed by Government as they do not represent adequate value for money.

No doubt the Liberal Democrats would forgo independent advice and instead rely on their in-house advisers: the teams in the county halls who provide wonderful advice about reducing expenditure in local government. If that is the big Liberal idea for controlling the economy, the party should make more of it throughout the country. Once again, we have seen the Liberal Democrats talk tough about holding down public expenditure. The reality is that, when they are in power in town or county halls up and down the country, they are the biggest spenders of all. They must live down that reputation before anyone will take them seriously in a general election.

The Finance Bill enacts the creditable Budget proposals that the Chancellor set out a few months ago. It is a measure of the Budget's quality that it proved such a disappointment to the Opposition parties. They claimed that it would be the great giveaway Budget--a bribe to the electorate--that would demonstrate the Government's cynicism. They claimed that we would offer anything in order to be re-elected. However, as the hon. Gentleman pointed out, the Budget contains modest fiscal tightening

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measures--hardly an election giveaway--involving sensible reforms to public expenditure, taxation and distribution of the tax burden.

I welcome the changes to income tax. My right hon. and learned Friend the Chancellor has forgone the chance of making the headlines by announcing a massive reduction in the standard rate of income tax. He has chosen instead to widen the tax bands and raise thresholds, thereby ensuring that many poorer people are removed from the tax system and that many more are in the 20 per cent. band. That was the correct thing to do, as it provided help where it was most needed. It is often a difficult decision to take, as the benefits are not perceived by the general population until they receive their pay packets some time later. The Budget will have no real effect on people until after the next general election, so the Chancellor took a courageous--but correct--decision.

The benefits that will accrue to small businesses up and down the country have led the Forum of Private Business to describe the Budget as the best in 10 years for small business. I was particularly pleased about the business rate relief. Mr. Deputy Speaker, you will remember that my amendment to local government finance legislation provided transitional relief to small business. Further relief for those businesses, which were hard hit by the recession and revaluation, is very welcome.

I also welcome the thrust of the Bill in closing several taxation loopholes. We have progressively closed them over the years, but fertile minds continually find new ones. Therefore, it is correct that each year we ensure that people are paying appropriate rates of tax.

My right hon. Friend the Chief Secretary expressed a wish to abolish allowances and said that he preferred lower rates of tax. I seek confirmation that his attack on allowances will not affect the married person's allowance. It is extremely important for tax arrangements to recognise the importance of marriage. The tax advantages accruing to married people have been eroded over the years and I should prefer to see the differentials reinstated rather than eroded further. I am interested to hear my right hon. Friend's thoughts on the matter in the context of the next Conservative Budget.

I have some specific questions about the clampdown on avoidance procedures. The changes in value added tax in so far as they relate to property investment concern the whole industry--not just property companies. The British Property Federation, which represents many institutional investors, pension funds and insurance companies, is concerned about the impact of the proposed changes. I hope that the arrangements will be flexible, so that we do not disadvantage the whole system of investment.

I must declare an interest in the debate as an adviser to the British Insurance and Investment Brokers Association. I was rather disappointed with the Government's decision to hike up insurance premium tax so soon after declaring that they would not do so. Insurance is a valuable asset to society and, if we make it too expensive, we may expose the Government to risks. People may fail to insure and thereby become a charge on the public purse. We must strike a balance between raising revenue through IPT and ensuring that there is no claim on the benefit system when people fail to insure.

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I am concerned about the attack on inclusive sales. The insurance profession may benefit if people are forced to buy insurance from a broker rather than from a travel agent--unless the broker is advising the agent. However, unless we are dealing only with insurance policies that must be bought, I am worried that we may be tilting at a windmill that does not exist. For example, with some holidays, it is compulsory to purchase the insurance policy that accompanies them. In those circumstances, we could argue that the price of the holiday is being deflated by inflating the cost of the insurance. It is perfectly legitimate to attack that practice. However, when there is no compulsory link between insurance and the product being sold--when it is purely optional--the proposal represents a shift away from the Conservative doctrine of individual freedom of choice. If people choose to buy ridiculously expensive insurance, that is their decision--so long as they are not forced to do so. I urge the Government to re-examine the issue.

I received an encouraging response from my right hon. Friend to my intervention on capital allowances. There is real concern that the airlines will be disadvantaged compared with sea and rail transport. If one couples those provisions with the proposal to double air passenger duty, the combined discrimination against the airlines--and the consequent knock-on effect on the aircraft industry and the industries that supply it--is quite worrying. I ask my right hon. Friend to consider the possibility of at least having a regime for airlines that is no worse than that for shipping and trains.

I know that my hon. Friend the Member for Havant (Mr. Willetts) made this point, but it is important. The level of capital taxes in this country is a direct disincentive to invest.

There has been a welcome increase in the threshold for inheritance tax. Some Labour Members do not think that we should do that. The problem with inheritance tax is that it is not paid by the really rich. The super-rich with their multinational empires never pay it. Some of the "luvvies" and some of the billionaires who support the Labour party today do not pay it, because their money is offshore, and no doubt they will keep it there.

The people who pay inheritance tax are the modestly well-off: the middle classes, the people who cannot afford the expensive schemes to take their money offshore, the people who have built up small businesses and want to hand them on, the people who have helped to create wealth within our society. It is to them that we need to look, because the concept of passing modest wealth from one generation to another is one to which we should all aspire and not be consumed by the politics of envy. I hope that we shall do more on that.

I was particularly disappointed that there was nothing in the Finance Bill on capital gains tax, because it seems absolutely mad that someone who has spent 10 years building up a business and who then sells it will pay the same marginal rate of tax as a speculator who makes an overnight gain on the international currency markets. That does not seem to make any sense. It does not encourage people to risk their money and to invest. [Interruption.]

I am encouraged by noises that appear to be coming from Opposition Members, saying that they may do something about that, because although it would be difficult to abolish capital gains tax without the risk of people switching income into capital gains in the way that

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we had in the past, there is a real case for a much lower rate of capital gains tax for people who invest for the long term in real, productive enterprise. I very much hope that before long we shall see a Budget that does that.

6.42 pm

Mr. Jeff Ennis (Barnsley, East): Thank you, Mr. Deputy Speaker, for allowing me to make my maiden speech so early in the debate.

I am conscious of the traditions of the House and that when one makes a maiden speech, one usually refers to one's predecessors. On this occasion, it is a great privilege and a pleasure to refer to my very good friend, Mr. Terry Patchett.

Terry was a very honest and sincere man, a true man of the people. I know that he had the respect of hon. Members on both sides of the House. I knew Terry for a very long time. It goes without saying that he felt far more comfortable at his home in Darfield, with Glenys, his wife, and his family, and in Barnsley, East in general than he did down here in the House. However, that fact did not affect his performance as a first-class constituency Member of Parliament for Barnsley, East.

I am aware from my recent personal involvement in the by-election that Terry was held in the highest esteem and with fond affection by almost all his constituents. He will be very sadly missed, both in the House and in his constituency. I say his constituency because until recently Terry was the only Member of Parliament Barnsley, East ever had, as the constituency of Barnsley, East came into being only in the 1983 general election, the year that Terry entered the House for the first time. I am sure that all our thoughts are with Glenys and Terry's family.

As someone who has lived in the Barnsley, East constituency all my life, I feel extremely proud and honoured to be its new Member of Parliament. Despite the low turnout for the by-election, with it being so close to Christmas, the result was a resounding success for new Labour and, indeed, a ringing endorsement for the leadership of the Labour party. It certainly emphasises the fact that, in my opinion, new Labour commands solid support in Barnsley, East, a constituency that is and always will be proud to be described as a traditional Labour heartland.

Just to emphasise the success of my by-election, my majority rose from 63 per cent. of the votes cast in 1992 to a majority of 68 per cent. this time. The Tory vote disintegrated and was almost halved, from 14.2 per cent. of the votes cast in 1992 to 7.3 per cent. this time. In my opinion, that result underlines the melting away of traditional Tory voters, as a direct consequence of the failure of the present Government to implement the tax cuts that they promised in their 1992 manifesto, which have so far failed to materialise.

As I said, I am proud to say that I was born and bred in the constituency. Both my wife and I were born in Grimethorpe and we both come from traditional mining family backgrounds. Both my grandfathers and my father were miners. My grandad Ennis retired from Grimethorpe pit when he was in his early 40s, with 100 per cent. pneumoconiosis. My grandad McQueen, who was an early political role model of mine, was also a miner at Grimethorpe colliery as well as being the National Union of Mineworkers treasurer at Grimethorpe and a councillor with the old Hemsworth rural district council until his untimely death at the age of 56 from lung cancer.

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My grandmother was the youngest of 22 children. My dad was the oldest of 10. My wife, Margaret, also comes from a big family, so the House will probably see why I have been elected to represent Barnsley--because I am related to almost everyone in my area. I think that hon. Members will see that it is not just the aristocracy of this country who come from large families.

I have deliberately mentioned my family background to emphasise the point that Barnsley, East has always been associated with the coal mining industry, an industry that has created communities throughout the country with a strong and powerful community spirit, with a sense of caring and sharing. The people of Barnsley, East are the salt of the earth, who deserve the best, which is something that the current Government have failed to deliver in this year's and past years' Budgets.

I am proud to say that I have represented my area on Barnsley council since 1980, and in 1980 Barnsley was awash with pits, such as Grimethorpe, Houghton Main, Hickleton, Goldthorpe, Highgate and Darfield Main, to name but a few, providing almost 30,000 jobs to the local economy.

Constituencies such as Barnsley, East have contributed significantly to the national wealth since well before the industrial revolution. Now there are no pits left at all in Barnsley, East, thanks to the Government's pit closure programme. I know that this country will rue the day that the Government--who will never be forgiven--closed down pits such as Grimethorpe, which in its last six weeks of full-time production in 1992 made more than £250,000 in profit. More than 60 million tonnes of known, workable coal deposits are entombed below Grimethorpe for ever.

A study carried out by the policy and research centre at Sheffield business school in 1992, before Grimethorpe closed, revealed that if Grimethorpe and Houghton Main collieries closed, the cost to the British economy would be £330 million over 10 years, but if they remained open, they would make a profit of £48 million in that period.

Where was the economic sense and financial prudency in allowing those profitable pits to close? No wonder one of the main themes for my election campaign, "Brassed off with the Tories", was so successful. There is no doubt that the nation is brassed off with the Tories. I strongly recommend all hon. Members to see the recently released and much acclaimed film "Brassed Off", which was filmed primarily around Grimethorpe, with the co-operation and assistance of the world-famous Grimethorpe colliery band. The film captures the spirit of the times during the pit closure programme of 1992. It is also a fitting epitaph to what the Government have done to the mining industry and mining communities.

I turn my attention briefly to the Finance Bill. Once again, we have a classic example of the Government giving a little with one hand and taking away a great deal with the other. One example of what the Government are taking away is to be seen in the form of indirect taxes such as 13p on a gallon of petrol, an increase in taxation that took effect immediately, while the 1p reduction in the standard rate of income tax will not take effect until April.

As usual with the Government, we are seeing a transfer from direct to indirect taxation, especially in the form of VAT. That has the effect of transferring the burden of taxation from the very rich to the very poor in our society. It is a pity that the Government refused to accept the Opposition's proposal to reduce VAT on fuel from 8 to 5 per cent.

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The Budget will have an impact on schools. It is a subject that is close to my heart, because I spent more than 20 years in the teaching profession. The Government have claimed that 3.4 per cent. more money will be available for schools. They are, however, increasing their contribution to local authority spending by only about 1.5 per cent. At least the Government have had the decency to admit that their cuts in support for local authority services over the next three years will force council tax payers to cough up another £4 billion, which is the equivalent of £200 for each household. That will have to be paid to meet the differential.

Once again, local councils will have to increase council taxes to replace cuts in Government grants. They will be able to increase school budgets only if greater cuts are made in other key services such as social services, libraries, refuse collection and the like.

The Government continue to refuse to fund teacher pay awards when Ministers agree that they should be granted. Increased pupil numbers are not covered by extra finance. Since 1992-93, standard spending assessments per pupil, in real terms, have fallen across all age ranges, with secondary spending falling by 9 per cent. The number of primary pupils in classes of over 30 has increased by 40 per cent. in the past four years to 1.3 million.

The SSA formula is supposed to distribute Government resources on the basis of need. I have referred to the annihilation of coal mining--the main industry--in Barnsley, East. It has had a devastating effect on the socio-economic fabric of my constituency. Under the Government's SSA formula for next year, Barnsley will receive £691 per head of population while Tory-controlled Westminster will receive £1,272. That means that Westminster will receive 184 per cent. more grant per head of population than Barnsley, to provide the same level of education resource.

That cannot be right. I am sure that the good people of Westminster have not had to endure many of the economic hardships that my constituents have experienced, and certainly not to the tune of a 184 per cent. differential per head of population.

In conclusion, Barnsley, East is still coming to terms with the complete destruction of its traditional industrial base. I pledge myself to do my very best to work hard for the economic and social regeneration of the communities that make up Barnsley, East. I thank the House for giving me such a good hearing.


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