House of Commons
Thursday 12 June 1997
The House met at half-past Two o'clock
PRAYERS
[Madam Speaker in the Chair]
Oral Answers to Questions
TREASURY
Windfall Tax
1. Mr. Prior: To ask the Chancellor of the Exchequer if he will publish the representations he has received from business leaders regarding the windfall tax. [1585]
The Chancellor of the Exchequer (Mr. Gordon Brown): Companies have been invited to make representations. While I intend to follow the normal procedure of treating such representations as I would others for the Budget--namely, as confidential between the parties--if companies wish to make their views public, that is a matter for them.
Mr. Prior: Will my right hon. Friend--[Interruption.] Will the Chancellor confirm that in principle he is not in favour of retrospective taxation and that the one-off windfall tax is, indeed, one off?
Mr. Brown: I am grateful for the welcome that I received from the right hon. Gentleman--[Hon. Members: "Right hon.?"] The hon. Gentleman raises the issue of the windfall levy and asks whether I support retrospective action. That is a question that he should ask of his colleagues who were in the House in the 1980s. Was not the first windfall levy imposed by a Conservative Government without ever being in a Conservative manifesto and without any advance consultation with the businesses affected? That windfall tax was imposed on the banks to deal with the costs of failure. We are imposing a windfall tax so that we can tackle a problem that the hon. Gentleman and other Conservative Members should be concerned about. Indeed, they should be ashamed that the previous Government did not act to tackle youth and long-term unemployment.
Mr. Stevenson: Does my right hon. Friend agree that, with the notable exceptions of Sir Iain Vallance from British Telecom and Conservative Members, there is tremendous public support for the windfall tax throughout the length and breadth of the country? Will my right hon. Friend therefore undertake to introduce the windfall tax at the earliest possible opportunity so that we can begin to get our young people back to work?
Mr. Brown: I am grateful to my hon. Friend. The greatest opponents of the windfall tax are not the utilities,
but the Conservative party. When a report today states that 500,000 long-term unemployed people in our country need proper skills and training to allow them to get back to work, people will be asking why the Conservative party is defending the utilities instead of the long-term unemployed.
A chairman of one of the utilities has reported that he regards the way in which we are going about the matter as reasonable and fair. Mr. James Rogers, co-owner of Midland Electricity, said only a few weeks ago that he was confident that Labour would apply the tax in a "fair and reasonable manner". He said:
"a windfall tax would require us to deal with the sins of those before us. A one-off tax is not inconsistent with that."
Minimum Wage
2. Miss Kirkbride: To ask the Chancellor of the Exchequer what estimate he has made of the impact of a national minimum wage on the cost of public sector pay. [1586]
Mr. Gordon Brown: A minimum wage is in principle both fair and efficient. The impact of the minimum wage on public sector pay will depend on the level at which it is set. That is a matter for the Government to decide, when we have the advice of the Low Pay Commission, taking into account the wider effects on the economy.
Miss Kirkbride: Will the Chancellor confirm figures given by the Foreign Secretary, when he was shadow Secretary of State for Health, that a minimum wage of £4 per hour would cost the National Health Service an extra £500 million a year?
Mr. Brown: First, I welcome the hon. Lady to the House. She was a distinguished parliamentary correspondent and is now a Member of Parliament, having moved from a larger Conservative institution--The Daily Telegraph--to a smaller one, the parliamentary Conservative party.
The claim about the minimum wage was made repeatedly by the Conservative party throughout the general election campaign. There is no evidence for the statement other than the accusation made by the former Secretary of State for Health, who has continually suggested this. Given the traditions of Winston Churchill, Harold Macmillan and the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) in supporting a minimum wage, it ill befits the Conservative party to deprive the people currently being exploited in the labour market of the dignity of a minimum wage. I believe that both sides of the House should accept the principle of a minimum wage. The application of it will be a matter for the Low Pay Commission, on which business--including small business--is represented. It is about time the Conservative party joined the modern world.
Mr. Skinner:
Is my right hon. Friend aware that there is a popular demand throughout the country for a national minimum wage, which was best exemplified in the mandate that we received at the general election? On several occasions, my right hon. Friend and others on the Front Bench have said that they will consult, among others, people in the business fraternity. As several trade
Mr. Brown:
I am grateful to my hon. Friend for supporting the principle of a minimum wage. [Interruption.] I should have thought that Conservative Members would be listening to the electorate more by supporting the case for a minimum wage--[Interruption.]--than by defending huge salary rises in the privatised utilities. [Interruption.]
Madam Speaker:
Order. Hon. Members must stop shouting.
Mr. Brown:
The Opposition have learnt nothing from the past few weeks.
The specifics of the minimum wage will be dealt with by the Low Pay Commission, which will receive representations. Business and employees are represented on it, and small businesses are specifically guaranteed representation on it. That is the right way to set a minimum wage. I may also tell the Opposition that the experience in America is that a minimum wage is not only fair and efficient but helps to create jobs.
Mr. Kenneth Clarke:
The Chancellor was very courteous to my hon. Friend the Member for Bromsgrove (Miss Kirkbride), but he quite deliberately avoided the point of her question. Will he accept that, unless the minimum wage is set at a level at which it makes absolutely no difference to any public sector pay, it will affect the cost of public services? If he sticks to his commitment not to raise public spending, the national health service and others will face a choice between cutting services or cutting jobs. Faced with the minimum wage, they will be able to do nothing else.
Mr. Brown:
All those questions will be taken into account in setting the minimum wage. I remind the right hon. and learned Gentleman, who is trying to re-establish "one nation" traditions in the Conservative party, that his predecessors as shadow Chancellors and as leaders supported the principle of a minimum wage, and until the 1980s there was all-party consensus about the need for wage protection through wages councils.
As for public sector costs, the Government are having to pay out huge sums in family credit to cover wage levels--set by employers--which are lower than they should be, instead of helping, as we should, people who are in poverty. The costs of family credit are escalating as a result of there not being a minimum wage and because employers are able to set wages lower than they should. It is about time that Conservatives started to show concern about the thousands of people earning £2 or less per hour and in some cases less than £1.50 per hour. The Conservative party had better soon restore its belief in "one nation" Conservatism.
3. Mr. Mitchell:
To ask the Chancellor of the Exchequer what liaison arrangements he proposes
The Chief Secretary to the Treasury (Mr. Alistair Darling):
The Government's central objectives are high and stable levels of growth and employment. Price stability is an essential foundation and the Government have introduced radical reforms to monetary policy arrangements to achieve this. It is the Government who set the objectives by setting the inflation target, and the Treasury and the Bank of England will continue to have regular liaison at all levels.
Mr. Mitchell:
As the Bank of England's highest wisdom in any situation is to put up interest rates--it has already done so, despite the fact that real interest rates are at a record level and the pound is substantially overvalued--is not the Bank preparing the way for a manufacturing contraction, a rise in unemployment and a fall in growth next year? If we are to have an independent central bank, should not the Government at least appoint an expansionist Governor, and is the Minister aware that the shadow Chancellor might well be available for the job next week?
Mr. Darling:
I think that the shadow Chancellor has another job in mind and would not want to rule himself out of that at this stage. My hon. Friend will accept that, if we are to achieve long-term sustainable growth, we must have low inflation and stability--something that Britain has not had for many years. We must avoid the situation that we have experienced in the past 18 years, when the Conservative Government delivered two of the deepest recessions since the war. If businesses and individuals are to be able to plan in the long term, we must have stability. My hon. Friend will have noticed that long-term interest rates have fallen since my right hon. Friend the Chancellor's announcement three or four weeks ago.
Sir Peter Tapsell:
Why does the Chancellor think it wise to separate the management of fiscal and monetary policy? Is it that he rejects the advice of John Maynard Keynes and is embracing the policies of Philip Snowden?
Mr. Darling:
No. My right hon. Friend made it clear why we have taken the decision to give the Bank greater operational autonomy. We believe that it is important that interest rates are struck with a view to the long term. I am sure that the hon. Gentleman, who has been in the House--and in politics indirectly--for a long time, will agree that when Britain's performance is compared with equivalent competitor countries, our record for stability is not so good as it should be. We believe that the steps that we have taken to give the Bank of England greater operational autonomy in support of the Government's economic policy--an important point, as my right hon. Friend has made clear--are the way to achieve the stability that most people agree is essential.
| Next Section
| Index | Home Page |