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Mr. Gardiner: Will the right hon. Gentleman please enlighten the House? If "raids on pension funds" by removal of advance corporation tax and tax credits are such important issues, why did the Conservative party not think it fit to introduce such tax relief until 1993--14 years after first being elected to government?
Mr. Redwood: The hon. Gentleman has not done his homework. During its periods in government, the Conservative party has extended most generous tax reliefs to the pensions business, consequently generating the most enormous growth in pension funds and pension investment for the future. The growth in pension funds is one of the proudest achievements of those Conservative years and means that most of our fellow citizens will retire with a decent second pension, for which they and perhaps their employers have saved. Money has been in a fund and can be paid out.
What we now see is a smash-and-grab raid from the Labour party, which is taking away from those funds the tax credits that had been paid in over many years. It is not as difficult a concept to understand as some Labour Members seem to find it. Every quarter, a pension fund gets a cheque from the Inland Revenue that reflects the tax already paid by the company on those dividends. If this measure become part of the Finance Act, those funds will suddenly no longer get that cheque each quarter. It is a very savage blow to pensions and pensioners.
The measure has a very direct impact on the amount of tax and the pension contributions that an individual will have to pay if he or she has his or her own pension fund or, as an entrepreneur or small business person, a self-employed fund. There are several million such people in this country. They will immediately see the impact of this measure, because they will have to make good what the Inland Revenue does not pay into their pension fund. It is effectively a direct increase in their income tax burden.
My hon. Friend the Member for Ashford asked an extremely good question, which I hope the Paymaster General will answer when he winds up, on TESSAs and PEPs. The words are weasel words indeed. The Inland Revenue press release leaves us in no doubt about whether the tax reliefs that go to TESSAs and PEPs will continue for all those who have savings in them so far. We are left in doubt about whether the new regime will be as generous as the old one for people who wish to take out new investments under the new plan, which we trust will be revealed soon.
The Minister should have done more homework on the plan earlier and should have done the House the courtesy of telling us what was intended for TESSAs and PEPs, as they have such a direct impact on the savings rate in this
country and on the long-term savings plans of many people, especially all those who do not have large savings and to whom the TESSA or PEP is the most important part of their worldly wealth and their future security.
I do not know whether the Chief Secretary wanted to answer that point immediately. He seemed to indicate that he wanted to intervene; now he seems rather lost as to whether he knows the answer. [Hon. Members: "Answer."] The Chief Secretary was having a private conversation instead and not listening, although he had previously implied that he knew the answer to my question. We now know that he does not, which underlines my point: Treasury Ministers do not, even today, know whether people will keep their tax relief on TESSAs and PEPs, and what tax relief will be available for savers thereafter.
The Budget is bad for business, bad for savers, bad for companies, bad for pensioners and very bad indeed for pension funds. The Labour Government came to power promising that they would not raise taxes. They told us that they saw no need to raise taxes and that they could find the money for health and education by other means. Indeed, they have done so out of the contingency fund in a way that doubtless we would have done--probably more generously--in a couple of years when we reviewed spending in the autumn. They said that they would not review spending; they have changed their mind. They have now reviewed two items of spending. They have raided the contingency fund and invented an entirely fictitious black hole in the finances of this nation.
The only genuine black hole is the one that Labour created. Labour promised us before the election that it would carry forward our privatisation plans so that no money was lost from that source. In these Budget papers, we see that that was untrue and that £1.5 billion of privatisation proceeds will be lost next year. That is a genuine Labour black hole, which the Government now have to fill from higher taxation on the corporate sector.
The Paymaster General (Mr. Geoffrey Robinson):
There is not a great deal of time in which to reply to the debate. As the shadow Secretary of State for Trade and Industry said, many of the detailed points can be dealt with in Committee. Although we shall not be welcoming the right hon. Gentleman to that Committee, there will be plenty of time to debate the detail then. I am led to believe that we shall have two full days' debate in the Committee of the whole House, followed by two weeks in Committee, so there will be no shortage of time in which to debate every aspect of the Finance Bill.
Some sour and prissy notes crept into the right hon. Gentleman's speech--perhaps that is what cost him the leadership of his party. If he wishes to impugn the integrity of any Member of the House, he should have the courage to do so in a substantive manner. Will he kindly therefore either withdraw what he said about my noble
Friend the Minister for Trade and Competitiveness in Europe or take this opportunity of saying that he was not impugning his integrity?
Mr. Redwood:
I did not impugn anybody; I asked questions. The House needs to know whether the Minister for Trade and Competitiveness in Europe has sold all his shares and got rid of all his business interests, or whether he is debarred from undertaking certain discussions and making certain decisions in the Government. That is a fair question, and the Leader of the House has admitted that the Minister has not regularised his position.
Mr. Robinson:
That is an attempt to distract attention from the proven sleaze among former Conservative Members, outlined in the recently published report. I am surprised at the right hon. Gentleman raising the subject in that way, as I had not thought that he was that sort of Member of the House.
The right hon. Gentleman also grumbled rather prissily that the Secretary of State for Trade and Industry was not here to reply to the debate. Yesterday, the shadow Chancellor of the Exchequer grumbled that there was no Treasury Minister present to reply to him. If Conservative Members can get their act together, we shall willingly respond in the most appropriate way.
Mr. Robinson:
No, I shall not give way again.
I am pleased to say that while, in his grumpy reply to the debate, the right hon. Gentleman was talking down British industry and British engineering, the stock market rose a further 20 points at 12.30 pm today.
We have heard many maiden speeches today, all of which have been outstanding. I shall mention those which contained points for me to take up and I hope that other maiden speakers will forgive me if I do not mention them.
My hon. Friend the Member for Jarrow (Mr. Hepburn) raised the subject of the Benefits Agency in his constituency. I am pleased to say that there will be the fullest consultation exercise before the decision is implemented.
The hon. Member for Bromsgrove (Miss Kirkbride) made an excellent speech without notes and with touching modesty. She spoke of the camaraderie of the House. I fear that when she reaches the Front Bench, as I am sure she will, she may not find that that spirit always prevails. Given the present state of the Conservative party, she may find more camaraderie across the Floor of the House than among her own Benches in the immediate future.
My hon. Friend the Member for Exeter (Mr. Bradshaw) made another appropriate maiden speech. I know that it was his second or third attempt to do so, but it seemed all the better for the wait. He talked about the excellent weather in Exeter. I have checked the records and I understand that Exeter has just suffered its wettest June for 50 years.
The hon. Member for Canterbury (Mr. Brazier) spoke about families in his usual fashion. I can confirm that one of the purposes of tax and benefit integration is precisely to get rid of the anomalies that he mentioned. The matter is now the subject of a consultative exercise carried out by Martin Taylor, the chief executive of Barclays bank.
The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) showed a degree of technical competence and I hope that we shall be able to welcome him to the Committee stage of the Finance Bill. He raised an important point about foreign income dividends. He will know that the measures do not come in until 1999. We want to encourage--I am sure that the hon. Gentleman and the House will support this--multinationals to have their bases in London, thus confirming it as the primary international centre for business. That is why we shall ensure that international holding companies can continue to pay dividends without advance corporation tax. The necessary legislation will come in in the spring of 1998. We are also looking sympathetically at the position of UK-based groups with a substantial amount of foreign income.
My hon. Friend the Member for Brent, North(Mr. Gardiner) also made his maiden speech today, and I am pleased to be able to tell the House that he became a father for the fourth time during the course of our debate--clearly maiden speeches and fatherhood go together. My hon. Friend's wife has given birth to a son, and I am sure that the whole House will join me in congratulating them. I assure him that, in the design of the new deal, we are working with those who are experienced in running training programmes, to make sure that we deliver the quality that he seeks.
The hon. Member for Epping Forest (Mrs. Laing) gave a well-researched and highly cultured account of her constituency, and I compliment her on it. She raised the issue of the London tube and I can assure her that we are seeking a partnership with the private sector that will not be a rip-off. We want something that is based on practicality and pragmatism and not on the ideology that made such a mess of the private finance initiative under the Government of which she was, luckily, not a member.
The hon. Member for Buckingham (Mr. Bercow), in his maiden speech--which, like that of the hon. Member for Bromsgrove, was delivered without notes--told us that his mother was here. I thought that I could identify an admiring gaze in the Gallery, which spoke volumes for her rightful pride in her son and which I hope will beam down on him on future occasions.
The hon. Member for Mid-Dorset and North Poole (Mr. Fraser), also making his maiden speech, referred to the excellent national health service trust in his constituency. I am sure that he will welcome the extra £1 billion of resources that we have made available to the NHS.
I am pressed for time, but I want to answer one or two of the points arising from the debate relating to the windfall tax and corporation tax. I am sure that it will come as a relief to hon. Members who are preparing for Committee that we are making the draft clauses for the windfall tax available this afternoon. It may be helpful if I make it clear now that I intend to table an amendment to the provisions relating to the windfall tax. Hon. Members should not worry--it is a small matter of ensuring that our policy of using post-privatisation profits to derive a taxable value is implemented as intended, and that the legislation does not inadvertently take into account profits that arose while companies were in the public sector, in circumstances where profits for the financial year straddling flotation have to be apportioned. It is quite clear what is intended. [Laughter.] I do not know why Conservative Members are so surprised--that is the whole
purpose of Committee stage. We could all heave a mighty sigh of relief if that was to be only amendment I proposed--I only wish that it was and that that was what I could announce today.
One of the best views on the Budget came from the Federation of Small Businesses, representing more than 100,000 members. The federation welcomed the
The federation also welcomes the £75 a week subsidy for employers taking on those who have been long-term unemployed and what we are doing for youngsters between 18 and 25 who have been out of work for more than six months. That is a positive reaction, and I am pleased to say that there has also been a tremendous response from the private sector to the welfare-to-work scheme and its placement programme. Hon. Members on both sides and those who have been involved in running similar schemes in the past will be aware that our success will exceed that achieved by previous schemes only if we can get the private sector behind us. I am confident that that will happen.
Some Conservative Members referred to the position of local government bodies and the implications for them in 2000. We are prepared to consult and discover what, in the best judgment of those concerned, will be the position then.
This is a Budget for the future; it will lead to more investment and greater growth, and it has a social dimension in the action that we intend to take by means of the windfall tax. It has the purpose of getting our young people back to work and of giving our younger-still people schools that are decent to learn in in the next millennium. The Budget was designed for that millennium.
Debate adjourned.--[Mr. Robert Ainsworth.]
Debate to be resumed on Monday 7 July.
"Re-introduction of 50 per cent. first year capital allowance which will benefit 3.5 million businesses".
We heard nothing of that from Conservative Members, nor of the fact that it covers 99 per cent. of United Kingdom businesses. The federation also welcomed the
"Reduction of the small companies corporation tax from 23 per cent. to 21 per cent",
which complements the reduction in the general corporation tax rate from 33 per cent. to 31 per cent. I think that the Government can claim an historic first--we are the first Government ever to have reduced corporation tax before they got into office: the change will become effective from April this year and we took office only in May. I am sure that that measure is also welcome; I regret Conservative Members' lack of alacrity in welcoming any of those positive measures introduced in the Budget.
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