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Fiscal Policy (Pensioners)
11. Mr. Bayley: To ask the Chancellor of the Exchequer if he will meet representatives of pensioners to discuss the impact of his fiscal policy. [6188]
Mr. Darling: We are always keen to know the views of representative bodies and are happy to meet those that wish to make representations to us on an appropriate basis.
Mr. Bayley: Is my right hon. Friend aware that the provision in the Labour Government's first Budget to cut the Tories' hated VAT on fuel was widely welcomed by pensioners in York? Does he agree that that shows that Labour's tax promises can be trusted? Will he confirm that the poorest households, including pensioners, will gain the most in proportion to their incomes, from this Labour tax cut?
Mr. Darling: My hon. Friend is right. I am sure that he owes a large part of his very large majority at the general election to the fact that the Conservatives wanted to raise VAT on fuel to the full 17.5 per cent. We kept our promise to reduce VAT on domestic fuel to 5 per cent., just as we have kept every other manifesto promise.
Mr. Page: Does the right hon. Gentleman have any plans to meet representatives of the secretaries to Members of Parliament to discuss the impact on their pensions of the changes to ACT? Has he any plans to increase non-contributory payments so that they can enjoy the same pensions to which they looked forward just before the infamous Budget?
Mr. Darling: I am not aware of any representations. I caution the hon. Gentleman and many of those who sit on the Benches alongside him: they do no one any good by creating false scares that have no justification.
Mr. Lilley: Yesterday, the Chief Secretary to the Treasury conspicuously failed to defend the Financial Secretary's claim that the £5 billion extra tax on pension funds was
- "good for pensions and pensioners, not bad for them . . . People should understand that our reforms will benefit pension funds."--[Official Report, 3 July 1997; Vol. 297, c. 507.]
Mr. Darling: As the right hon. Gentleman knows, I spoke for some 45 minutes yesterday--perhaps too long--during which I defended the Government's policy to the hilt because the position is correct. We have removed a distortion in the tax system. It should be for managers and businesses to decide what to do with their profits. The tax system should not decide whether they are reinvested or distributed. The decision will be good for pension funds because it will enable companies to grow. The stock market has risen not only since the election but since the Budget announcement because people realise that the decisions that we have made will add to the wealth of companies and, therefore, to the wealth of pension funds.
The right hon. Gentleman should think twice about attacking us because in 1993 the Government of which he was a member embarked on a bare-faced raid on pension funds because, as the right hon. Member for Charnwood (Mr. Dorrell) admitted at the time, they saw it as a soft touch for raising money. We have reduced corporation taxes. That will benefit companies and, therefore, pensions.
Welfare-to-work Strategy
12. Mrs. Dean: To ask the Chancellor of the Exchequer what discussions he has had with businesses about the implementation of his welfare-to-work proposals. [6190]
Mr. Gordon Brown: The chair of the advisory task force, Sir Peter Davis, has been involved in discussions with me and with other Ministers on aspects of the design and implementation of our new deal for the unemployed. On 25 June, I hosted a breakfast seminar for senior business figures on this very matter. I am pleased to say that our proposals have received support from many of Britain's leading companies.
Mrs. Dean: The welfare-to-work proposals are certainly important to my constituency, which covers six of the poorest wards in the west midlands. Does my right hon. Friend agree that the policy will realise the wasted talents of our young people and of the long-term unemployed? Does he agree that that can only be of benefit to industry and the country in general?
Mr. Brown: I believe that there has been a substantial welcome throughout the country, including the business community, for our proposals to tackle the problems of youth and long-term unemployment. Something should have been done many years ago. People understand that the Government made a promise at the election that they would take action on the issue. We have raised a windfall levy from the utilities to pay for the action that we are taking. We are a Government who keep our promises to the young people of Britain.
Mr. Peter Bottomley: Will the right hon. Gentleman acknowledge that, since his party first announced its proposals in opposition, the number of people who need the benefit of welfare to work has reduced and that his actual target is numerically impossible to meet? At the beginning of Question Time, when the minimum wage was mentioned, it was put to the right hon. Gentleman by the hon. Member for North-West Leicestershire (Mr. Taylor) that a significant number of adults earn less than £3 an hour. Is it possible that, in line with welfare to work, the minimum wage will be introduced at £3 an hour?
Mr. Brown: The hon. Gentleman should know that the Low Pay Commission is examining exactly that matter. The minimum wage will be decided after consultation involving the Low Pay Commission, which includes representatives from business, the trade unions and other sections of the public, including guaranteed representation for small businesses. There are more than 500,000 young people out of work. In Britain today, 20 per cent. of households include no one earning a wage. That is a sad and tragic commentary on 18 years of failed Conservative government.
Sterling
13. Mr. Barry Jones: To ask the Chancellor of the Exchequer if he will make a statement on the current strength of the pound. [6191]
Mrs. Liddell: The Chancellor keeps a close watch on the strength of the pound and is conscious of its impact on companies that are heavily involved in exports.
Mr. Jones: Does my hon. Friend know of the British steel industry's difficulties with the export of its products? In particular, is she aware of the anxieties of Shotton steelworkers in my constituency which are felt because of difficulties in exporting their products as a result of the high value of the pound? Does she agree that the Conservative party has to face up to a large measure of guilt for that?
Mrs. Liddell: I congratulate my hon. Friend on the concern that he has consistently expressed for the steel industry in his constituency. I am aware that, because of an efficiency drive by the company that runs Shotton, there have been 69 redundancies. We are acutely conscious of the impact of the previous Government's failure to act on the strength of the pound and we are conscious of its impact on exports. Indeed, my hon. Friend the Paymaster General is to chair a special forum devoted to exports. I am sure that he will concentrate on those aspects of the export industry that directly relate to the steel industry.
Sir Peter Tapsell: If the hon. Lady and her colleagues on the Treasury Bench are so proud of the fact that the Bank of England, on their behalf, is tightening monetary policy, how does she intend to face up to the real dilemma that every time interest rates go up not only will the pound sterling strengthen still further but mortgage rates will also go up, with the result that the cost of living index will go up? Surely that real problem will require fiscal approaches.
Mrs. Liddell: The hon. Gentleman rehearses the very argument that got us into difficulties in the 1980s and the Government he supported knew all about that. Before I came into the Chamber today I learnt that the pound has fallen by 2 pfennigs.
I take the hon. Gentleman's point about monetary policy. In that respect, it is important that we have a coherent long-term policy on interest rates. That is why the Chancellor has taken the sensible decision to ensure that the Monetary Policy Committee should take decisions on interest rates independent of the political grandstanding that took place under the previous Government. That affects mortgage rates, which affects the well-being of families throughout the country.
Mr. Geraint Davies:
Is not today's failure by the shadow Chancellor to say whether he agrees with the announced interest rate increase a clear signal that the Conservatives can never be trusted again not to lead us into a boom-bust cycle?
Mrs. Liddell:
My hon. Friend is perfectly correct. The shadow Chancellor is frightened to say yea or nay because he is frightened about which part of the Conservative party he might have to play to for his further preferment.
Business Costs
14. Mr. Gibb: To ask the Chancellor of the Exchequer when he last met the director general of the Confederation of British Industry to discuss the impact of the Budget on business costs. [6192]
Mr. Darling: My right hon. Friend the Chancellor met the CBI on 18 June and I am due to meet its representatives shortly.
Mr. Gibb: At that meeting, did the Chancellor raise his plans to abolish foreign income dividends? Does the Chief Secretary now regret that decision? Will he confirm whether he will proceed with that ill-thought-out and highly damaging measure? The earlier answer from the Economic Secretary will simply add further confusion to an already confused and highly unsatisfactory situation.
Mr. Darling: The situation is not confused at all. My hon. Friend the Paymaster General made the Government's position absolutely clear on Friday at the conclusion of that day's debate on the Budget. If the hon. Gentleman wants to see what my hon. Friend said, he need do no more than read Hansard. The situation is widely understood, particularly by those affected.
Mr. Winnick: Would not business costs be less if some of the top bosses paid themselves less in increases? Is my right hon. Friend aware of the 20 per cent. increase given to the director general of the BBC? He will now receive a salary of £354,000 a year. That is in addition to a number of perks, including petrol for private use, two cars and the rest of it. At the same time, redundancies have been announced at the BBC and, in general, employees receive an average increase of less than 2 per cent. Is it not time that the director general of the BBC was told that the organisation is in the public sector and that those who lead public service organisations should behave somewhat differently? Frankly, is it not time that the director general left that organisation?
Mr. Darling: I am bound to confess that I am not familiar with every detail of the director general's pay package. I shall repeat what I have said before, which is that those who lead companies should set an example to all their employees and all those concerned with the firm. Whether they do that is largely a matter for the companies and organisations involved and those to whom the director is responsible.
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