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The Chairman: I am sure that the hon. Gentleman is trying to be helpful, but I have a pair of eyes in my head that are not so far failing that I am unaware of the situation.
Mr. Campbell-Savours: Following the landslide victory, there are 160-odd Conservative Members of Parliament, but only four or five of them have bothered to turn up to oppose a Bill that they have been telling us for weeks will do great damage to the former public utilities and to the privatised companies. Obviously, they do not feel strongly about those matters.
I was saying that I had never purchased a share in a privatised company. I have not done so on principle, because I believe that what happened in the 1980s and the early 1990s was fundamentally wrong.
As a member of the Public Accounts Committee, I saw several reports produced by the National Audit Office at that time that questioned the arrangements for the sale and flotation of shares. The Public Accounts Committee discussed those matters regularly, and--without breaching the confidentiality of the Committee--I must admit that the handling of those arrangements created divisions. I believe that we gave away large public utilities in the 1980s, and many greedy shareholders queued to purchase shares in the knowledge that they would make substantial windfall gains.
I draw attention to an article that appeared in one of the more sensible press publications last year. It referred to a conversation about the windfall tax that allegedly took place in the former Conservative Cabinet. If I remember correctly--the article seemed very well informed--Cabinet members argued in favour of a windfall tax. Even the former Chancellor of the Exchequer allegedly expressed the view that a one-off dollop--if I may use that word--of cash from the privatised companies could help the then Government to secure their public expenditure targets. I shall say no more about that matter--perhaps the Opposition spokesman, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), will refer to it during the debate.
I welcome the windfall tax. I think that it is a brilliant idea, and I congratulate those who were responsible for dreaming it up. I congratulate the researchers, academics and whoever else enunciated the principle that we are now transforming into legislation.
I believe that it will have a major impact in my constituency. Many of my constituents aged 18 to 25 or 25 years and over are long-term unemployed people, and their condition worries me. Many of them have grown up in families with no one in work. Lack of employment opportunities is creating a culture of unemployment in some parts of the country. Unless we tackle the problems today, that culture will undermine the social fabric of our society and have all sorts of social and economic consequences. The Government are trying to address those issues through this very important tax and the Finance Bill.
If all we do in the next few years is give young people hope, involve them in economic activity, give them a purpose in life and restore their faith--or induce some faith--in society by showing them that we are interested in their future, we will succeed. Through the gateway concept, as outlined in the new deal proposals, we hope to give young people education and employment opportunities that will stand them in good stead for the rest of their lives. We may not be thanked for our achievements, but that does not matter. We must take a decision today that will enable many hundreds of thousands of young people to enjoy the experience of stable work--which is a common experience for most people in my age group.
I turn now to the legislation and to the reasons why it is important. I readily confess that I have been converted to the principles of privatisation, which I opposed in the late 1970s and early 1980s. I voted in Divisions against privatisations--I am quite open about that; it is on the public record--in most areas, although I was discreetly in favour of selling council houses because I envisaged great social benefits.
In the same way, many Tories have been converted to the idea of the national health service. They voted against our proposals in the mid-1940s, believing that private health was the only solution. Today, many Conservative Members believe in the national health service. They may do things to which we object--a core of Tories would like to privatise the whole process--but the Conservatives were converts just like us.
Once converted, we were forced to address the question of how to achieve the objectives delivered by nationalisation through the privatisation process, so we
became regulators. I think that the Labour debate in the next few years will be about the extent to which we can advance arguments about regulation without interfering in the workings of the market. We must strike a balance--and I believe that the previous Government got it wrong.
Mr. Quentin Davies:
I must correct the hon. Gentleman's perception of history. The national health service was suggested to the House in a White Paper that was produced by the coalition Government in 1944 and presented by a Conservative Minister of Health. The Conservative party supported the principle of the national health service from the outset. The only difference between the parties during debate on the 1948 legislation was whether hospitals should be nationalised or should remain independent, often charitable, foundations. The principle of free health care at the point of use was common to the major parties--including the Liberals--and, as such, it was enshrined in the 1944 White Paper.
I hope that the hon. Gentleman does not mind my correcting that point. It is not directly germane to this debate, but, as the hon. Gentleman raised it, it is important to ensure that an untruth does not gain credibility by being repeated without challenge in this place.
Mr. Campbell-Savours:
I do not intend to withdraw my remarks. The hon. Gentleman is rewriting history. When I came to this place in 1979, I met some very interesting old characters who had been Members of Parliament since 1945. We would sit in the Dining Room at night and they would tell us fascinating stories about parliamentary events in the 1940s. Their tales about Conservative Members' resistance to the socialisation of medicine in the 1940s were legion. They were very interesting stories, but I shall speak privately to the hon. Gentleman about them.
A residual issue remains: the huge gains made by many greedy people. We cannot turn back the clock and eliminate those gains. However, we can at least seek to redress the problems that have arisen as a result of the lost revenue that would have accrued to the taxpayers if the industries had remained publicly owned and begun to operate efficiently and effectively.
Mr. John Townend (East Yorkshire):
I listened with interest to the hon. Member for Workington (Mr. Campbell-Savours). The hon. Gentleman and others have the idea that those who invest in shares and make profits are greedy. They think that they should not receive profits and believe that they do not pay tax. Those who take that view are not living in the real world. We are told that those who have made profits should now pay tax, the
The hon. Gentleman says that he has been converted to privatisation. Could it be that one reason why privatised companies have been so profitable and successful is that, at the time of privatisation, no one realised the true level of the inefficiencies and bad management of the industries concerned? That is borne out by the fact that the hon. Gentleman says that he is now a convert to privatisation.
The windfall tax is not a fair tax, because it is a tax on success. I should like to hear the Minister's comments about two electricity companies, East Midlands Electricity and Yorkshire Electricity, which are of similar size. After the first year of privatisation, East Midlands Electricity made £109 million while Yorkshire Electricity made £100 million. East Midlands Electricity had a market capitalisation on flotation of £523 million while Yorkshire Electricity's was £497 million.
In the last of the first four years of privatisation,1994-95, the two electricity companies were roughly the same size. East Midlands Electricity made a profit of £164 million and Yorkshire Electricity £161 million. One would think that they would pay roughly the same amount in windfall tax, but that is not so. Yorkshire Electricity is paying 40 per cent. more--£39 million- worth. One of the principal reasons is that, in 1993-94, East Midlands Electricity had a bad year. It made some bad investments, its management took its eye off the ball, and profits fell from £116 million to £27 million. As a result of that inefficiency, the company will pay less windfall tax than Yorkshire Electricity.
Yorkshire Electricity was more successful than East Midlands Electricity in its diversification. It made £18 million from an investment in Sweden. That has nothing to do, of course, with the price at which the privatised companies were put to the market, yet Yorkshire Electricity is having to pay windfall tax on its profit of £18 million. As I have said, we are not dealing with a fair tax. There are many anomalies, and the outcome is a tax on success. Those companies that have been successful will pay much more than those that have been failures.
The hon. Member for Workington told the Committee how pleased young people in his constituency would be about the windfall tax. I represent an area in which there is a high percentage of pensioners, and they are rapidly beginning to realise that the windfall tax is not a good tax for them.
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