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Mr. Christopher Leslie (Shipley): Does the hon. Gentleman support welfare to work as a principle? If so, does he believe that it should be paid for by his party's stretched-out 1p on tax?
Mr. Hancock: I support welfare to work enthusiastically and wholeheartedly in the hope that hon. Members who vote for it for one year will share my conviction that it should be a five, 10 or 15-year programme. Welfare to work must have the consistency that far exceeds the expectations of the windfall tax. It must be deliverable to the next generation of young people, but, sadly, that does not seem to be the case.
I wish to talk briefly about the companies themselves. I feel that people will be paying twice. They paid first when the public assets were undersold, when people were deprived of a public asset on the cheap. The tax is seen to be a way of getting back at those who got rich quick on the back of privatisation. But my hon. Friend the Member for Gordon and others have explained that it will not be the fat cats earning £350,000 a year who will pay, but those who pay for the services provided by the companies and the pension funds which derive their incomes and their ability to pay enhanced pensions from the companies. The people we represent will pay twice.
There is a suggestion that everything in the private companies is wonderful and that there is no complaint about them. That is not right. Most of us receive complaints weekly, if not daily, about the various companies which make up the group to be taxed--gas, electricity, telephone and water companies. All of them materialise in reality for the people we represent as major obstacles to a decent life. They have problems with all of them. Many of the problems are associated with paying the high cost of using the service. The cost could and should have been greatly reduced if the amounts of money that are being talked about were genuinely available.
The windfall tax is a gimmick.
Mr. Campbell-Savours:
Is £5 billion a gimmick?
Mr. Hancock:
It is a very nice gimmick. If one is going to introduce a gimmick, one may as well introduce one that brings in £5 billion and use the money, rightly, for things that will do some good. However, we believe that the Government should have taxed in a way that offered opportunity for the long term rather than grasping something that would provide short-term gain and hoodwinking people into believing that a long-term solution was being offered.
Mr. Stevenson:
Like the hon. Member for Portsmouth, South (Mr. Hancock), I did not intend to speak in this debate. I have been goaded into speaking by a speech from the do-nothing Liberals. I heard justification of the windfall tax, and, from the hon. Member for Portsmouth, South, references to benefits and to the failures of previous training and work schemes. We all share the criticisms of such schemes, but I did not hear anything positive from the hon. Gentleman as to what we should do.
It is perfectly legitimate for any right hon. or hon. Member to disagree with another, but to criticise the windfall tax simply out of concern about the previous Government's schemes and to say that, by some magical formula, it is unfair, is to miss the point altogether.
I asked the Library to do some research on the difference between the proceeds from privatisation of the utilities, not including the railways, and their stock market share price the minute they were floated. I asked the Library to tot up the difference. It was almost £6 billion at the outset of privatisation and it has increased over the years. So the snapshot figure of £6 billion by which the Government undersold public assets, and therefore robbed the public, is a conservative estimate.
The proposals of my right hon. Friend the Chancellor for a windfall tax are justified by what the Government intend to do with the money, which is to put young people back to work and spend £1.3 billion extra on education. What is interesting, in view of the way in which the Liberal Democrats approached the election, is that, although I listened carefully to what the hon. Gentleman had to say, I did not hear any reference to the extra £1.3 billion for education.
Mr. David Heath (Somerton and Frome):
The claims of the Labour party on education leave a sour taste in the mouth of my constituents in Somerset, who face this week capping proposals which will rob them of 90 teachers and increase class sizes across the county. Is that what the Labour party means by making education its priority?
Mr. Stevenson:
I am certain that the hon. Gentleman will reflect on the speech of the hon. Member for Portsmouth, South and say to his constituents, who may have a sour taste in their mouths, that the do-nothing option suggested by his hon. Friend will make that sour taste even worse. That is the kernel of the argument.
The public purse was robbed of at least £6 billion. That figure can be multiplied for the years since privatisation. I am sure that the hon. Member for Gordon (Mr. Bruce), for whom I have the greatest respect, knows that that is the case. The figure of £6 billion is a conservative estimate of what was lost to the general public and the infrastructure of the country as a result of the obscene privatisation policy of the Conservative party. The question is, what does one do about that loss?
I find it remarkable that the Liberals oppose the windfall tax, but that is their decision. Apparently the Conservatives and the Liberals believe that the answer is that one should do nothing. We should just let the thing go along and let the privatised utilities continue to do what they want. South Western Electricity is alleged to have transferred some of its money to the United States so that
it will not have to take account of the measure. I find such a policy, and I believe that the country will find it, a policy of despair.
We know full well why the Conservatives oppose the windfall tax. They are ideologically opposed to it. They believe that the market should determine everything. They have swallowed hook, line and sinker the policy that says that public is bad and private is good so everything in the private sector should be maintained, even if the public at large are swindled of billions of pounds, as they have been in the past 10 years or so.
Mr. Loughton:
When the hon. Gentleman asked the Library to make a detailed analysis on the basis that the public had been robbed and swindled, did he also ask for an analysis of the compensating figures in terms of the reduction in the price of services provided by utilities that every using member of the public has enjoyed as a result of the privatisations about which the hon. Gentleman is now rather upset?
Mr. Stevenson:
That is a fair question. There have been significant price increases in many utilities, especially water. I am interested, as I am sure the hon. Gentleman is, in the criticism that has at last come from Ofwat of the water industry for failing to meet its commitments on investment.
We need to consider the principle. There is no doubt that billions of pounds of public assets have been transferred to the private sector at a very knock-down price.
Mr. Loughton:
Will the hon. Gentleman give way?
Mr. Stevenson:
I shall give way again later, but let me make some further points. The windfall tax is perfectly justified, and I shall discuss what the Government intend to do with the money from that tax.
The Conservatives' arguments about the windfall tax are more to do with protecting the companies that have benefited from privatisation. They place little emphasis on the Government's objective of using the money to begin to put people back to work. I accept that there are risks and unknowns, but I believe that they are worth taking on if we can provide an opportunity for a quarter of a million young people under 25 years of age.
If the Government succeed, as I believe they will, in their endeavour, it will be one of the most tremendous acts implemented by a Government for a generation; but we must be conscious of the risks. My right hon. and hon. Friends are conscious of them and determined to overcome them. They therefore deserve the Committee's support. I hope that they will get it, because of two principles: first, the tax is fair when considered overall; secondly, it will be put to a purpose that I defy any hon. Member to argue against.
Mr. Woodward:
Clause 1, like much of the Budget, is iniquitous, inefficient and--I am afraid that I cannot agree with the hon. Member for Stoke-on-Trent, South (Mr. Stevenson)--anything but fair. The only certainty is that it will create uncertainty. It proves, first and foremost, that Labour's first instinct is always to tax, and to raise taxes again and again.
The Government believe that the tax will be palatable to the electorate because it will hit fat-cat companies. I agree that it is an advance on Labour's former tactics
of directly soaking the rich, although at least under old Labour, we could all see what they were up to. Then, there was transparency and their policy was economically coherent even though it was wrong; now, it is still wrong but it is totally incoherent. Have no doubt, this tax will hit consumers, especially the most vulnerable, and all householders will pay for it in their bills. Some people will pay for it with their jobs when they are laid off. Undoubtedly, it will reduce the capacity of companies for investment.
Hon. Members may wish to refer to the propaganda booklet called "The Pocket Budget" that Labour handed out with its Budget last week. It is a nice little booklet with a couple of pictures on the front. It is glossy, terribly well produced--the sort of thing that one would expect to have been produced by Walworth road, although I understand that Walworth road did not fund it. The booklet's pages are not numbered, but towards the back there is a section called, "Moving Towards a Fairer Tax System", which states:
6 pm
"We need taxes to pay for our public services. The Government believes the tax system should:
How does all that motherhood and apple pie rhetoric sit with the reality of the windfall tax? The tax will not encourage work or promote savings and investment. It is not fair and, with time, it will be seen not to be fair. The whole windfall idea is another clever piece of rhetoric from Labour's spin doctors. There is no such thing as a windfall tax or a free tax; this is a tax, pure and simple. It is a tax on success, on profits, on incentives to create wealth and, ultimately, on jobs.
encourage work . . . promote savings and investment . . . be fair . . . be seen to be fair."
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