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Burdens on Business

Mr. Deputy Speaker (Mr. Michael J. Martin): I must inform the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

7.15 pm

Mr. John Redwood (Wokingham): I beg to move,

That this House regrets the damage to business and jobs represented by the actions and inactions of this Government; condemns the broken promises to the coal industry, the lack of clarity over ministerial duties, the persistent tax raids on business and the threats posed by new legislation; and urges the President of the Board of Trade to set out a clear energy, competition and business policy that is in the interests of British companies.

Labour is bad for business. So far, the Government have overtaxed and over-regulated business. They now threaten it with much damaging legislation. The Department of Trade and Industry, under the President of the Board of Trade, meddles, muddles and prevaricates on every issue. What a pleasure it is to see the right hon. Lady for once in her place. I have waited many a long week for the opportunity to debate, at last, something with her.

While the DTI meddles, the Treasury goes stealthily about its business, taking money away from the successful and the hard-working.

I love that work of fiction, the Labour party manifesto. I remind the House of what it said about taxation:

"New Labour will establish a new trust on tax with the British people."

I am delighted that Labour used the words "new trust", because lots of trusts have been set up by Labour Members and Ministers. Some of them, we are told, do not avoid taxes. They are in Jersey and Guernsey for the sake of the sea air.

The manifesto continues--

Mr. Deputy Speaker: Order. I hope that the right hon. Gentleman will not stray from the motion before us.

Mr. Redwood: Perish the thought. I wish to talk about taxation as one of the principal burdens on business.

The Labour manifesto says:

"The principles that will underpin our tax policy are clear: to encourage employment . . . to promote savings and investment".

It goes on to say that new Labour is not about high taxes.

Mr. Andrew Miller (Ellesmere Port and Neston): While the right hon. Gentleman is referring to manifestos, I ask him to cast his mind back to his own manifesto when he ran for the Tory party leadership. The words "trade and industry" did not appear in his manifesto. Why should we take him seriously tonight?

Mr. Redwood: The hon. Gentleman should listen to my powerful case about the way in which the Government are letting down business. He might like to remember that, before I came to the House, I chaired an industrial company and was a director of a merchant bank. I had

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substantial commercial and industrial interests in those days, which gave me considerable experience. When I became a Minister, I gave them all up.

Mr. David Hanson (Delyn): I note that the right hon. Gentleman mentioned the tax policy in the Labour party manifesto. Does he agree with the Labour party's proposed cut in corporation tax? Will he vote against it?

Mr. Redwood: As I shall demonstrate, the Labour party is not proposing to reduce the corporation tax burden on companies in the next four years; it is proposing a swingeing increase in corporation tax during this Parliament. I am surprised that the hon. Gentleman has not done his homework on the Budget arithmetic, as he walked straight into that one in a rather unfortunate way. I suggest that he sends it back to the spin doctor for rewriting.

The glorious summer of Conservative economic success that Labour inherited is quickly being made winter by the Government. The business trees are bring stripped of their leaves and buds in the hurricane of measures coming before us. The Chancellor plunders and blunders on in the name of converging with high- unemployment continental Europe. The Government should listen. My hon. Friends know that this is true. The outgoing Conservative Government forecast total taxes this year of £282,100 million. Labour told us that there was no need to change Conservative tax and spending plans, apart from introducing the windfall tax. I am sure that Labour Members said that in debates that took place during the general election.

Last week, in the Budget forecast made by the Chancellor of the Exchequer, we were told that we would pay £10,100 million more this year in taxation than that set out in the Conservative plans. A massive back-door smash-and-grab raid has been carried out in just seven months, and much of the ensuing burden will fall on the business community.

Worse is to come. Next year, the country will be expected to pay £12,500 million more than it would have paid under the outgoing Conservative plans for that year. Over the next four years, business will be required to pay five years' worth of corporation tax. That is an increase of almost £2,000 million a year. Meanwhile, business will also be paying the pensions tax, the utilities tax, the telephone tax and the renewable energy tax while bracing itself for more taxes on the business motorist, on lorry transport, on sand and gravel extraction, on oil production and on much else besides.

At this point in the economic cycle, with a lot of money around and with job shortages in the most prosperous parts of the country, the Government should be encouraging savings and investment. Savings reduce the spending and inflation pressures on individuals, while investment would expand our capacity to make the goods that people want. After all, that was the promise included in the Labour party's manifesto.

Instead, the Government are penalising both savings and investment. Pension savings are taxed and tax-exempt special savings accounts and personal equity plans are to be abolished. Industrial businesses are to see their cash flows reduced by the avaricious Treasury, which will cut the moneys that they have available to spend on new equipment.

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Meanwhile, there have been five interest rate rises from the party that said that it would keep interest rates as low as possible. The art of the possible is not a good one for the new Labour Government. It is no wonder that the interest rate rises were needed when the Chancellor of the Exchequer was so busy taxing savings. The right hon. Gentleman had to mop up the money in another way.

As a result, exporters face an uphill struggle. It is difficult exporting anything at current exchange rates. Industry is locked in a vice of higher interest rates and a higher value of sterling. It appears that the Minister of State, the hon. Member for Makerfield (Mr. McCartney), thinks that it is a good idea to yawn at this point. The hon. Gentleman should talk to British businesses, which are suffering as a result of the measures to which I have referred. He might learn a great deal if he talked to some real business men instead of being locked into his Department worrying about the next spin doctor attack.

Last Friday, I visited an exporter at Milton Keynes. He told me that, to stay in foreign markets, 70 per cent. of the components that he had to use were imported. Two years ago, 90 per cent. of his components were British.

I visited a textile plant recently. I was told that it was operating at half-capacity for want of overseas orders. The Government do not care and they do not know what to do. They merely press on with their high interest rates and a high-value sterling policy.

We have already read that United States investors may pull the plug on our electricity industry following the utilities tax and the regulatory threats that the President of the Board of Trade is making. Labour Members will learn that one company's grant is another company's tax increase and that taxing the successful is not the best way to produce growth in the economy and to increase employment.

Most businesses are suffering, but a favoured few do a little better from the Government. For example, BP has been granted a new 1,200 MW gas power station without any explanation. When did Labour drop its policy of saying, "No new gas power stations"? Rolls-Royce in Derby has been quickly granted £100 million of launch aid. I am delighted that the constituency of the President of the Board of Trade is to be looked after, but may we know what representations the right hon. Lady made and whether other companies will receive equal treatment?

Formula one, with 8,000 jobs at risk, is qualifying for help. It has policy reversed in its favour while the coal industry, with 50,000 jobs at risk, has policy changed against its interests. May we know what has happened to the six-point plan of the right hon. Member for Livingston (Mr. Cook)--when he was in opposition--to save the industry?

Mr. Gordon Prentice (Pendle): My right hon. Friend the President of the Board of Trade did not take the decision to award Rolls-Royce not £100 million in launch aid, but £200 million. I have a Rolls-Royce plant in my constituency, and I know for a fact that my right hon. Friend had nothing to do with the decision to which the right hon. Gentleman referred.

Mr. Redwood: I did not allege that the right hon. Lady took the decision. I know that she would not do that.

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I said that I wanted to know what representations she would have made as a constituency Member, and whether other companies would receive the same treatment and opportunity as the company concerned. I welcome the success of that Derby business, but we in the House must ensure that things are fairly and properly done, and the Government have not been following fair and proper process in all too many cases.

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