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Orders of the Day
Finance Bill
[Relevant document: The Fourth Report from the Treasury Committee, Session 1998-99, on the 1999 Budget (HC 325).]
Order for Second Reading read.
The Chief Secretary to the Treasury (Mr. Alan Milburn):
I beg to move, That the Bill be now read a Second time.
This is the third Finance Bill of this Parliament, and it builds on our previous two Bills in reforming and strengthening the British economy. It implements the most recent Budget delivered by my right hon. Friend the Chancellor of the Exchequer--a Budget that rewards work and enterprise, rewards families and will help to deliver a stronger economic future for our country.
The Budget will do that by locking in the economic stability that the Government have been creating over the past two years. Our approach has been right and necessary. When we came to office, we inherited an economy that was going off the rails. The national debt had doubled, the public finances were spiralling out of control, inflation was back in the system, and the economy was fundamentally weakened--[Hon. Members: "No."] The Tories do not like hearing that, but it is true. The economy was fundamentally weakened after two decades of Tory boom and bust.
Mr. Andrew Tyrie (Chichester):
Is the Minister aware that, in the 1960s and 1970s, the British economy grew at about two thirds the average rate of those of our European competitors, whereas, in the 1980s and 1990s, it grew faster than our European competitors' average? Does he think that that had nothing to do with the reforms that Conservative Governments made over 20 years?
Dr. Norman A. Godman (Greenock and Inverclyde):
Where did they go wrong?
Mr. Milburn:
As my hon. Friend asks, why, then, did the Conservatives go so badly wrong? I remind the hon. Member for Chichester (Mr. Tyrie) that they inflicted on this country the two deepest and most damaging recessions that this country has ever seen. Only a Tory party as out of touch with reality as the modern Conservatives could describe that pitiful history as a golden economic legacy.
Mr. John Bercow (Buckingham)
rose--
Mr. Milburn:
Talking of golden economic legacies.
Mr. Bercow:
The right hon. Gentleman will be aware that every Labour Government in history, without exception, have left office with levels of taxation and unemployment higher than those that they inherited. If the right hon. Gentleman is so cocksure about the future, is he prepared today to guarantee that this Government will be the exception, and that when they eventually leave
Mr. Milburn:
The hon. Gentleman is an assiduous attender of these debates, and I can tell him that we would be pleased to match our record against that of his party any day. We would be pleased in particular to contrast our record on tax promises with that of Conservative Governments. I remind him that the Labour party keeps its tax promises, whereas his party breaks such promises.
Mr. Barry Jones (Alyn and Deeside):
I marvel at my right hon. Friend's patience. I urge him to tell the official Opposition that, in two short years in the 1980s, the policies of Mrs. Thatcher, Keith Joseph and Geoffrey Howe led to Britain losing 2.5 million jobs. Will he please remind the Opposition of that?
Mr. Milburn:
My hon. Friend represents a constituency that is thankfully still rich in manufacturing companies, and he knows fine well that what those companies most dread is a return to the days of the 1980s and early 1990s when a million manufacturing jobs were lost, manufacturing output declined by 8 per cent. and manufacturing investment fell by a quarter. Those companies know that, far from leaving a golden economic legacy, the policies of Conservative Governments fundamentally weakened the British economy.
Mr. Jim Cunningham (Coventry, South):
Does my right hon. Friend recall that, under the previous Government, industry was decimated, particularly in the west midlands; unemployment reached record levels; and, more importantly, people suffered from negative equity, which Opposition Members have failed to mention?
Mr. Milburn:
My hon. Friend is absolutely right. During the 1980s and early 1990s, inflation and interest rates were in double figures. Indeed, interest rates were at 15 per cent. for a full year. Tens of thousands, if not hundreds of thousands of home owners who had voted Conservative because they believed the promises that the Tories had given, found themselves with negative equity, as my hon. Friend said.
Mr. Michael Jack (Fylde):
Does the Chief Secretary agree that, when the Government took office, they took over the tax plans of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke)? Those plans, together with my right hon. and learned Friend's plans for the economy, delivered inflation at the target rate of 2.5 per cent., which increased tax flows, and imposed the constraints on public expenditure. They amounted to the golden economic legacy.
Mr. Milburn:
The right hon. Gentleman feels that he must defend his own legacy, because he was a Treasury Minister at the time and I shadowed him in that job. I remind him that, if the Tories had got back into power on 1 May 1997, the tax projections in the final Budget proposed by him and his right hon. and learned Friend would have landed the British people with a higher tax burden than they will pay this year, next year or the year after.
Not all Conservatives have been as reticent about the past as those who have spoken this afternoon. The recently announced Scottish Tory party manifesto was a model of the new confessional style of Conservatism, about which we have heard much from the right hon. Member for Richmond, Yorks (Mr. Hague).
Madam Speaker:
Order. We have had a robust exchange to begin with, and I have enjoyed it enormously. I hope that we can now get to the Finance Bill.
Mr. Milburn:
I fear that I was provoked, Madam Speaker. You are quite right to correct me.
In the past two years, we have been putting the economic fundamentals in place for lasting, long-term prosperity. Inflation is now under control, long-term interest rates are at their lowest level in decades, mortgages have not been cheaper for more than 30 years, youth and long-term unemployment rates have halved, and a record number of people are in work--over 400,000 more than at the time of the general election.
Public finances have been transformed and this Finance Bill continues that process of transformation. We have cut public sector borrowing by some £30 billion, so that the Government are now living within their means, but we have been able to give hospitals and schools the biggest increase in extra funding they have ever seen--increases that were opposed by the Conservatives as reckless. What the Tories now need to declare is whether they think that the further increases in funding that we announced in the Budget and that are taken forward in the Bill are also reckless. Is it reckless to invest an extra £60 million in school books? Is it reckless to spend an extra £170 million on tackling and preventing crime, or to invest an extra £470 million on spreading the benefits of computer learning to every community in the land? Is it reckless to invest extra resources--an additional £430 millionon modernising hospital accident and emergency departments and making access to primary care services in the community faster and easier? If the Tories think that it is, they should have the courage of their convictions and they should say so.
Mr. Andrew Rowe (Faversham and Mid-Kent):
It is not reckless, if one has the money. Of course one has the money if one is prepared to take it, for example, from some of the poorest pensioners. Even if the amount taken is very small, it is still a high percentage of their income.
Mr. Milburn:
In that case, I am sure that the hon. Gentleman will welcome the £1 billion package that my right hon. Friend the Chancellor announced in his Budget for those pensioners, including a dramatic increase in the amount of money to help them with their winter fuel bills.
Dr. Godman:
May I make a plea for a more sympathetic tax regime for our much reduced merchant shipping fleet? I know that Lord Alexander is carrying out a study of that issue, but were a more favourable tax regime to be introduced more ships would come under the British flag, more British sailors and officers would be recruited and our nautical colleges would receive a fillip.
Mr. Milburn:
Those points are well made by my hon. Friend. They are precisely the sort of points that
Mr. John Burnett (Torridge and West Devon):
I endorse the comments of the hon. Member for Greenock and Inverclyde (Dr. Godman) on a tonnage system for taxation of shipping, on which I tabled a new clause at the Report stage of the previous Finance Bill. I hope that the Government pay attention to that point, because there was much sympathy for it in the House. I also hope that the Government will start to unravel the unfair system of long-term capital allowances, which were introduced in the previous Government's last Finance Bill.
3.42 pm
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