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Mr. Redwood: Of course not. It was not the previous Government who introduced them. Under pensions law approved by Parliament under Governments of both parties over the years, it was reasonable for a company with more money in its fund than it needed to meet its liabilities as assessed by an independent judge or actuary to reduce its contributions while the surplus lasted. Alternatively, a firm in that position could consider increasing benefits. It could also choose some combination of the two approaches. Many funds did a bit of both, to get rid of or reduce the surplus.
There was no problem when this Government came to power. Funds were very solvent and they had the marvellous choice of increasing benefits or cutting contributions. They could also choose a combination of the two. It is under this Government that funds face the awful choice of cutting benefits or winding up the funds because they cannot find the money to pay the bills.
Mr. Beard: How does the right hon. Gentleman arrive at that conclusion? The tax introduced by the Chancellor at the beginning amounted to £5 billion a year or thereabouts, but the stock market has lost more than £100 billion in the past two years or so. Why is it the £5 billion that is having that dire effect, and not the fall of the stock market? In the contorted logic of the right hon. Gentleman's argument, how does he believe that this Government are responsible for the stock market falls around the world?
Mr. Redwood: I specifically said that I was drawing attention to the extra fall in the London stock market, as compared with other stock markets. The hon. Gentleman greatly underestimates the extent of the total fall, but his figure of £100 billion is very fortunate for my argument, which he must want to support. That amount, £100 billion, is exactly the capital fall that one would expect from a tax on companies of £5 billion a year. When the tax was imposed, the stock market tended to value company earnings on a multiple of
about 20. Multiplying the £5 billion taken away from companies each year by the multiple of 20 by which the stock market valued earnings, one arrives at exactly £100 billion.I made that point when the Chancellor wanted to impose the tax. I said that he should expect a fall of about £100 billion in the stock market, in addition to anything else that might happen elsewhere around the world. That is what happened. Much of that fall of £100 billion was directly due to the pension fund accounts. The Chancellor should have known that British pension funds have traditionally had between 60 per cent. and 70 per cent. of their investment in equities—for good reason, because they tended to do well. When the Chancellor sandbagged British business with taxation, it was bound to cause trouble.
The Chief Secretary argued that British business should be grateful for the one or two very small tax reductions in the Budget, and in previous Budgets, but I find that extraordinary too. The CBI and other bodies—none of them well known supporters of the Conservative party—have come to their own independent conclusions. They believe that the Government have imposed a massive increase in the tax burden on businesses. That imposition was achieved by sleight of hand, through the pensions and telecoms taxes that I have mentioned, and above all by changing the timing and incidence of corporation tax payments. The Government were therefore able to claim that they had made a very small reduction in the rate, while at the same time collecting far more revenue because they had changed the cash flow impact on business, which is what matters. The Government had also removed quite a lot of money from business that firms needed to pay the wage bill and to continue investing in the future.
I should have liked a different kind of Finance Bill, although I suppose that that was too much to hope for from this Government. Occasionally, Ministers say that they would like lower taxation to make us more competitive. They accept that lower tax rates can produce more revenue and attract more business, jobs, prosperity and investment. So why cannot the Government produce a Finance Bill of the kind that I would like, doing just what I have described? Why do they find all sorts of ways to clobber all the main interest groups in this country?
This Bill continues the Government's hate campaign against the motorist. It further increases the charges on motorists. It is getting to the point where people need to be very rich if they want to drive around the country, because so many of the charges are imposed on people with relatively low incomes. The aim, presumably, is to tax them off the road to allow more space for the chauffeured cars of Ministers—who do not pay their own tax on such things.
Kali Mountford: That is silly.
Mr. Redwood: The hon. Lady says that that is silly, but she may not realise that, for people who are not
Ministers, it costs £5 a day to drive in the centre of London. That comes to £25 a week, which comes out of net income. People need large incomes to pay such bills.
Mr. Beard: Did the right hon. Gentleman have the use of a car when he was Minister?
Mr. Redwood: The hon. Gentleman asks whether I had the use of a car when I was a Minister, and I can tell him that of course I did, but the Government whom I supported did not impose these very high charges on motorists. We did not try to tax people with low incomes off the road, as this Government are attempting to do.
Mr. Laws: Does the right hon. Gentleman recall the Budget statement made by the right hon. and learned Member for Rushcliffe (Mr. Clarke) in the last Conservative Parliament? He announced that there would be charging on motorways. Does the right hon. Gentleman agree with that policy?
Mr. Redwood: No such charges were introduced by the Conservative Government. I favour charges if a new motorway, an additional facility, is financed with private money. I see nothing wrong with the Birmingham northern relief road, which I think is what my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) had in mind. That was a Conservative scheme, for which I see this Government are going to take some credit, after a bit of delay. There is at least bipartisan support for the notion that a new facility that is privately financed should result in a charge for those who use it. However, I do not think that the same applies to roads that we have paid for already, many times over, through taxes. That could be justified only if all sorts of other changes were made that improved rather than worsened the motorist's lot.
The Government have also decided to sandbag people who wish to buy properties. The stamp duty proposals are complicated and very expensive, but it ill behoves the Govt to tax people buying quite modest properties in London and parts of the south-east. It shows that they do not believe in fairness or justice around the country, as stamp duty has become a tax on anyone who needs to buy a property in the south-east and in London. As a result, many people—especially in central London—will have to pay the full 4 per cent. rate, given the very high level of house and flat prices, and the low level at which the highest rate applies. The Government should look again at the injustice around the country that their stamp duty taxes represent.
What have the Government got against young people and families struggling to buy a property in London and the south-east? Why do the Government weep crocodile tears about the difficulties experienced by key public-sector workers trying to buy property in London and the south-east, when they are making those workers pay a stamp duty tax? Given the level of house prices over which the Government have presided, that tax is very high in some cases.
According to the Chief Secretary, this Government claim to be very good at attracting inward investment. That was true of Governments for many years. It was true under the Conservative Administration of the 1990s, and of the first years of this Labour
Administration, demonstrating that a country did not have to be in the euro, or seeking to join it, to attract inward investment. We were told many times, when the Conservative Government were in power, that, if Britain did not pledge entry to the euro, investment would flee or be driven away. That turned out not to be true. In the early days of the Labour Government, some people in business told us that investment would flee if they did not get on with joining the euro. However, investment kept flooding in.Britain was the preferred destination for investment for many years—at the end of the Conservative era and at the beginning of the Labour era. Now we can see a problem developing. The Chief Secretary did not refer to it, but the volume of inward investment is now lower than in the good years. Why should that be so? I think it would be surprising were it otherwise. The Government are taxing and regulating business away from this country. The process that I described in manufacturing is beginning to spread to services. Companies are not going to France or Germany to seek the euro. They are going to countries in eastern Europe or Asia, where they get more flexibility, and much lower labour costs.
That is the serious threat to the British economy. Ministers would be well advised not to ignore it or bury their heads in the sand. They should understand the process, and should be seeking to reduce the tax burden on British business. In that way, we can return to being the premier location in western Europe to attract business, rather than pricing ourselves out of the market by stealth.
In response to my requests for lower business and individual income taxes, the Labour Government will ask where the money to pay for public services will come from. The most disreputable part of the debate has been the consistent attempt by Labour spokesmen and Back Benchers in this House to claim that my hon. Friend the Member for Arundel and South Downs (Mr. Flight) and his boss, the shadow Chancellor, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), wish to cut public expenditure by 20 per cent. across the board. They have never said that: it is clearly not Conservative policy; nobody believes that we would go to the electorate with such a policy; nobody believes that we would be elected on such a policy; and nobody believes a democratic Government would ever put through such a policy. It is complete nonsense.
What my hon. Friend the Member for Arundel and South Downs has rightly said, as he explained again today, is that there are parts of government—not teachers, nurses, doctors, hospitals and important front-line services—where he, modestly, would like a fifth off the cost. I have said before, and will say again, that I should like to see more than that taken off my regional government: I would like 100 per cent. off my regional government.
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