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Mr. John Wilkinson (Ruislip-Northwood) (Con): I am sorry that the Secretary of State for Education and Skills has gone. I was looking forward to commiserating with her about that nasty experience at the head teachers' conference when she seemed to have got the bird. I was wondering how that could have happened to such a nice person. All those of us who serve on European Standing Committee BI see in his place the hon. Member for Luton, North (Mr. Hopkins), who is a regular attender like myselfalways looked forward to the right hon. Lady's presence while we discussed the latest daft directive from the European Union or the latest crazy regulation that would further damage British employment and business and further constrain the British economy. She always smiled her way through such occasions, but she did not cause much mirth with her rather petulant and uncharacteristic outburst at the beginning of her speech to the House today, when she went into synthetic-phonics new Labour speak, fabricating facts about our intentions based on ridiculous ideas of how we would use the money saved from the cut in waste and bureaucracy which the Conservative party is determined to bring about in government. I am sure that she will grow into her job, but she will have to change her manner of addressing the House.
I remember on first entering the House being struck by how alike Labour Members were to their caricatures. As I leave this place, I detect that the same phenomenon is apparent. I was struck then, as I am now, that hon. Members quite honestly echo their mimics and impersonators on televisionand none more so than the son of the manse, the Chancellor of the Exchequer. He is great on the theatrics of his performances. The
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volumes of Hansard have stacked up, as the regulations and burdens on industry, commerce and the individual pile up under his stewardship. They represent the voluminous and needless complexity of the British tax system. I always regard excessive complexity in the British tax system as a reflection not of the imagination or strategic thoughts of Her Majesty's Treasury, but of the tiny minds that must, unfortunately, still exist in some recesses of that refurbished building and of the susceptibility to pressure groups and every societal constituency to which the Labour party is subjected and is amenable in the run-up to a general election.
The Chancellor prides himself on creating stability. As far as the management of the British economy is concerned, he has produced stasis. We used to look forward to Budgets; they were exciting eventsan annual occasion at which people put on funny hats and listened to imaginative proposalsbut this one was a supremely boring occasion. People who had hoped for an optimistic vision in which British society would be galvanised so that it could realise its full potential went away disappointed.
Perhaps I have a somewhat simple view of the role of government; I do think that it exists to realise the full potential of each and every person in this country. That is why I was struck by two excellent speeches, which we have enjoyed. One was from the hon. Member for West Bromwich, West (Mr. Bailey), who spoke from his personal experience. He related life as he saw it, as he had experienced it, on behalf of his constituents. So, too, did my hon. Friend the Member for Boston and Skegness (Mr. Simmonds), who analysed with great clarity and precision the deficiencies of the Chancellor's Budget, but similarly did so in the context of eastern Lincolnshire, which I know well from my days in the Royal Air Force.
The Labour Government like nothing so much as to control each and every person's life. That is why I see no prospect, certainly not on the fiscal projections and given the black hole that undoubtedly exists in the Government's finances, owing to the very nature of socialism. It is socialism; the Government like to control almost as much as Ulricht's or Honecker's East Germany. They do it in a nicer way, but they like to spend more and more of the people's money as they think best. In the process, they create a mendicant society in which people have to ask for their entitlements through myriad and complex tax credits. It should not be so.
Mercifully, I never will have, or ever could I have had, the opportunities that Ministers on the Treasury Bench have enjoyed. I hope that they realise in the exercise of their responsibilities the magnitude of the chance that they are privileged to have been given on behalf of their constituents. If they really want the United Kingdom to be richer and more prosperous, they have to tackle the burden of tax and do it resolutely and imaginatively.
We must first, as my hon. Friend the Member for Boston and Skegness emphasised, do everything that we can to stimulate savings and investment. To that purpose, I would suggest, as I have no responsibility whatever, a lower rate of income tax for savings income over that for earned income. That is a very simple and perfectly straightforward measure, which could be introduced gradually. Its great merit is that it would
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recognise the fact that the income that people derive from savings is income from money that they have put away, which has already been taxed.
Secondly, we ought to move, as in many countries in eastern Europe, to a single rate of income tax and a lower one, with higher personal allowances at the bottom, especially for the elderly. How wrong it is that we have this "rob Peter to pay Paul" system, whereby there is a one-for-one withdrawal of the age allowance over a certain threshold. That is deliberately impoverishing people in old age and making it harder for them to enjoy the benefit of their savings.
Thirdly, we ought to abolish inheritance and capital gains taxes entirely and create a genuinely enterprising economy, so that capital formulation is rewarded. Fourthly, because we ought to make it a virtue for people to provide for and have responsibility for their families, we ought to introduce tax relief for private school fees and for private medical insurance. I say that because thereby people would be not only providing for their own in the way that they think best, but saving the Exchequer by so doing.
Fifthly, we ought to reintroduce mortgage interest tax relief and encourage home ownership, starting of course at the lower tax rate band. Sixthly, we should abolish stamp duty on share transactions, to make the City of London even more vibrant than it is today. Seventhly, we should reintroduce dividend interest tax relief for pension funds, and do it gladly and unashamedly, because it was a disgrace that it was ever taken away.
Then, we should look at raising even further the bottom threshold for stamp duty on house purchase. The threshold of £120,000 that the Chancellor has introduced would hardly buy a garden shed in my constituency. At the same time, we need to diminish stamp duty on higher bands so as to encourage movement up the housing scale and the mobility of the labour force. Next, we should introduce over time a funded, state-approved pension scheme, as in Chile and Singapore, so that we can get investment in industry and commerce and a more dynamic economy.
Last but not least, in the context of the European Union constitution, we should renegotiate our relationship with the EU, not only to eliminate the British net contribution, but to ensure that we do not accept the EU's right to manage or back-seat-drive our economy. I am in favour of European tax competition, which is thoroughly healthy. Under a radical Conservative Government, we could win it for the benefit our people, to ensure their enrichment, prosperity and long-term fulfilment.
Mr. Jim Cunningham (Coventry, South) (Lab):
May I begin by querying something that the hon. Member for Westmorland and Lonsdale (Mr. Collins) said? I might have misunderstood himif so, he can correct mebut he spoke about withdrawing funding from education authorities. That is a dubious proposal, because under previous Conservative Administrations local government, and education authorities in particular, were always under siege. The argument was that there were too many people at the centre, and local management of schools was introduced.
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It has been suggested that Britain's economic recovery started before 1997. The hon. Member for Westmorland and Lonsdale said that it started under the Conservative Government, but I remind him of the disaster of the exchange rate mechanism. I am sure that he will remember negative equity and, before the disaster of the ERM, the fact that the manufacturing industry in the midlands, including the motor car industry, was losing thousands of jobs every day and every week. The Standard Motor company in Coventry is no longer in existence, so the hon. Gentleman's suggestion that the grass was greener under Conservative Governments does not stand up.
We have had many debates about rebates for council tax payers, but who made a mess of local government funding in the first place? In the 1970s, the famous Layfield report strongly advised Governments not to tinker with local authority finances. The Conservative Government of the early 1980s, however, introduced the poll tax, and we all remember the consequences. At the same time, they withdrew money from local government. Local authorities used to receive a HIPhousing investment programmeallocation for housing, but the Tories started to withdraw that. Various grants helped to keep rates down, but they were withdrawn on a large scale. In fact, capital programmes were capped. Those are the days that the Tories are harking back to, so they really cannot crow about their record in government. As has been said, they have an appalling record on the economy and on local government.
Whether or not the Opposition cut £35 billion of public expenditure, when they start talking about cutting waste and jobs we can bet our bottom dollar that there will be cuts in public services. Whatever the academic argument about cutting £35 billion, that is where the cuts will fall. To compound the felony, the Opposition have also talked about tax cuts.
To strike a positive note, I shall turn to the Budget. Inflation has been about 3 per cent. for eight years, which allows businesses and families to plan ahead. Families can acquire mortgages or take a holidaywhatever they want to do with their money, they know that the economy has been steady for the past eight years with inflation at 3 per cent. Businesses can look two, three or four years ahead and know how much they will spend on investment. From that perspective, the Government cannot be faulted. Over the past eight years, mortgage rates have averaged 6.1 per cent. Under the previous Government they reached 12 per cent. On one occasion, in fact, they reached 18 per cent. There is therefore a contrast between the way in which we run the economy and they way in which the Opposition did so.
Every year, a member of the Opposition finds a black hole in the Chancellor's Budget and suggests that there is a crisis around the corner. However, since 1997, 4,000 new businesses have been created. When the Opposition were in power, about 2,000 businesses went out of business every year. I welcome the winter fuel allowance, which will remain at £200 for the over-65s and at £300 for the over-80s. The Opposition contend that the Chancellor did not say that the council tax rebate was only available for one year. In fact, he didhe said that it was available for one year pending a review of the council tax system. Anyone who thinks about changing the council tax system should be
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extremely careful, because history suggests that the House of Commons and Governments are not very good at doing so. We should therefore learn the lessons of the early '80s.
While we have had debates about occupational pensions, we have not discussed problems with civil service, teachers or local government pensions. If a political party wants to make the headlines it says that there are too many civil servants and that they do not do anything. That has been said again tonight. However, since the Government came to power we have created a number of public service jobs and recruited many badly needed doctors and nurses. That part of the equation is never mentioned by Opposition Members when they try to justify their position. I am concerned about civil service, teachers and local government pensions and about job cuts. In the past few months, the Opposition have mentioned some extraordinary figures for job cuts in the civil service, but they are also going to make cuts in public services. How many doctors and nurses are they prepared to make redundant?
An important issue for Coventry is the future of Peugeot, and recently we have had Adjournment debates on the subject. Over the past 18 months we have found it difficult to get answers out of the company. A few days ago, an announcement was made that 850 jobs would go, despite the fact that the Government had secured a grant of £14.4 million to assist the company with new developments and projects at the Coventry plant. However, the company says that it does not want that money. At some point, we must introduce meaningful legislationthe Government have announced their intention to do soso that the consultation and information directive comes into effect. It is strange that Peugeot employees in France know something before the labour force in Coventry and Britain. We should have learned lessons from the collapse of Rover. BMW told its employees what was going to happen to them, but it also told them what was going to happen to the Rover labour force. Action was not taken, however, to enforce the relevant directive. The Government must take a radical look at that problem.
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