Skip to main content

Commons Chamber

Volume 78: debated on Monday 29 April 1985

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Monday 29 April 1985

The House met at half-past Two o'clock

Prayers

[MR. SPEAKER in the Chair]

Oral Answers To Questions

Electricity Prices

1.

asked the Secretary of State for Energy what assumption about the likely level of electricity price increases during 1985–86 was made in determining the external financing limit for the electrical supply industry for 1985–86.

First, Mr. Speaker, I say on behalf of the House how delighted we are to see you back with us.

The EFL announced for the electricity supply industry was estimated to be consistent with an average price increase this year below the level of inflation.

Will my right hon. Friend assure the House that any extra cost in the production of electricity this year resulting from the coal strike will be borne out of general Government revenues and not passed on to electricity consumers?

Yes, Sir. The Government have announced that the EFL remains and that price increases remain as budgeted. Over the past few years there have been improvements, and before this year's rise electricity prices to consumers had fallen on average by 8 per cent. in real terms over the past two years.

Is my right hon. Friend aware, as is my hon. Friend the Under-Secretary of State, that one part of the United Kingdom—the Isles of Scilly—will suffer a 14 per cent. increase in electricity charges this year unless the South Western electricity board changes its mind? Will my right hon. Friend consider electricity prices on the Isle of Scilly as my hon. Friend the Under-Secretary of State has been kind enough to do?

Whatever my hon. Friend the Under-Secretary of State considers, I consider with equal enthusiasm.

Power Stations (Emissions)

2.

asked the Secretary of State for Energy if, when he next meets the chairman of the Central Electricity Generating Board, he will discuss sulphur emissions from power stations and the implications for the level of coal burn by the electricity supply industry.

I have discussed this with the chairman of the CEGB on a number of occasions. He is well aware of Government policy on reducing sulphur emissions.

As the Secretary of State for Energy is asking for an additional £2 billion in the Coal Industry Act 1984, would it not make sound economic sense to invest a substantial part of that sum in the only coalfield in western Europe which produces high quality, low sulphur coal, which is South Wales?

The availability of low sulphur coal in the United Kingdom is limited. It is to be found mostly in Scotland and Wales and amounts to about 12 per cent. of annual output. It is among the most expensive coal to extract. It is not, therefore, an economically practical method of reducing significantly sulphur dioxide emissions.

Is my hon. Friend aware that hi south Derbyshire we like coal-fired power stations and that many of my constituents work in them? Is he aware also that we manufacture the gadgets that will help to make them cleaner in future? These are produced by a number of companies in Derby and south Derbyshire. When he meets the CEGB's planners will he urge them, when they next consider building a coal-fired power station, to place it in my constituency?

I am aware of my hon. Friend's close interest in stations in her constituency—an interest which I share. I shall draw what my hon. Friend has said to the attention of the chairman of the CEGB.

Are the Minister and my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) aware that good quality, low sulphur, low chlorine coal is produced in Ayrshire as well as in Wales and can be produced economically? As there is a great demand for it, and as it is attractive environmentally, is it not stupid of the Coal Board in Scotland to say that there is no long-term future for the Killoch and Barony pits in my constituency?

I am sure that the Coal Board's chairman will have heard the hon. Gentleman's words.

Will my hon. Friend confirm that total sulphur emissions have decreased in the United Kingdom in recent years but that, generally speaking, emissions from CEGB power stations have not? Does he agree that on environmental grounds, and recognising that it is possible economically to take this course, a priority programme should be launched by the CEGB to reduce sulphur dioxide emissions?

My hon. Friend is correct in saying that sulphur dioxide emissions have already decreased significantly. They have decreased by about 40 per cent. since 1970 and 20 per cent. since 1980. Emissions from CEGB power stations have decreased since 1979 and it is the Government's intention that further reductions shall be achieved. It is intended to achieve a 30 per cent. reduction on 1980 levels by the end of the 1990s.

Will the hon. Gentleman confirm that it is not just sulphur emissions from coal-fired power stations that are responsible for acid rain? He spoke about the 30 per cent. reduction target for 1992–93 outlined by the EEC. Will he also confirm that the chairman of the South of Scotland electricity board is claiming that Scotland has already achieved that 30 per cent. reduction?

Conservation

3.

asked the Secretary of State for Energy what further initiatives he proposes to take to promote energy conservation.

10.

asked the Secretary of State for Energy whether he is satisfied that existing energy conservation schemes are adequate.

23.

asked the Secretary of State for Energy if he will make a statement on his plans to make 1986 Energy Efficiency Year.

Energy Efficiency Year, which I announced on 1 April 1985, will carry forward the momentum and progress achieved in energy efficiency since I launched the campaign 18 months ago. The year will serve as a focus to get everyone involved.

Does the right hon. Gentleman accept that much more has to be achieved and that, given the large number of houses occupied by the least well off, who can neither afford to pay for sufficient heat nor make the best use of the heat that they can afford to purchase, some real action is needed? Does he also accept that as much energy can be saved from effective conservation measures at lower cost and with a faster rate of return as can ever be produced by developments such as Sizewell's PWR?

One could quote any development and compare it with savings that can be effectively and efficiently made. I agree that the hon. Gentleman is talking about a sector of enormous potential savings—about £7 billion a year could be saved with such policies. As to those on low incomes, I agree with the hon. Gentleman that much more needs to be done. My Department is encouraging, with some success, the voluntary groups that are bringing to low income families a whole range of aids, such as insulation and the sort of things that will reduce their energy bills considerably.

Are not more powerful financial incentives to consumers of energy needed to get greater conservation?

There is a remarkable range of incentives per industry. We estimate that over £300 million of investments could be made, which would show savings of more than 100 per cent. per annum. There is incredible complacency as well, and if we could remove that in both domestic heating and lighting and in commercial use, a great deal of progress could be made. At the moment, there is a lack of consumer awareness about what can be done.

During Energy Efficiency Year, will my right hon. Friend be looking specifically at the efficiency of coal-fired boilers? If there are potential savings here, can they be pointed out to industry so that it can reduce its costs?

Yes, in every one of the conferences that we have had on energy efficiency—we have now contacted nearly 15,000 chief executives—part of the demonstration has been to show the advantages looking positively at conversion to coal.

What co-ordination is there between the energy efficiency office and the Department of the Environment about building standard regulations, which have effects on energy conservation? Will the right hon. Gentleman's Department resist the moves that are believed to be under way to introduce new regulations that will run counter to his aims for greater energy efficiency?

As a former Secretary of State for the Environment, I recognise the wide-ranging problems about building regulations. There is good liaison between the two Departments.

My right hon. Friend will be aware that this week is the 10th anniversary of neighbourhood energy action, which has been so successful in harnessing the community task force to insulate people's homes. Will he ensure that this successful project gets every further encouragement?

What are the Secretary of State's views on the Newcastle upon Tyne experiment, in which, as the right hon. Gentleman is probably aware, an office has been set up to deal with both consumers and industry? When will his Department concentrate on consumers as well as industry?

Nobody benefits more from all that we are doing in energy efficiency than the consumer. The whole of the campaign is directed towards helping and assisting consumers to reduce their energy bills. If this campaign is a success, it will primarily be consumers who will benefit.

Is my right hon. Friend aware that a theatre group from his Department recently visited my nine-year-old son's primary school and acted out the need to save energy, since when he has switched off everything in the house, including his mother's oven, and left on the television?

I have not seen any of these theatrical groups, but I gather from those who have that they have a remarkable impact and are highly successful.

Coal Industry (Subsidies)

4.

asked the Secretary of State for Energy what response he has made, or intends to make, to the recent proposals of the EEC Commission contained in the draft communication DG XVII to the Council on the phasing out of all subsidies to the coal industry.

I have seen the document. Does the Secretary of State agree that were these proposals to be implemented they would be an extremely serious threat to the future of our coal industry? Is he aware of estimates that between 150,000 to 200,000 jobs in Europe would be lost as a consequence of implementation? What are his views on the matter? Has he had any consultations? If not, when does he propose to have them?

Funnily enough, I had a consultation this morning when I had a discussion with the Commissioner responsible for energy. That was arranged some time ago. The Commissioner assures me that there are no definite Commission proposals as yet, and he very much wanted to hear our views. In general, in the light of the French Government's proposals substantially to reduce the coal industry in France, only two countries in Europe will have major coal industries. We both have a range of different opportunities and problems. Whatever the Commission does, it must understand that we know best how to tackle those problems.

When the right hon. Gentleman receives the Commission's report, will he bear in mind that when the Heads of State met about three years ago, with the Prime Minister in attendance, they recommended that EEC coal mining production should be doubled? Does that not mean that the Commission's report will fly in the face of the wishes of the Heads of State?

When almost any organisation or body, including Governments, gets into the game of making predictions, it is normally wrong.

We very much welcome what the Secretary of State said. We hope that he will keep the House fully informed of developments and report on discussions that he may have with the Commissioner and the EEC. Is he aware that when I visited the Nottingham coalfield last week great concern was expressed about these proposals, and that that concern must be allayed?

As I have said, no proposals have been received by the United Kingdom Government. I had a useful discussion with the Commissioner this morning. There will also be discussions in the Council of Ministers, which, from memory, I think will meet on 20 June. As I stated, there are in reality two countries with major coal interests, and those interests must be looked at.

North Sea Oil

5.

asked the Secretary of State for Energy what percentage of United Kingdom North sea oil is refined within the United Kingdom; how many jobs there are in United Kingdom refineries; and how this compares with the figure in May 1979.

In 1984, 37·5 per cent. of United Kingdom North sea oil was refined within the United Kingdom. There were some 23,100 jobs in the refining industry in September 1984, compared with about 25,300 in May 1979.

I know that the right hon. Gentleman is aware of the shattering blow caused to the communities affected by the BP-Llandarcy announcement, given the hundreds of jobs involved. Is he also aware that people, especially those who work in the refining industry, find it completely incomprehensible that we refine under 40 per cent. of United Kingdom North sea oil and that we have taken just as big a cut in refining capacity as other European countries which do not have a barrel of oil? Will he have urgent talks with the North sea oil companies to see whether they can improve on the amount of North sea oil that goes through our refineries, thereby possibly safeguarding at least some of the jobs in our refining industry?

I wholly appreciate how shattering that news was to the community around the refinery and to those who work there. As the hon. Gentleman knows, last week I met colleagues in the House with an interest in the matter as well as trade union representatives from the refinery. Their views are being made known to the BP management. I remind the hon. Gentleman that we have a considerable refining over-capacity in relation to our demand, and in many cases, because of the nature and quality of North sea crude, it is more economic to export it and to import lower quality crudes to give us the right mix in our refineries.

Will my right hon. Friend re-emphasise that the cut of the barrel must be aligned to the market and that there is adequate room for rationalisation in the United Kingdom and throughout western Europe?

In contrast with what the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, it is perhaps significant that the United Kingdom's reduction in refinery capacity, as a proportion of total capacity, is very much at the lower end compared with many other countries. What has happened in this country is, therefore, to some extent not quite as bad as in some other countries.

The right hon. Gentleman has indicated his awareness of the redundancies at Llandarcy and the fact that Llandarcy's products, in the main, are to be refined at Texaco's refinery at Pembroke. Is he aware that Llandarcy is the only refinery that is geared to deal with United Kingdom land oil? Will he intevene with his right hon. Friend and urge him to reconsider his decision, which was conveyed to me in a letter, and that representations be made to the BP board to change the decision, in the national interest?

I appreciate the hon. Gentleman's concern. He has, as he says, been in touch with my right hon. Friend about it. I assure him that the views of those who came to see me last week have been conveyed to British Petroleum.

May we thank the Minister for the sympathetic hearing that he gave us and our trade union colleagues when we met him last week? We gave him evidence of the allegations of a cartel operating within the refining industry in the United Kingdom, and also allegations of various back-to-back arrangements between the several oil companies. Will he look into those allegations and, if necessary, seek to lean upon BP to provide jobs, directly or indirectly, in replacement?

The important point to recognise is that it is a commercial decision of the company. The company is prepared to meet and to discuss the different aspects of it. It has made it clear that the decision was taken in the light of its commercial activities in the United Kingdom.

I have two large refineries in my constituency, Mobil and Shell, both of which have shed labour in the past few years. Does my right hon. Friend agree that those oil refineries must continue to be efficient in a very highly competitive international market?

I agree with my hon. Friend that it is a highly competitive market. In recent years the downstream refining activities of the oil companies, have been the least profitable parts of their activities. If we are to remain with a strong refining capacity, which I hope we shall, we must be competitive with overseas countries.

Does the Minister understand that, of the 1,000 job losses at Ellesmere Port, 350 fall on employees living in my constituency?

In the light of the Llandarcy redundancies, I remind the Minister that male unemployment is more than one in five in west Glamorgan. Does he know that Wales has lost 103,000 manufacturing jobs since 1979?

Yes, I am aware of those figures. They were among the points put to me by some of those who came to the meeting last week. As the hon. Gentleman knows, the Welsh Office was also represented at that meeting, and I know that my right hon. Friend the Secretary of State for Wales is fully aware of the position. I have spoken to him since that meeting.

National Coal Board

6.

asked the Secretary of State for Energy what topics will be discussed when he next meets the chairman of the National Coal Board.

I meet the chairman of the National Coal Board regularly to discuss all aspects of the coal industry.

When the Secretary of State next meets Mr. MacGregor, will he call into question Mr. MacGregor's view that while running a decentralised operation there should be massive anomalies in the treatment of the labour force from one area to another? Will the Secretary of State ask Mr. MacGregor to explain why it is that miners in Scotland who have been dismissed because of activities outwith the NCB during the dispute have not been considered in terms of the conciliation procedure within the board?

While we in Scotland expect to be treated differently on occasions, we are not prepared to be treated worse by a Scot who should be sent back to America.

Obviously, Mr. MacGregor meets his regional leaders frequently and has discussions with them. I know that there is a constant exchange of views between them.

Perhaps greater examination of dismissals before the dismissals took place was made in Scotland than in any part of the country. There was a time when other regions were complaining that the speed with which people were being sacked in those regions was far greater than in Scotland, where cases were being looked at carefully.

Will my right hon. Friend ask the chairman of the NCB to make sure that when the plans for the vast new south Warwickshire coalfield are announced in the not too distant future there will be the widest possible local consultation and a full explanation of the NCB's case?

Is the Secretary of State aware that in a large number of Yorkshire collieries industrial relations are now at rock bottom and rotten? Is he further aware that in the past 20 years, by custom and practice, and by general agreement between management and men, the trade union branch secretary has been allowed three days on the surface of the mine to look after miners', widows', pensioners' and disabled miners' problems, as well as his own trade union work? The management has now stopped that and is making him work five days a week underground. Apart from the sour and bitter relations that exist at those pits at present, the people who most need his services are being denied it because of the board's action. There is a suggestion that it is by diktat of the chairman of the NCB. What are the Secretary of State's observations about that? Will he ensure that when he next meets the board he will raise that issue?

I shall certainly convey the views expressed by the right hon. Gentleman on that issue. Nobody has previously conveyed any complaint to me, about that issue. Obviously, we shall look into the matter and see whether there is any reason to make a change.

Will my right hon. Friend be able to reassure the chairman that extra resources will be made available for the coal conversion scheme?

Resources are available for the coal conversion scheme. I am glad to report that there are many applications for it. The success of the scheme depends on the degree to which industry can be confirmed in the view that there will be a security of supply.

Will the Secretary of State discuss with the chairman of the NCB the management of the Coal Board now that the industrial dispute is over? Does he agree that it would be better if a method of reconciliation could be found, and if all the members of the Coal Board, all the staff and the work force, could be involved in discussions and participate in the new decentralised structure?

A great deal has already been done in the new executive, which is advising and acting in this area and which has a wide range of good top managers. The return to good production figures in many of the pits is encouraging.

Will my right hon. Friend discuss with the chairman more capital investment in the midlands, where industrial relations are extremely good and where the work force clearly works harder and is more reliable than any other?

The Coal Board has a whole range of potential investment areas. It will certainly be noted that high productivity is an encouragement to investment.

Would it be right for a man found not guilty by the courts to be ruled guilty by the NCB?

If the matter was not taken up by the courts, or if there were other reasons for doing so, if anyone from the Coal Board is wrongfully dismissed, he has considerable rights against wrongful dismissal.

Is my right hon. Friend satisfied that the Coal Board has taken proper steps to safeguard from harassment from their colleagues the miners who worked during the strike?

Yes, the management has been firm in taking action against anybody in the industry who has been guilty of harassment. When it has received evidence of harassment, it has taken swift, decisive action.

In view of the latest demonstration of the evils of apartheid—the shooting of innocent unarmed workers—will the Secretary of State give Mr. MacGregor a categorical statement that under no circumstances must he import coal from South Africa?

As far as I know, no coal is being imported from South Africa. However, I shall convey the hon. Gentleman's views.

As 11,903 miners left the industry between 10 March 1984 and 9 March 1985, what steps will my right hon. Friend take to protect working miners who are still being harassed and intimidated and who need the support of the country?

Obviously, I have been told of a number of individual cases, which I conveyed immediately to the Coal Board. In my judgment, the board has dealt effectively with every case that it has examined and has been reported to me to date. That is the board's intention.

When the Secretary of State next meets the chairman of the NCB, will he ask him to expedite the work of the new review body and to give the numbers of closures required before colliery closures take place, not afterwards?

I believe that a meeting on that subject is taking place tomorrow and I hope that quick progress will be made. Those miners who have taken voluntary redundancy have done so because it was the majority view of the miners that that was necessary, not because the NCB laid down some policy. With his considerable knowledge of the mining industry, the hon. Gentleman will recognise that if miners have to choose between a pit without a future, transfer to another pit, voluntary redundancy or being sent home for four or five months, they may well vote that way. I hope that, in the aftermath of the strike, it will be recognised that it is in the interests of miners to come to such a decision.

Will my right hon. Friend convey to the NCB the congratulations of the House on the work of the mining research and development establishment at Stanhope-Bretby; which has just received its fouth Queen's award for technology for its work on dust? Does my right hon. Friend agree that that work has so eradicated the dust problem underground that pnumoconiosis should be a disease of the past and that mining in future will be cleaner and safer?

I think that both sides of the House will applaud the work of that establishment.

I share the Secretary of State's hope that the NACODS agreement will be introduced and operated as from tomorrow, but will he inform the NCB that if it wants to reduce the distrust and suspicion that remains prevalent in the industry, that step tomorrow would be the most useful that it could take?

I cannot say what everybody will be demanding tomorrow, because a number of delegations are involved, not just those from NACODS. I can only say that I want the principles of that agreement enforced as quickly as possible, and I know that that is the view of the NCB. The hon. Gentleman talks about suspicions and so forth, but I hope it will be recognised that a number of decisions made to date have been made not by the NCB working against the interests of the miners but as a result of the consensus of miners.

Does the Secretary of State agree that if the NACODS agreement had been fully implemented there would be no need for the ballot that is now taking place so that its members can decide whether to take industrial action? When the right hon. Gentleman sees the chairman of the NCB, will he ask him to explain why there are such wide discrepancies about reinstatement in different areas? Why is Scotland so different from, say, south Wales, or other areas? Why is the Coal Board carrying out a vendetta against certain people?

There is no truth or substance in that allegation. I have no evidence of that, and if I did I would take action. There is no such evidence. No procedures have taken place for men to take voluntary redundancy, and so on, which have not been on the basis of what the miners themselves wanted.

Energy Efficiency Programmes

7.

asked the Secretary of State for Energy whether he has plans to increase the number of sectors participating in monitoring and targeting programmes for increasing energy efficiency.

At present 20 sectors are participating in the monitoring and targeting programme run by the Energy Efficiency Office. In view of the success of the programme in helping firms achieve savings, I plan to increase the number of sectors to 40.

My hon. Friend will be aware of the pleasure that it gives to hear that the scheme is to be extended, but can he say what savings have already been identified through the pilot scheme?

Yes. Major successes have been identified in the two pilot sectors. The four mills in the project in the paper and board industry reduced energy costs by £1 million with virtually no investment, and the four mills in the textile industry taking part in the pilot scheme have already identified savings of 18 per cent. Those achievements set a marvellous example for the rest of British industry.

Coal Industry

8.

asked the Secretary of State for Energy if he will make a statement on the prospects for the coal industry for 1985–86.

1985–86 will be a year of reconstruction, following the damage done both to mines and to markets by the strike. In order to secure its long-term future, the industry will also need to make progress in bringing down the average costs of production.

Does my right hon. Friend agree that the industry should look forward rather than back and regain the customers that it lost during the dispute, and that it could best do that by producing a good product, efficiently, at a competitive price?

Yes. There is obviously a considerable task in hand, but nothing could be better than if we could show that productivity was improving and that the product would be reliably and constantly supplied to the market place that is willing to take it. The coal industry has a considerable potential in Britain.

Does the right hon. Gentleman agree that prospects for reconciliation in the coal industry in south Wales would be greatly enhanced if the five men sacked from the Phurnacite plant in my constituency on the say-so of Mr. MacGregor were reinstated forthwith? Two of them were sacked for allegedly spitting at the one working miner among 6,000 in the constituency during the strike. Should they not be reinstated forthwith?

Any decisions on individual cases must be taken by the management, which has taken great care in the matter.

The Secretary of State has been asked about the prospects for the industry. Does he agree that if there is to be reconstruction and good prospects there must be new investment and new pit sinkings? Is he aware that, even in Nottinghamshire and the midlands, investment contracted between 1979 and 1983–84? In 1979–80, £78 million was invested in north Nottinghamshire. That figure has been reduced to £55 million. In south Nottinghamshire there was a reduction from £55 million to £27 million. In the south midlands there was a reduction from £77 million to £33 million. There is a great deal of reconstruction to be done. The right hon. Gentleman should tell his hon. Friends who represent those areas that without new investment and new pit sinkings the industry will contract.

If the hon. Gentleman wishes me to compare the record of the Labour Government on investment with that of the present Government, I shall be very happy to do so.

Opencast Workings

11.

asked the Secretary of State for Energy how much coal he anticipates will be drawn from opencast workings in the next five years.

The level of opencast output is determined primarily by market demand. I am not in a position to forecast what that demand might be in the next five years.

Does my hon. Friend realise that opencast working is a most profitable investment and would produce a much better return for the money which the Government are to pour into the mining industry? Should we not lift opencast production from 12 or 15 million tonnes to perhaps 20 million tonnes?

I agree with my hon. Friend's comment about the opencast industry. The future is very good indeed.

It is all very well for Conservative Members to advocate the expansion of opencast working. However, is the Minister aware of the possible environmental consequences of an expansion of opencast working. Do not our communities have as much right to a good environment as those in Finchley, Reigate or the Wirral?

I agree. I do not think that there is any difference of opinion between the hon. Gentleman and myself on that point. There is always the question—sometimes a very difficult one—of marrying the disadvantages to the environment with the great advantages to the country.

Double Glazing

12.

asked the Secretary of State for Energy if he is satisfied with the contribution double glazing presently makes towards savings in energy resources.

The Minister will be aware of the representations made by the Glass and Glazing Federation. Is he aware that since the imposition of value added tax on double glazing hundreds of small companies have gone bankrupt and nearly a thousand jobs have disappeared in the north-west? Does the Minister not agree that VAT is unnecessary in this important sector of industry?

The imposition of VAT is a matter for my right hon. Friend the Chancellor of the Exchequer. However, the installation of double glazing has many advantages. One of the major objectives of the Glass and Glazing Federation is that householders should use energy more efficiently. That objective has the full co-operation of the Energy Efficiency Office and of my Department.

Could my hon. Friend make any reassuring noises about the future of the home energy audit scheme?

I very much support the concept of energy labelling, and look forward to further progress towards that end.

Electricity Industry (Investment)

13.

asked the Secretary of State for Energy when he next plans to meet the chairman of the Central Electricity Board to discuss future investment levels in the industry.

I shall be discussing this matter during my regular meetings with the chairman of the CEGB.

In view of the facts given ealier about the progress made by the CEGB in controlling and reducing sulphur emissions, will my hon. Friend join me in deploring the personal attack on Sir Walter Marshall, the chairman of the CEGB, by the hon. Member for Liverpool, Mossley Hill (Mr. Alton), in early-day motion 583? In contradiction of the views expressed in that motion, will my hon. Friend continue to give the fullest possible support to Sir Walter in the research and development taking place into the control of pollution?

I agree that personal attacks are usually regrettable. I thoroughly agree that the CEGB has made and continues to make a substantial contribution to the Government's intention of achieving a further drop in sulphur dioxide emissions. The Board has played a full part in the continued improvement of power station efficiency, the growing nuclear contribution, energy efficiency efforts and in collaboration with my Department on new power station designs to reduce emissions.

Renewable Resources

14.

asked the Secretary of State for Energy what is his latest estimate of the proportion of total United Kingdom energy needs which could be met by renewable resources, including solar, geothermal and wind and wave power, in five years' time.

My Department's aims are to encourage the uptake of commercially attractive renewable technologies and to increase understanding of those that are promising but uncertain. We expect only a small input from renewables by 1990, but, in the longer term, this should grow significantly.

Although I appreciate that only a relatively small proportion of Britain's energy needs can be met by renewable resources, does my right hon. Friend agree that they could form a significant proportion of the energy needed in certain localities? Will he bear that local consideration in mind when assessing the need for research, development and encouragement?

Yes, Sir. That is one reason why a lot of money is being spent on electricity production from wind, as it is specially applicable in some remoter communities. We are watching with interest the progress of the Orkney experiment and the considerable amount of money that we put into it.

House Of Commons

Research And Secretarial Staff

27.

asked the Lord Privy Seal what is the average number of secretaries per hon. Member; and if he will make a statement.

The average number of secretaries per hon. Member is 0.9. This figure includes only those secretaries who have passes for the Palace of Westminster.

I am grateful to my right hon. Friend for giving that fascinating figure. Does he agree that some hon. Members receive much more constituency mail than others? Does he think that that is due rather to popularity than to notoriety? Is he aware that secretaries of hon. Members with heavy mail need extra help? Will he consider initiating a typing pool to which the odd tape could be sent for typing up, say once or twice a week?

I am sure that my hon. Friend is right in saying that the work load varies as between hon. Members and as between various times of the year in respect of all hon. Members. I hope that the present allowances cover the secretarial requirements of hon. Members. 1 would not wish to encourage any into thinking that further provision could be made along the lines that have been suggested.

Is the Leader of the House aware that what he has just said is completely wrong and that an increasing number of hon. Members on both sides of the House no longer treat this place as a gentleman's club but as a place of work? Is he further aware that, to provide an efficient service to constituents, there should be adequate secretarial and research facilities? Will the right hon. Gentleman assure us that this matter will be considered again during this Parliament?

I do not think that the facilities of the Palace have ever—at least in the recent past—suggested that it was a gentleman's club. I have already said that the decisions arrived at last year for the secretarial allowance should be given a reasonable run before reconsideration.

Has my right hon. Friend noted during his years in the House that the work output of hon. Members can vary greatly? Does he think it right that, if an hon. Member has a high profile in his constituency and therefore attracts a great deal of work, he sometimes has to pay for extra secretarial work out of his own funds? Does he think that that is proper? If not, does he have any proposals to do anything about it?

No, I have no proposals. I think that the salary and the secretarial allowance are based on a standard figure. The House has had plenty of experience of working within the secretarial and research allowances and, last year, voted on the level of those allowances.

Is the Leader of the House aware that when I was a Euro-MP I received about £30,000 for secretarial and research allowances and was able to keep a researcher and a secretary fully occupied? [Interruption.] Is the right hon. Gentleman aware that my research shows that I now do seven times as much correspondence as when I was a Euro-MP? I do not doubt that many hon. Members on both sides of the House have bigger postbags than me, but is it not ridiculous that the allowances for hon. Members do not enable us to employ two good members of staff to cope with all the work that we have to do?

The House took a view last year on the appropriate level of pay. What the hon. Gentleman has just said reflects as much upon what happens at Strasbourg as on what happens here.

Written Questions

28.

asked the Lord Privy Seal whether, in view of the increased numbers of questions tabled for written answer in the last few years, and the increasing cost of answering them, he will bring forward proposals to limit the number of such questions which can be tabled by hon. Members.

I have no immediate plans to do so, but I note the hon. Gentleman's concern.

Is the right hon. Gentleman aware that my figures show that during the last Session there were more than 42,000 written questions, compared with 21,000 four years ago, and that the cost of answering them came to £1·68 million? Is he also aware that there is some evidence that the system is being abused by outside bodies? I can tell him that there are two Conservative Members now in the House who are in the pay of drug companies. During the present Session they have tabled 70 written questions to the Department of Health and Social Security compared with a total of 23 from those two hon. Members in the last four years. Does that not demonstrate a prima facie case of gross abuse whereby the taxpayer is asked to foot the bill for the research of private companies outside the House?

I have a good deal of sympathy with the hon. Gentleman's concern about the increasing use of written questions which, if they are adjusted on a sittings day basis, have risen from 139 for the Session 1980–81 to 188 in the current Session—an increase of about 43 per cent. I suggest that the specific matters mentioned by the hon. Gentleman touch more on the declaration of interests of hon. Members and that he should refer his remarks to the corresponding Select Committee.

Does my right hon. Friend agree that another factor responsible for the explosion in the number of questions is the increase in the number of hon. Members' research assistants? Is he aware that one hon. Member of whom I know has had at least five research assistants at one time, most of them provided by American universities?

The Services Committee has recently reported on this matter. I hope that its report will be available to the House fairly shortly.

Research And Secretarial Staff

29.

asked the Lord Privy Seal what information he has about the number of research and secretarial staff available to elected numbers of national assemblies in France, Germany, Italy, the Netherlands, Belgium, Denmark and the United States of America, respectively.

The information I have received suggests that there is a considerable variety in the provision made for the funding of Members' personal staff.

Does the Leader of the House agree that virtually all the Assemblies in the countries listed provide their elected Members with more support than we have? Does he also agree that last year's decision by the House is one which many hon. Members on both sides of the House now regret? Would not the position be different if we had a trade union acting on behalf of our interests?

I do not think that I am immediately convinced of the last point made by the hon. Gentleman. However, he is right to say that many Parliaments provide more secretarial and research facilities for their Members. It was a matter touched upon by the Top Salaries Review Body in its 20th report, but I have to repeat what I said when I was last asked about this a few weeks ago: I rest upon the vote taken by the House last year.

Why do some hon. Members seem to manage quite well on the allowances when others who do no more work do not seem to manage adequately? Why are we concerned about public expenditure in every area except when it affects our own allowances?

My hon. Friend makes a pertinent point. There is such an extraordinary variety of response because, mercifully, the House of Commons is a very varied institution.

Does the Leader of the House realise the intense danger to the House of being regarded by people as increasingly irrelevant? Is not that sense of irrelevance growing, not least because the power of Back-Bench Members has been declining so dramatically? If hon. Members on both sides of the House want to see the power of Back Benchers increased, is not one way of doing that to make sure that they have sufficient facilities to do their job properly? It is not being said that they must do it. We are asking for that service, and the House deserves it.

If this place is regarded as being so irrelevant, I am surprised that people of such distinction still try to make their way here, not least people in the Brent constituency. If there is one way in which the House of Commons will be cocooned, it will be if it cocoons itself with research assistants.

Late-Night Sittings

30.

asked the Lord Privy Seal if he will take steps to seek to reduce the number of late-night sittings.

Business is already planned to take account of the many demands upon parliamentary time, whilst seeking to avoid late-night sittings wherever possible.

Does my right hon. Friend accept that, with the House sitting on average until 12.52 am and with the number of late-night sittings this Session being the highest for the past 11 Sessions, something should be done as a matter of urgency, especially because of the number of Government Bills being passed—60 in 1983–84? Will my right hon. Friend try to speed up decisions on this matter so that the House stops work at 12 midnight?

I have every sympathy with my hon. Friend's point. I am told that to date, this Session, the House has risen on average at 12.43 am, which is not very different from previous years.

Civil Service

Secondments

31.

asked the Minister for the Civil Service how many persons were seconded to the Civil Service during the last 12 months for which figures are available.

There were 116 secondments to the Civil Service from organisations in industry and commerce in 1984. The details are given in a report on the interchange programme published today by the Management and Personal Office, copies of which I am placing in the Library of the House.

I understand that the number of secondments has increased in recent years. Does my hon. Friend agree that the Civil Service would benefit from a greater increase in interchange? Does my hon. Friend agree that, if there were a reciprocal process, especially with civil servants being seconded to industries, this could only be beneficial?

I agree with my hon. Friend that the interchange programme is generally extremely useful and beneficial to all concerned. The numbers coming into the Civil Service from outside and the numbers seconded from the Civil Service to industries and organisations outside are increasing. I very much hope that this trend will continue.

Does the Minister accept that the appointment of some people from outside the Civil Service to temporary posts, such as Mr. Levene's appointment, has drawn unprecedented strictures from the Civil Service Commission, which has pointed out that established procedures were set aside in Mr. Levene's appointment? Will the hon. Gentleman give a firm commitment that in future all appointments from within and outside the Civil Service will be based on open competition and not on political patronage of any kind?

The principle of fair and open competition for Civil Service appointments is an extremely important one, which has been maintained over the years and must continue to be maintained. The suggestion that the procedures followed in Mr. Levene's appointment were wrong is misplaced.

On secondment, it has been the long-standing practice of successive Administrations not to believe that a qualification certificate from the Civil Service Commissioners was required. Only at the time of Mr. Levene's appointment did legal advice come forward saying that such a certificate was required. As my right hon. Friend the Prime Minister has made clear, the Government immediately took steps to recognise the position. In the event, Mr. Levene was not seconded. He was appointed under a fixed term contract not exceeding five years. The proper procedures were followed.

Trade Unions (Meetings)

32.

asked the Minister for the Civil Service when he last met representatives of the Civil Service trade unions; and what subjects were discussed.

I refer the hon. Member to the answer that I gave him on 18 February about my last meeting with the Civil Service unions on 4 December 1984. My right hon. and noble Friend the Chancellor of the Duchy of Lancaster met representatives of the Institution of Professional Civil Servants on 2 April to hear their views in favour of extending unified grading in the Civil Service.

Is the Minister aware that four Civil Service unions are tomorrow meeting the Secretary of State for Employment to argue their case for their pay claim to be put to arbitration, which has been refused by the Treasury? Will the Minister support the unions in that modest request?

I hope to be present at the meeting with the unions. The determination of their request for arbitration is a matter for my right hon. Friend the Secretary of State for Employment and I would not seek to prejudge what will happen at the meeting.

Has the Minister discussed with the Civil Service unions the possibility of a better and longer term method of determining Civil Service pay, including some element of fair comparison?

Yes. Following publication of the Megaw report, the Government made it clear that they believed that negotiations should take place on long-term arrangements for determining Civil Service pay, based on the Megaw report. The Government's intention was that those negotiations should succeed. In fact, the negotiations ceased at the beginning of last year, but the Government have again made it clear in the current pay round that they believe that it is in the long-term national interest for such an agreement to be achieved, and I hope that substantive discussions can begin soon.

Has my hon. Friend met the Civil Service trade unions representing Her Majesty's Nuclear Inspectorate, which still has grave reservations about its dispersal to Bootle? If he has not recently met them, will he make arrangements to do so?

That would be a matter for, I think, my right hon. Friend the Secretary of State for Employment, who is responsible for the Health and Safety Executive, of which, I believe, that groups forms part.

When the Minister meets the Civil Service unions, will he explain to them why, when there has been a substantial increase in productivity in the Civil Service as a result of the substantial cuts in manpower, he has allowed the real pay of civil servants to fall by 14 per cent. compared with the 1980 level? Will he also explain why he has allowed a shortfall of 20 per cent. to arise between them and other white collar workers?

I note the base year which the right hon. Gentleman takes for his comparison. It is curious that he does not take as his base the last year for which his Government were responsible. If we take that as the base year, we see that the increase in the earnings of civil servants has well exceeded the rate of inflation.

When the pilot scheme for the use of the polygraph at GCHQ has been completed, will the Minister hold discussions with the Civil Service trade unions? I remind him that the Select Committee on Employment advised the Government that polygraphs and their tests were useless.

Questions about GCHQ and the use of polygraphs should be addressed in the first instance to my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs.

Has the Minister discussed the morale of civil servants with their representatives? Is he aware that the recent ballots on strike action came dangerously close to calling for industrial action? Does that not show that something is seriously wrong with morale? Is not part of the reason for that the way that the Government keep attacking civil servants?

The recent ballots showed that, in what they had been saying before the ballots took place, the leaders of the civil service unions were not adequately reflecting the majority view of their members. I am glad that the unions followed the requirements of the Trade Union Act 1984 and that the public were, therefore, not inconvenienced by strikes called by union leaders who were not fully representing their members.

Energy

Sizewell Inquiry

15.

asked the Secretary of State for Energy what is his latest estimate of the final cost to public funds of the Sizewell inquiry.

The final cost of the inquiry will become evident only when the inspector has completed his report. However, costs up to 31 March 1985 either falling to my Department or recoverable from the CEGB total approximately £2,407,000.

Does my hon. Friend agree that that inquiry has gone wide of planning, and that the wider policy issues raised would be better decided and discussed by Parliament? Does he agree that future applications to build new types of power stations should be assessed in a way that is cheaper and takes less time?

As the House will be aware, the Government have made clear on a number of occasions their view that the inquiry should be full and wide-ranging. Decisions on future inquiries will be taken in the light of circumstances prevailing from time to time.

As there is intense public interest in the inquiry, when will the Secretary of State be able to give the House the time scale of how the matter will be processed?

The timing of the report is a matter for the inspector. My right hon. Friend will lose no time when it is in his hands.

Northern Ireland (Local Elections)

3.31 pm

(by private notice) asked the Secretary of State for Northern Ireland if he will make a statement on the validity of medical cards as evidence of a voter's identity at the forthcoming local elections.

Because of widespread concern in Northern Ireland about the growth of personation in elections, Parliament has passed the Elections (Northern Ireland) Act 1985, and the Local Elections (Northern Ireland) Order 1985 which applies the main provisions of the Act to local elections. The new legislative provisions include a requirement that a voter must produce a specified document to obtain a ballot paper. These documents are a current full driving licence issued in Great Britain or Northern Ireland; a current British or Irish passport; a current benefits, allowance or pension book issued by the Department of Health and Social Services for Northern Ireland; a medical card issued by the Northern Ireland Central Services Agency for the Health and Social Services; and a certified copy, or extract, of an entry of marriage issued by a registrar general, where the voter concerned is a woman married within the preceding two years.

It has come to our attention that there are some electors holding a medical card issued before 30 September 1973 by the Northern Ireland General Health Services Board, the predecessor of the present Central Services Agency. Some of these electors may believe that these are specified documents entitling them to vote. This is not the case. It is not possible to estimate with any accuracy how many electors hold these older cards and who do not have any of the other specified documents. However, the Chief Electoral Officer issued a statement on Friday 26 April pointing out that anyone who has no other specified document and did not have the appropriate kind of medical card should take steps now, if he or she had not already done so, to obtain a new medical card. Special arrangements have been made to ensure that anyone needing a new medical card can obtain one quickly, and these arrangements will be kept under review.

The Northern Ireland information services have published advertisements in the Belfast and local Northern Ireland press, on the radio and television, and distributed leaflets to households throughout Northern Ireland setting out which documents will be needed. If people remain in doubt on this point, I suggest that they look at these leaflets or at the back of the polling cards which are now being issued and which have a list of the specified documents on the back.

My right hon. Friend the Secretary of State is aware of the understandable concern of Northern Ireland Members and other Members about this matter and is in Northern Ireland this afternoon reviewing the issues involved.

As it is the medical card on which, in particular, elderly people and the less well off are bound to rely, and as within the available time it is a physical impossibility to replace the large number of pre-1973 cards which are validly held in good faith, will the Minister ask his colleagues to take the commonsense decision to issue a statement to the effect that valid medical cards, whatever their date of issue, will be treated as effective for the purposes of the 1985 Act?

Older people will be covered by their pension book. We were careful, when the Act was put through the House, to ensure that the people on allowances—those who are most deprived in our society—and the old would be covered. Their pension books will cover them for voting. Since 1973, 1·4 million cards have been issued, in a population of 1·5 million. We are not aware of how many people are left with the old medical cards and do not have a new one. I have heard what the right hon. Gentleman has said, and I shall pass his comments on to my right hon. Friend the Secretary of State.

National Health Service (Private Medicine Abuses)

3.35 pm

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"private medicine abuses within the National Health Service as condemned by the Comptroller and Auditor General's report."
The matter is specific because it has been pinpointed by the Comptroller and Auditor General as the key reason why, almost without precedent, he insisted upon qualifying his certificate to the NHS accounts. In other words, he found the accounting system seriously defective in that respect.

In addition, the Comptroller and Auditor General's report is specific in detailing that which has gone so badly wrong by cataloguing that
"provision of NHS facilities for private patient treatments was not properly authorised; that income collection procedures were defective; that the identification of private, non-resident treatment was inadequate and that charges determined centrally by the health departments did not recover total costs attributable to the treatment of private patients."
The report is also specific when it spells out that other criticisms include
"poor control over the use of private beds, inadequate records of private medical treatment, inaccurate charges and the absence of deposits from private inpatients in advance of treatment."
The matter is important because, in the considered judgment of the Comptroller, as the head of the National Audit Office, the NHS is being cheated, whether by negligence or by fraud, of millions of pounds a year at a time when the Government are enforcing major cuts in other areas of the National Health Service to keep within budgets.

The condemnation by the Comptroller and Auditor General is all the more important because the criticisms made today echo those made by the auditors four years ago. In 1981 Ministers responded by insisting that they would tighten procedures to stamp out abuse. Four years later the statutory auditors have found that the abuses persist—on an even greater scale—so it is important for the House to be given an opportunity to insist that it will not be fobbed off again with the same ministerial excuses.

The issue is important in two other respects. Only 37 district health authorities were selected at random for audit. That is fewer than one fifth of health authorities in England and leaves aside nine in Wales and another 40 in Scotland.

There is no reason to doubt that other health authorities are involved in similar patterns of abuse and defrauding of the NHS, so it is important that the House is able to require the Secretary of State to order that which he has so far refused to order—the auditing of the other 164 district health authorities in England and Wales to recoup the many additional millions of pounds lost to the NHS in those areas.

It is also important that the Government, who are soft on private medicine, are made to face the fact that abuses by private practice within the NHS——

On a point of order, Mr. Speaker. Is it in order for the hon. Member for Oldham, West (Mr. Meacher) to make the speech that he would make if the debate were granted? He has been speaking for a considerable time.

Thank you, Mr. Speaker. It is important that the Government are made to face the fact that abuses from private practice within the NHS are now on such a scale that they are becoming endemic. After years and years of what the Comptroller and Auditor General identified as

"serious and persistent failures to maintain proper control over income from private patients"
the House needs to state and to endorse the view that the only effective answer to this continuing malpractice is complete separation of the private sector from the NHS.

The matter is urgent because these revelations from the Comptroller and Auditor General have only just been disclosed, and because immediate action is called for to uphold public standards by prosecuting those who are proved to have discredited their position at the expense of the NHS. Above all, it is urgent that effective action be taken now to stop this persistent haemorrhage of public funds.

For all those reasons, I strongly request you, Mr. Speaker, to grant a debate on this crucial subject at the earliest opportunity.

The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,

"private medicine abuses within the NHS as condemned by the Comptroller and Auditor General's report."
The hon. Gentleman knows that the only decision I have to take is whether to give this matter precedence over the orders set down for today or tomorrow. I have listened carefully to what he has said, but I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

Statutory Instruments &C

Ordered,

That the draft Weights and Measures (Liquid Fuel carried by Road Tanker) Order 1985 be referred to a Standing Committee on Statutory Instruments0, &c.— [Mr. Major.]

Welsh Affairs

Ordered,

That the matter of the Welsh economy, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.— [Mr. Major.]

Orders Of The Day

Finance Bill

Order for Second Reading read.

[Relevant document: Eighth Report of the Treasury and Civil Service Committee, House of Commons Paper 306 of Session 1984–85.]

3.41 pm

I beg to move, That the Bill be now read a Second time.

I have selected the amendment in the name of the Leader of the Opposition.

The House is now being asked to consider the legislative consequences of the Budget. Although it is in a sense a technical tax measure, I think it right in the first instance to set the Bill in its economic and strategic context, not least because we have the benefit of the eighth report of the Treasury and Civil Service Committee, which will, I am sure, make a useful contribution to our debates. However, it may not surprise the House to know that I do not entirely agree with all of its conclusions.

When my right hon. Friend the Chancellor of the Exchequer came to the House about six weeks ago to deliver his Budget speech, he did so against the background of some economic turbulence. At home, the miners' strike had just ended and it was possible to calculate that in 1984–85 it had added some £2¾ billion to the public sector borrowing requirement and had worsened the current account by about £4 billion. Abroad, the unprecedented period of dollar strength was coming to an end, and in consequence the foreign exchange markets were unsettled. The paramount requirement was, therefore, for my right hon. Friend to make it clear beyond any risk of misunderstanding or misinterpretation that the Government were totally committed to reducing inflation still further and would not be diverted from the financial strategy which they had followed consistently since 1979.

I must emphasise that recent policy measures do not reflect any change in policy as some commentators and even, to a degree, the Select Committee have suggested. Rather, they demonstrate the Government's unshakeable resolve to carry out their present policies. The fall in sterling in January posed a clear threat to the ultimate objective of falling inflation. The Government had to react to this in order to maintain sound monetary conditions, and they have taken firm measures to demonstrate that their public sector borrowing and monetary objectives will be met.

Interest rates will remain at the levels that are judged necessary to achieve the right monetary conditions. That does not represent a break with previous policies. As my right hon. Friend the Chancellor of the Exchequer explained in his Budget speech, the precise combination of monetary growth and exchange rates, necessary to keep our financial policy on track, must be a matter of fine judgment.

An increase in the reserve of £2 billion was designed—and I am glad to see that it has been accepted by the Select Committee on that basis—to reinforce the realism of our public expenditure plans and does not indicate any relaxation of our grip there. It serves to underline the continuing pressures in sensitive areas, as the Select Committee has observed, and the continuing need to contain them.

Against that background, it was inevitable that our room for manoeuvre in the tax area should be less than we had hoped last year or at the time of the Autumn Statement. I hope, however, that on closer examination of the Bill the House will recognise that it contains many points of interest an even imagination. As hon. Members study the main features of the Bill, I hope that they will be struck by the number of measures which carry forward the theme of tax reform and simplification which was started in last year's Finance Bill. I hope that they will be struck also by the range of measures designed to promote job creation.

I draw particular attention to the increase in personal allowances—the increase in the married man's allowance, for instance, by 9·5 per cent. and the increase in the single person's allowance by 10 per cent.—in other words, twice that required by statutory indexation. The overall cost of the increases in allowances proposed in the Budget and the Bill is about £1½ billion in 1985–86. This is the fourth successive year that the real value of the basic personal allowances has been increased. They now stand 20 per cent. higher than they were in 1978–79.

It is a familiar and rather threadbare point that the greatest cash benefits from an increase in allowances go to the higher rate taxpayers. In a sense they do, because we have a progressive tax system, but the greatest proportionate gains go to the lower paid. This year, for example, the combination of the increase in personal allowances and the reduction in national insurance contributions for those earning below £90 per week mean that the budget reliefs have been concentrated on lower income groups.

I shall give a few examples. A one-earner couple earning £85 per week—a little below half the average wage—will gain an extra £3.43 per week from the Budget when the reductions have taken effect. This will represent an increase in their take home pay of almost 5 per cent. A married couple on £380 a week—about twice average earnings—would gain £2.50 per week, or just about 1 per cent. on their take-home pay. We expect that a positive effect of these measures will be a general encouragement to people to take up lower paid jobs and a sharpening of the incentive for employers to create more jobs for them.

Another positive effect of these tax measures will be to take a further 800,000 people out of the tax altogether—375,000 more than if the allowances had merely been indexed. For those who argue that many of these people are young people, pensioners and part-timers, I make two points. The first is that we regard it as important—whatever our critics say—to remove as many people as possible with low incomes, whatever the source of that income or their household status, from tax. The second is that the relatively small numbers taken out of the poverty trap show that personal allowances, despite sustained increases under this Administration, are still toe low in real terms. That is one of the reasons why we believe in maintaining a firm grip of public expenditure to keep open the way for further cuts in direct taxes.

I should emphasise also that our ideas of changing to a new system of personal allowances—in fact a move towards a system of transferable personal allowances— will be embodied in a Green Paper which we shall publish later in the year. My hon. Friend the Financial Secretary will refer to that in greater detail when he replies to the debate. This should ensure that we can have an informed debate both in this House and in the country as a whole on the path of tax reform so that we are ready to move when the Inland Revenue has completed its gigantic task of computerising schedule E and case 1 and case 2 of schedule D taxation.

Does my right hon. and learned Friend understand the argument, which is attractive to many of us, that it would not make sense to rush ahead with extensive and far-reaching social security reforms in early legislation if that would preclude the possibility of linking that reform with an overall review of tax and benefits taken together? Will he bear that point very much in mind in considering the time scale in moving forward with both sides of the public accounts?

I recognise my hon. Friend's concern, which is shared by both sides of the House. That will naturally be an important question. No doubt there will be opportunities for debate, although this is not a matter for me, when reforms in both sectors are made available to the public.

I draw attention to one further income tax measure—clause 40, which introduces tax relief for half of the class 4 national insurance contributions made by the self-employed. Taken with the measures which the House debated in the Social Security Bill two weeks ago, which cut the class 2 national insurance contributions by £65 per year, these will, I hope, meet the long-felt grievance of the self-employed that their national insurance arrangements put them at a disadvantage as against the employed. Taken together, these two measures will cost around £155 million in a full year. Taken together, they will also, I hope, emphasise our continuing concern for the self-employed, who now number over 10 per cent. of the labour force. They constitute an enterprising, flexible and adaptable element in our economy and will continue, we believe, to make an increasing contribution to our economic growth, particularly as patterns of activity alter.

The considerable reliefs which we are proposing in these sectors need to be balanced by increases in other sectors. That is why we propose increases in excise duties beyond inflation. We have, however, taken careful account of the position of the industries likely to be affeced, including the employment implications of any changes. In particular, the House will note that we have increased the duty on spirits by rather less than inflation. This is designed to give some relief to the Scotch whisky industry, which we accept has recently experienced particular difficulties.

Is the right hon. and learned Gentleman aware that the excessive increase in duty on beer is not confined to this year? It has been excessive every year since 1979 and represents the most consistent and longest record of heavy increases in duty on beer.

I take the hon. Gentleman's point, and I know that concern has been expressed from both sides of the House. The hon. Gentleman will be aware of the infraction proceedings brought against this country, which made it necessary to adjust the balance between the duties on wine and beer. We felt that it was appropriate to phase these matters in as gradually as possible so that the impact on brewers and consumers was not as sharp as it would have been if we had done it in one year. I understand the hon. Gentleman's concern, but he will understand the constraints upon us, which would have been operative on the Labour Government, of whom he was a distinguished member, if they had still been in office after 1979. He will recall that infraction proceedings had been pending before 1979.

Again, while we have increased the duty on cigarettes by more than the rate of inflation, we propose no increase in that for cigars or pipe tobacco. That is in part because the health risks attached to them are, on the best evidence available, less than those associated with smoking cigarettes, and in part to mitigate the overall effect of the duty increases on employment in the tobacco industry.

I should also perhaps refer to the extension of VAT, proposed in clause 10, to newspaper advertising. While we have respected the sensitivities of the powerful advocates of the written word, we hope that the House and the country will recognise that failure to charge press advertising would remain an anomaly. Other forms of advertising are charged—for example advertising on local radio—and although we are not introducing this measure under pressure from the European Commission, I should mention that newspaper advertising is charged to VAT in Belgium, Denmark, France Germany, Italy and Ireland. The yield in a full year will, I hope, amount to £50 million.

The Chief Secretary will be aware that this will particularly affect classified advertising. This is the mainstay of local newspapers, as they do not benefit from customers getting the advantage of the input tax. Therefore, classifieds will bear the full increase, whereas large display advertisements by larger companies will receive the benefit of the input tax and will not be affected in the same way. This is a serious disadvantage for local newspapers.

The concerns of local newspapers have been put to us very forcefully by hon. Members on both sides of the House. However, with his long experience in the Treasury, I am sure the right hon. Gentleman will recognise that this has been a continuing anomaly and that this year it was fair to redress the balance between the various forms of advertising.

I understand why the right hon. and learned Gentleman said that he wanted to rectify the anomaly, and there will be some support from the Opposition for his wish to rectify it in relation to display advertising. However, the problems of classified advertising are the problems not just of small newspapers, but of families who wish to publish notices relating to births, deaths and marriages. Does the Chief Secretary really believe that such people should be taxed without any possibility of recouping it? Will he think about that again?

We shall certainly reflect on that, and we shall no doubt discuss the detailed consequences when we debate the matter in Committee. I appreciate that classified advertising is on occasion important to the families concerned, but I wonder whether it forms a large or important part in their budgets. I understand the concern which has been expressed. We can have a useful debate on the subject, but I do not believe that this proposal will have a serious impact.

I come now to the business sector. Last year we set in hand a major reform of corporate taxation, and we see no need to alter or modify the rates of corporation tax which we then mapped out. The House will recall that for large companies corporation tax will be reduced to 35 per cent. by 1 April 1986. The rate for small companies has been reduced to 30 per cent. retrospectively with effect from 1 April 1983. We have, however, listened carefully to the various representations made about our reforms of capital allowances, and in particular the withdrawal of capital allowances next year.

We have considered carefully the argument that the withdrawal of initial allowances next year will lead to a dip in investment. I have to say that we are not convinced of this, for several reasons. First, although allowances will be lower, so too will corporation tax, and business will continue to benefit by nearly £1 billion a year from the abolition of the national insurance surcharge. Secondly, company profits have risen dramatically in recent years, and company finances are in general sound. Thirdly, the new system of allowances will allow most companies to write off their investments against tax at a rate which on average compares favourably with true economic depreciation. Finally, the new rate of allowances has been introduced in three stages and over a three-year transitional period.

We have, however, thought again about the case for modifying these arrangements for assets with a short life. Clause 54 sets out the change that we propose. It will give businesses the option of keeping investments expected to depreciate rapidly—because of technological obsolescence, for instance—out of the main capital allowance pool. If they are then disposed of at less than their written down value within five years, a balancing allowance will be given. As a result, the cost to the business of the asset will be written off over its life. This measure will, I hope, be particularly useful to high technology businesses, whose capital stock is subject to rapid obsolescence.

So as to emphasise to the House that our appetite for further tax reform has not been satisfied, I shall turn now to some specific provisions in the Bill. The first are those contained in chapter II of part I which derive from the work of the Keith committee, which we set up in 1980 to review the enforcement powers of the Customs and Excise and the Inland Revenue.

It has long been felt, we believe, that the powers of these two departments were overdue for re-examination and reform, so as to ensure that they were effective and that a fair balance was struck between the interests of taxpayers and the Government. It was on that basis that we set up a committee in 1980 under the chairmanship of Lord Keith to review this vast and sensitive area. We are greatly in the debt of this committee for its patient, painstaking and thorough review. Chapter II of part I of this year's Finance Bill contains the results of that review in relation to VAT.

I should emphasise that there was very full consultation on the report itself in 1983–84, and on the draft clauses which were published in November last year. Therefore, no one can say with real justification that the proposals have been sprung on an unsuspecting world. I hope also that on close examination they will be seen to strike a fair balance between the interests of the taxpayer and the Government.

In outline—and we shall no doubt have an opportunity to examine the provisions in more detail in Standing Committee—we propose a revision of Customs and Excise powers in relation to VAT control and investigation work, coupled with increased safeguards for taxpayers. We also propose the introduction of a civil offence code for compliance failures and less serious frauds in place of the present quasi criminal sanctions.

I should emhasise that, in deference to the many comments and representations received, we have introduced a number of important changes since the Keith report. In particular, we have increased the rights of appeal to cover situations where the taxpayer considers that there has been reasonable excuse for his failure to comply with the law and that he had exercised all due diligence. The default surcharge and misdeclaration penalties have also been targeted more specifically on persistent late payers and substantial errors. The balance of the proposals has thus been tilted further towards the protection of the taxpayer, without, we believe, losing sight of the aim of improving the compliance of dilatory taxpayers.

If the package commends itself to the House, we expect that it will halve the amount of VAT outstanding—perhaps over £1 billion at any given time—produce an increased revenue flow of £50 million a year, result in a once for all increase in the revenue flow amounting to £600 million by 1988–89, and produce an annual revenue for surcharge, interest and penalties amounting to £150 million over time.

With regard to VAT outstanding, will my right hon. and learned Friend, in conjunction with our right hon. Friend the Secretary of State for Trade and Industry, do something about the large number of bankruptcies which are caused by the VAT man taking the first bite of the cherry? The matter is coming up for discussion tomorrow.

My hon. Friend puts me in a difficult position. Those who have been bankrupted, to whom my hon. Friend refers, have, after all, been collectors of VAT on behalf of the general body of taxpayers. Although I would be happy to look at any individual cases where perhaps there has been an excess of zeal in exercising powers, it would be difficult to soften the procedures any further. Indeed, I hope that when they are examined in detail it will be seen that the interests of the taxpayer have been safeguarded.

May I try to elaborate the point which I think my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) was making? Where the Customs and Excise is dilatory in collecting VAT and a firm goes into bankruptcy, the Revenue is protected against the other creditors. That is the anomaly that we have to eradicate.

I apologise to both my hon. Friends. I had not realised that the reference was to the insolvency provisions. It will be a matter for consideration by the House when insolvency legislation is brought before it. I do not think that it will arise out of the provisions in the Finance Bill, but I shall bear in mind what my two hon. Friends have said.

Is there not evidence that many companies, in the rather difficult trading conditions of today, are extending more credit and by doing so are delaying the date on which they will receive the VAT payment which is due to them? In those circumstances, in the event that the Minister presses forward in the way that he suggests—I am not wholly opposed to the proposal, but I am opposed to many parts of it—surely the effect will be to impose a VAT burden on businesses which they cannot afford to pay because they have not themselves been paid. When the rules were readjusted, to what extent was that problem taken into account?

The rules will not alter the chargeable event by reference to which VAT is collected. They are merely, as it were, the collecting mechanisms when a chargeable event has occurred. The hon. Gentleman is suggesting that because credit has been extended in hard times that necessarily alters the chargeable event. There may be odd occasions when that is so, but in general it is not true. The chargeable event remains the same. I think that there will be a chance to examine the matter in detail in Committee and to consider the point that he has made. He might care to give me advance notice of any particular case that he has in mind, so that it can be measured against the provisions.

I think that there are two points to be debated. The first is whether the chargeable event is set at the right moment. The second is whether the collection mechanisms are sufficiently effective, or too effective. We can consider both points in due course.

I now move to another area of reform. We are conscious of the fact that, even with the provisions introduced in 1982, capital gains tax can still be regarded as a levy imposed on inflationary as well as real gains.

Clause 64, therefore, modifies the indexation formula for capital gains tax. The exclusion of the first 12 months' inflation from the allowance for assets acquired after March 1982 is lifted. For assets held in March 1982, indexation on the post-March 1982 gain will be based on the market value of the asset on that date. Indexation will also be extended to losses.

The effect of the changes is that inflationary gains from March 1982 onwards will be fully offset against the capital gains tax liability. The tax will be charged only on real gains from that date. There remains, however, an element of taxation of inflationary gains made on assets acquired before March 1982. I have to say, in all candour, that to extend indexation to inflationary gains before March 1982 completely would have been too expensive in revenue and staff.

Finally, I deal with development land tax. In clause 87 we propose the abolition of development land tax. If this move commends itself to the House, it will be the third tax which the Government have abolished in two years. [Interruption.] I am glad that there is enthusiasm on both sides of the House for that bold and far-reaching measure.

I have to say that it was the least cost-effective tax in the statute book, raising only £80 million last year at an administrative cost of about £5 million. The net cost of abolition will, in fact, be only about £50 million in a full year, as there should be an increase in income tax, corporation tax and capital gains tax yields on gains previously charged to development land tax. But above all, abolition should remove 200 pages of complex legislation from the statute book and will, we hope, bring more development land on to the market and help the construction industry.

There are some who have described the Budget—and so, I suppose, by extension, the Finance Bill—as a dull Budget. I would not be dismayed if either were classed as dull. There are occasions for drama and occasions for self-restraint. What is important is that the Budget and the Finance Bill were and are right for the circumstances of this year. The Budget has, I believe, signalled clearly that we have not faltered in our economic objectives.

The Finance Bill will, I hope, be recognised as a carefully constructed, thoughtful Bill, entirely consistent with our economic strategies, directing reliefs where I believe the country would require them to be directed—particularly to the less well-off, and to the creation of jobs—but also a Finance Bill which carries further forward the process of sensible, enlightened, tax reform which will, over the lifetime of several Parliaments, give us a tax system which is in tune with the times in which we live. It may not dazzle, but nor should it alarm. I hope it will reassure the country that its financial affairs are in firm and competent hands. On that basis, I commend it to the House.

4.9 pm

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:

This House declines to give a Second Reading to a Bill which fails to face the real problems of the United Kingdom economy, increases the burden of taxation without providing adequate relief for the lowest paid or desperately needed help to pensioners, the sick and families, and is the product of a Budget which was misleadingly described by the Chancellor of the Exchequer as primarily intended to reduce unemployment.
The House will have noticed that the Chief Secretary addressed us in a more subdued mood than on the last occasion when he spoke to the House. His new attitude was wholly appropriate for the introduction of this mouse of a Bill, which is not simply regarded as timid but, according to all the evidence, the most unpopular Finance Bill presented to the country since the war—[Holy. MEMBERS: "Rubbish."]—by the most unpopular Chancellor of the Exchequer. That is the clear evidence of the polls.

If the Chancellor of the Exchequer does not recognise that, we are likely to continue to see not only the downward spiral of the Government's popularity, which we naturally welcome, but the continual debilitation of the economy. The one contribution that the Chief Secretary made to the standing of his Government was the repetition with something approaching conviction that the Bill stood for no change in the strategy, an unshakeable resolve to continue as the Government had begun, and the continuation of the policies which the Government have followed since 1979. The Chief Secretary always manages to make that promise as if he did not realise that the continuation of that strategy was the continuation of a strategy which has produced record unemployment, record company liquidations, record real interest rates and a general debilitation of the economy. The right hon. and learned Gentleman may not recognise that, but when one considers his constituency and his majority, one sees that the electors of his constituency will have recognised that by the time of the next general election.

Six weeks ago when the Budget, on which the Finance Bill is based, was presented to the House, some Conservative Members either genuinely believed or pretended to believe that the Chancellor of the Exchequer intended the Bill to be a major assault on unemployment. Six weeks ago that was their excuse for opposing the one package which would have begun to put Britain back to work—the concentration of available resources on public sector capital investment. By now, even the most gullible Conservative Back-Bench Member must understand the truth.

There was little in the Budget, and there is virtually nothing in the Bill, which is intended to reduce unemployment. The changes in income tax thresholds, to which I shall return in detail later, were not proposed for that purpose. On the supply side, the argument that unemployment is high because of a lack of incentive to work is plainly preposterous, as a comparison of pay and unemployment benefit demonstrates. Unemployment is high, not because men and women will not look for jobs, but because they cannot find them.

The demand side case for tax cuts as stimulants to employment can be dismissed in two sentences. First, if there is a need to increase demand, as we believe there is, there are much better ways of using available resources to create jobs, and the best way is investment in public sector capital projects. Secondly, the Government do not believe, and continually repeat that they do not believe, that any increase in demand is necessary. Half the Government's case on unemployment is that demand is adequate. I hope, therefore, that Conservative Back Bench Members who attempt to defend the Budget as a Budget for jobs will not pretend that the reductions to the allowances have anything to do with that objective.

The Bill does not even acknowledge the need to reduce unemployment, nor does it contain anything specifically with that aim in view. It adds to the annual tax bill, thus compounding the fraud of which the Government have been guilty for six years—the promise of tax cuts and the reality of an increase of £29 billion in the annual tax bill from 1978–79 and 1985–86.

The Bill is not the product of a Budget for jobs. If the Budget was for anything, it was for sterling. It was made necessary by the way in which the Chancellor and the Prime Minister bungled exchange rate policy in January. Yet the exchange rate remains at its present level only because interest rates are kept artificially and damagingly high, with catastrophic effects for mortgage holders.

The Chief Secretary rightly said that we must consider the context in which the Bill was introduced. The Bill is introduced with base rates at 12.5 per cent., against a background of a cut in the public sector borrowing requirement, and against a tightening of monetary policy. It increases the tax take by more than £3.5 billion. Against all those background facts, the result of the Bill is far more likely to be an increase in unemployment than a reduction in it. That gloomy fact is confirmed by the Treasury forecast that the underlying rate of growth will fall next year and that there will be no improvement in it the year after.

Two weeks ago, the Leader of the House, knowing what the Bill contained and what the Budget proposed, wrote to his constituents predicting a fall in unemployment before the next general election. I ask the Chief Secretary now, and I shall give way to him at once for his answer, whether, on behalf of the Treasury, he will confirm the prediction by the Leader of the House that unemployment will fall before the next general election. [HON. MEMBERS: "Answer."] I am not surprised that he does not answer. On the radio the Chancellor of the Exchequer pointedly avoided supporting that forecast, and the Secretary of State for Employment has been similarly reticent. That is not surprising, because they both know that what the Chief Secretary this afternoon called the employment creation measures, which are the Government's only gesture to the 3.5 million unemployed within the Budget, of which the Bill is part, will not even be fully effective when we debate next year's Finance Bill.

The youth training scheme will be phased in after April 1986, the expansion of the community programme will come fully into operation in June 1986, and the changes in national insurance contributions take effect next October.

The Bill will not even scratch the surface of unemployment, nor will it satisfy the other hopes which the Chancellor excited during the winter to bolster up his flagging popularity in the Conservative party. There were hints of massive tax cuts and claims of massive tax reforms. The Bill provides neither. The Chancellor has discovered that it is far easier to demand tax cuts than to deliver them, and far simpler to advocate tax reforms as a journalist than to implement them as a Chancellor of the Exchequer.

Last year, at the beginning of his Second Reading speech, the Chief Secretary described the 1984 Bill as a
"radical and imaginative reform of our tax structure."—[Official Report, 10 April 1984; Vol. 58, c. 248.]
He was wise not to make such a claim this year. The Chancellor has chosen to hide behind a Green Paper or, to be exact, two Green Papers. We had one about the taxation of working couples in the last Parliament. The great tax reform rabbit pulled out of the hat on Budget day was that we were to have a second Green Paper on these crucial subjects—most notably, important and significantly, on the taxation of working couples. When the Financial Secretary replies, will he tell us why we have to wait for a second Green Paper? Why was the Green Paper of his predecessors not regarded as a basis for action? Is it, as most people suspect and as I suspect, that the Green Paper is regarded as an alternative to action rather than a promise of progress? The Green Paper on tax reform means that there will be no major tax reform in the lifetime of this Parliament. The switch from direct to indirect taxation has been halted, a change of strategy that Labour Members applaud. But that has happened not because the Chancellor has changed his mind but because the Chancellor has lost his nerve. All the heady promises to eliminate distortions, increase incentives and improve the use of resources have been forgotten or abandoned. The Bill contains only three items which the Chancellor was prepared to describe as tax reform during his Budget statement.

It is true that the Chief Secretary has reminded us today of a default surcharge and some other reforming measures, but those were not measures sufficiently significant to command the Chancellor's attention when he introduced his Budget to the House. In fact, his entire package of reform on that day consisted of three items, two of them simple abolition. The stamp duty on gifts and other minor transactions is to go and so is development land tax. But the one item that the Chancellor would have condescended to call reform in his mood of last year is the simplification of capital gains tax, which, incidentally, I am sure offers a £155 million reduction to those who pay tax.

It may be that the Chancellor would argue—I look forward to hearing the Financial Secretary on this point because his parliamentary answers are significant in this debate—that the changes in national insurance payments that were part of the Budget are in themselves an item of tax reform. Were he to do that he would be conceding what the Prime Minister continually denies—that national insurance contributions are a tax.

I welcome, as did my right hon. Friend the Leader of the Opposition on the day of the Budget, the reduction in employees' contributions. Indeed, we advocated that principle before the Budget as part of the proposals that we made for the sort of Budget that we would like to see. After the Budget we said that the changes were an excellent idea, badly applied. But we have never believed that they could be anything other than an attempt to increase the take-home pay of the lowest paid. We have never believed that an adjustment in the national insurance contributions could be what the Chancellor regards as something synonymous with or comparable to a tax incentive which would in itself create more jobs.

It is worth noting that even now most contributors to the national insurance scheme are paying more than they did under the Labour Government. They were paying 6·5 per cent. of their calculable earnings in April 1979 and now, unless they are earning £55 a week or less, they are paying 7 per cent. So I hope that as the debate goes on we shall not hear grandiose claims of how the measures to reduce national insurance—which is the background to the Budget—are in some way the alternative to the supply side measures, about which the Chancellor talked in a way which might have induced the unwary to believe that they would be included in the Bill.

In any event, the Labour party has never believed that such changes to the cost of labour and employment could contribute to the solution of the central problem of the economy, which is the reduction in unemployment. I repeat what I said a moment ago. A point which the Bill seems unable to understand and does not accommodate is that the problem of the economy is neither that wage costs are too high nor that people will not attempt to find work. The problem of the economy and the unemployment which results from that problem is that there is not enough work available because there is insufficient demand and investment.

As I sense that the right hon. Gentleman is leaving the area of tax reform, and as he has told us his position on VAT and, presumably, on indirect taxes, what areas of direct taxation does he feel are ripe for reform which he would tackle if he were Chancellor?

The aggregation of the married man's and woman's taxation, the working partnership, has to be tackled. I believe at one time that the Government would tackle that by disaggregation. I suspected that when they did so they would not make sufficient compensation for people at the bottom of the income scale, but that clearly must be tackled and, in his Budget statement, the Chancellor talked as if he accepted the need to do so. I cannot understand why, having had one Green Paper on the subject three years ago, he now requires a second Green Paper on the subject before he is prepared to grasp the nettle. My conclusion from that is that he believes that there are solutions which, while they are right socially and fiscally, may be electorally unpopular, and he therefore postpones them rather than faces them in the way that a proper Chancellor would.

Having answered that question, let me return to the subject from which the right hon. and learned Gentleman momentarily diverted me. I repeat that the problem of the economy is neither that wage costs are too high to encourage expansion, nor that wages are too low to encourage unemployment in preference to work. In any event, were those problems to be the difficulties which the Government pretend, putting together the income tax proposals in the Bill and the national insurance proposals in the Budget that go with them, the basic income tax structure of Great Britain remains, like the Government, biased against the low-wage earner.

The national insurance proposals create a series of new wage traps. In a period of tighter money and slower growth they simply result in the encouragement of low paid jobs at the expense of more highly paid employment.

I notice that the right hon. Gentleman wants to intervene. Does he want me to give way now or after I have given examples to demonstrate the point that I was making?

Taken together with the Bill, the national insurance proposals leave the Government's basic tax record unchanged. Compared with 1979, taxes are higher for the low paid and lower for the high paid. The richer the taxpayer the bigger the tax cut he or she has enjoyed under the Government. Indeed, the Government have a unique record which has not been duplicated in the past 150 years—a record of taking from the poor and giving to the rich. Let me give the House some examples.

The right hon. Gentleman talks about taking from the poor and giving to the rich, but how will it help Britain's economy to return to what he says he wants—the highest penal rates of taxation, which we inherited? It means that he wants to go back to the days of 95 per cent taxation—[Interruption.] — or 98 per cent. taxation. Who cares which; there is nothing left anyway. Will that not discourage every person who has ever created any wealth? Will that not ruin Britain? Will his envy and malice not destroy Britain rather than rebuild it?

All that the hon. Gentleman proves by quoting me as saying that I want to see 98 per cent. taxation is that he reads the Daily Mail and believes it. I have never said that but the Daily Mail continually repeats that I have. During the Budget debate I made it explicitly clear that my objection to 98 per cent. marginal rate of taxation was that even when it was in operation the only people who paid it were pop singers with large amounts of investment income and incompetent accountants. Certainly I want to obtain a higher level of taxation from the better off and certainly I want to reduce——

I urge the hon. Gentleman to concentrate, as I urged his colleagues to concentrate during the Budget debate——

I have told the hon. Gentleman on previous occasions that I do not find his winsome ways particularly winning. I propose to answer the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) and then I shall give way to him.

I urge the hon. Member for Selly Oak to concentrate not on marginal tax rates but on the other forms of allowance that enable the very rich to pay a disproportionately small proportion of their earnings in tax. The hon. Gentleman must explain to his constituents how he can justify a taxation regime that has required higher percentage payments from the worse off and lower percentage payments from the better off. That is an intolerable and unjustifiable system.

No, I must give way to the winsome hon. Member for Enfield, North (Mr. Eggar).

Will the right hon. Gentleman tell us what the highest tax rate would be if he were Chancellor of the Exchequer?

No, of course I cannot. Such a question is preposterous. [HON. MEMBERS: "Oh."] The idea that the Opposition might find themselves incommoded by their inability to introduce the Budget of 1988 in the spring of 1985 is suitable only for schoolboy humour.

I cannot—and would not as Chancellor—tolerate a situation in which the richest 14 or 15 per cent. of the population enjoys massive tax cuts while the poorest 20 or 30 per cent. pays more. I am determined to redress that balance.

I promised to give some examples. I shall do so before I give way. As I said before the welter of interruptions, under the present Government, the richer the taxpayer, the bigger the tax cuts that he enjoys. The statement that drew hon. Members so passionately to their feet—the statement that embarrasses them or that they wish would not be repeated—was that the present Government have a unique record in taking from the poor and giving to the rich.

A married worker on average earnings with two dependent children will, after the passage of the Bill, pay 3·1 per cent. more in income tax and national insurance contributions than he or she paid in 1978–79. A worker on half average earnings will pay 14 per cent. more. However, a worker on five times average earnings will pay 13.8 per cent. less, and a worker on 10 times average earnings will pay 23 per cent. less. I shall gladly give way to any hon. Gentleman who can justify a system under which a taxpayer on 10 times average earnings pays 23 per cent. less tax, while a taxpayer on half average earnings pays 3·1 per cent. more.

Does the right hon. Gentleman not agree that the people in all the examples that he has given are better off after five or six years of Conservative Government, while they were worse off after the same period of Labour Government?

Some people at the bottom of the income scale are absolutely better off, but some are not, and that is a disgrace. What is extraordinary is that the Financial Secretary—and, for all I know, the Chancellor—tries to justify the relative changes. Can he justify the fact that the poor pay more tax, while the rich pay less, simply by saying that there has been a small increase in their gross earnings, net income or real income? No one could justify the comparison that I have made, and the country will note that neither the Financial Secretary nor any other hon. Member tried to justify the relative changes in the tax system.

The whole House would agree that under no circumstances should the right hon. Gentleman, as shadow Chancellor, say what a future Labour Government would do. Of course he cannot give a categorical assurance about future tax rates. However, will he confirm that, in order to raise revenue, the next Labour Government would introduce a wealth tax and cancel mortgage interest relief?

In the belief that some hon. Member would be weak-minded enough to ask me about mortgage interest relief, I brought with me a paper from which I could read all the steps that past Labour Governments have taken to assist interest relief to home buyers. The House may be delighted to be reminded of the 11 items of assistance to home ownership introduced by previous Labour Governments. The hon. Member for Lancaster (Mrs. Kellett-Bowman) whispers to me from a sedentary position that that would not amuse her. I shall therefore merely say that the Labour party has no intention whatsoever of abandoning mortgage tax relief. We have made that clear on innumerable occasions. However, as the Conservative party believes that it is in its interests to keep repeating the falsehood, no doubt we shall have to continue to make our position clear.

No, no, no. My assurance that there is no such intention could not be more categorical. Any hon. Members who pursue that line of argument simply show how poverty-stricken are their arguments about the state of the economy.

There must be a major change in the structure of our taxation system. We have always advocated such a change, and will continue to do so, in the belief that the neglect of the interests of the lower-paid is one of the great scandals that besmirches the Government's record. A Chancellor who had really wished to help the lower-paid, and to give any veracity to interventions such as that of the Financial Secretary, would have constructed a different Budget. He would have increased child benefit at least by the percentage by which the tax thresholds were changed. It was the clear intention when child benefit replaced child allowance that whenever there was a major revision in the tax thresholds child benefit would be increased by the same amount. Had that not been so, the simple introduction of child benefit would have penalised families. The Opposition believe that there is overwhelming evidence that the most direct and cost-effective way of alleviating poverty would have been substantially to increase child benefit. Low income families with children have suffered more than any other families during the prolonged recession. The available resources should have been concentrated on their urgent needs.

By changing the thresholds, the Chancellor has reduced the annual tax bill for a worker earning, say, £5,000, by £90 a year. However, because of the nature of tax thresholds, the same process reduces the tax bill for a worker on £50,000 a year by £565 a year. His tax reduction is six times as great as that enjoyed by the low-income family. The needs of such high-income groups should not be a high priority. The money spent on ensuring that they receive tax reductions should have been concentrated on the lowest-paid and the poor.

That would have been much more effectively done by using the money available for child benefit in preference to other alternatives. The Government have boasted that the adjustment in the tax threshold has taken 800,000 workers out of tax altogether. That boast requires critical examination, some of which the Chief Secretary anticipated. However, while the hon. Gentleman posed a question, he gave no answers.

The hon. Gentleman was right to say—if only because he knew that if he did not say it, we would—that very many, if not most, of the workers taken out of tax are young people, married women, pensioners and part-time workers. Those are the groups on whom the Government rely in many particulars. They are the groups on whom the Government depend for their bogus demonstration that they are increasing employment. On this issue, however, they are a particular group which must be analysed in a particular way. Their earnings are often additions to the principal family income, and taking them out of tax is not a head-on assault on poverty, nor is it a change that provides major relief from the wages trap.

The wages trap bites most severely on heads of households in receipt of family income supplement. Leaving aside the numerous additional wage traps that are almost certainly being created by the new national insurance thresholds which the Chancellor proposes, it is important to examine the wages trap as it applies to and as it might be reduced by the new measures and their removal of 800,000 taxpayers from tax.

Last year's Finance Bill took 450,000 taxpayers out of tax, but only 2 per cent. of them were heads of households and family income supplement recipients, although they were the people who needed the assistance. Only 2 per cent. of them received it in a form that might have done something about poverty and the wages trap. I should like the Financial Secretary to answer three questions about the 800,000 families or taxpayers who, as a result of the Bill, will not pay tax. How many are in full-time employment? How many are family income supplement recipients, as distinct from being on low wages but which receipts are supplementary to the main income in their family? How many were released from taxation in last year's Budget and were recaptured during the financial year, thus enabling the Government to make the same boast twice about the same group of taxpayers?

The answers to those questions will be revealing in terms of the Chief Secretary's claim and in terms of the nature and character of the Bill. The answers will show that the Bill does even less than was originally thought. As neither the Budget nor the Bill was ever thought to amount to much, that is very little. We are debating a trivial Bill which is the product of an inadequate and uniquely unpopular Budget brought in by an inadequate and uniquely unpopular Chancellor, and it does not deserve the House's support.

4.42 pm

Mr. Terence Higgins
(Worthing)