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Mr. Christopher Gill (Ludlow): In view of the importance of the next debate and in deference to the Government Whips, I shall make but a brief contribution on Third Reading. It is customary on these occasions for a Back Bencher to pay a tribute of thanks to the members of the Finance Bill Committee for their hard work and diligence in bringing the Bill to the House for Report and Third Reading.
It is also customary on Third Reading for the hon. Member for Ludlow to say a few words about capital taxation. I thought that this year, we would make a little more progress than we have done. I am grateful for the progress that has been made, but when I heard my right hon. Friend the Prime Minister say, last July, that he intended to abolish inheritance tax and capital gains tax, my heart leaped. On so many occasions in the past, I have said that there is absolutely no justification for those two taxes in a capitalist society and that they should not be perpetuated by a Government comprised of Conservative Members who believe that the reduction and abolition of taxes stimulate wealth creation and lead to greater revenue for the Exchequer in the long run.
I draw the attention of the House, as is my wont,to the figures for capital gains tax and inheritance tax. For 1994-95, the most recent full tax year, capital gains tax was worth £900 million to the Treasury, a figure exceeded only by the cost of the reliefs and allowances against capital gains tax, which totalled £965 million. Similarly, inheritance tax raised £1.4 billion for the Treasury, after allowing for reliefs and allowances of £365 million.
The effect of the Government's tax cutting in the past has always been to stimulate additional revenue. What I deplore about the continuation of capital taxes is the enormous amount of time, effort and resource deployed by some of the best brains in the country to try to avoid those taxes and get round them. I also greatly resent the way in which capital taxes tie up financial decisions that would otherwise be made on purely commercial and economic grounds.
Mr. Paddy Tipping (Sherwood):
This is the first year in which I have had a real involvement with the passage of the Finance Bill. I spoke in the Budget debate, I was on the Standing Committee and I am here to the end. This is virgin territory for me--although I had better be careful how I say that.
Let me give the House an impression of how I found the experience. First, I was astounded by the length of the Bill. Secondly, although I am well educated and relatively articulate, I found working through that Bill extremely hard. I believe that the whole process needs to be simplified. It could be made easier if amendments were not tabled at a very late stage. I appreciate that that is sometimes necessary, but it has certainly made life more difficult. Moreover, legislation passed in haste often has to be revisited. I am already conscious of a whole range of outstanding issues that need to be revisited through amendments to the law, and of many matters that Ministers will consider at a later date.
Having said that, I thank my hon. Friends on the Front Bench for their tolerance and for helping to educate me. By the way, that does not amount to a promise that I shall ever do it all again--I am getting my retaliation in first.
One result of my time on the Standing Committee is that I have begun to take a real interest in bingo, and have visited several bingo halls. I have not yet become an addict, but I have come to appreciate what an important role bingo plays. The whole face of gambling has been changed by the national lottery. The Finance Bill accepts that fact, and there have been changes in the football pools and in the duty on betting on racing, but nothing has been done for bingo. Bingo is a populist subject, and I know that future Finance Bills will have to deal with it.
Mr. Tim Smith:
The hon. Member for Oxford, East (Mr. Smith) rattled off a series of criticisms of the Government's economic achievements. Indeed, he rattled them off so quickly so that it was impossible to intervene, so I now want to pick up one point from his speech.He complained about the Government's record on job creation.
If there is one measure by which people judge the success or otherwise of a Government's economic policy, it is probably job creation. The Department for Education and Employment has published an excellent book called simply "Jobs".
Mr. Andrew Smith:
I have read it.
Mr. Smith:
I am glad to hear that. If the hon. Gentleman has read the book, he will know that this country has a larger proportion of the adult population in
Why is that happening? If the hon. Gentleman looks at another table in the book, he will see what the on-costs are for every £100 of the direct costs of employing someone, such as wages and salaries. The on-costs are £18 in the United Kingdom, £36 in France and £44 in Germany. Yet the Labour party wants to add even more to payroll costs, directly through the minimum wage and indirectly by introducing the social chapter.
It is easy to complain about the Finance Bill on the ground that it does not somehow encapsulate a great strategy. However, what it does is add to what has already been done. The process is incremental. For example, the rate of corporation tax is a significant factor when people are deciding whether to invest in the United Kingdom. What was the rate in 1979? It was 52 per cent. What is it today? It is 33 per cent. What was the standard rate of income tax 17 years ago? It was 33 per cent. What is that rate today? It is 24 per cent., with a target of20 per cent.
I welcome the fact that the Bill contains incremental changes that have led to substantial reductions in direct taxation. It also contains many other measures that I think were welcome. We had a good Committee stage, and I shall finish by thanking my hon. Friends the Treasury Ministers.
Ms Primarolo:
The hon. Member for Beaconsfield (Mr. Smith) admitted that he agreed with us that the Budget did not have a strategy. I shall return to that subject, but first I thank my hon. Friend the Member for Sherwood (Mr. Tipping), and agree with him about the length and complexity of the Bill. I think that at times all members of the Committee struggled to get to grips with the intention of many of its clauses. Indeed, the Economic Secretary to the Treasury agreed to allow Opposition Front-Bench spokesmen additional briefings with the civil servants to try to ensure that everything was correct. I am grateful for that.
We greatly valued the contributions by my hon. Friend the Member for Sherwood. We are pleased that he is so interested in bingo, and hope that he will maintain his interest in Finance Bills, so that he will be an active Member on our side when we are in government, pushing forward Labour's proposals.
The right hon. Member for Wirral, West (Mr. Hunt) said that the Budget was about further job creation.I should remind him of the Government's record in that respect: 1.2 million fewer people are in work today than when the Prime Minister took office; 8 million people have had at least one spell of unemployment since the general election. Unemployment under the present Government has doubled, and male unemployment in the United Kingdom is higher than the European average. According to labour market trends, fewer people are in work now than at the time of the general election.
When we consider the Government's claims to have created new jobs, we see that the facts do not live up to the rhetoric. Among major European countries, since 1979 the UK has had the worst record on job creation. If we consider the situation elsewhere, we see that employment in Japan has grown18 times faster than it has in the United Kingdom; it has grown 21 times faster in the United States than here.
On the Government's figures, the annual financial cost of unemployment to the taxpayer is more than £20 billion, and that figure does not include the human misery and insecurity that are attached to it. This Budget does nothing to address those facts. On an interest that the Chief Secretary shares with me, he will note that the Bank of England has today added to the continuing insecurity by announcing the closure of its regional branches in Bristol, Manchester, Newcastle and Birmingham. That means that 150 jobs will go. The Bank of England said in its letter to its employees in those cities:
The Chief Secretary referred to the landfill tax. We welcome that tax, but we made it clear in Committee that it needs a great deal of improvement. He referred to the 1p tax cut. What he forgot to mention is that, since the Conservatives were returned to office in the 1992 general election, there has been the equivalent of a 7p increase in tax. So taxes are 7p up and 1p down, and they expect to be congratulated.
The Chief Secretary, worse still, forgot to mention the forced rise--an average of 8 per cent.--in council taxes. In the city that he and I represent, the increase has been 12.5 per cent. He forgot to mention increased charges in prescriptions, bus fares and public services. He forgot to mention that, at the most recent Treasury Question Time, he admitted that living standards in this country had fallen in the previous 12 months, yet the Budget does nothing to address that fact.
The right hon. Gentleman forgot to mention cuts in the energy conservation programme, and that 200,000 homes that would have had insulation and greater energy efficiency will not be insulated. The Government cut the budget for that programme by £30 million. He forgot to mention--as the Government are apparently interested in job creation--that they cut the community action programme, cutting 40,000 jobs for vulnerable, unemployed people desperately seeking work.
The Finance Bill fails to match up to the challenges facing this country: jobs, investment and fairness. It does nothing for long-term investment. It does nothing to address the central problem: we still have 2.2 million people unemployed, and others suffering huge insecurity at work, which is having a detrimental effect on the housing market.
When the Chief Secretary mentioned inheritance tax, he did not mention the 25,000 housing repossessions in the first half of 1995 or the 1.7 million home owners trapped in negative equity. He did not mention that personal debt is still three times higher than it was in 1979 or that, in 1994, we had the lowest inward investment for eight years. He did not mention that Britain is bottom of the league for investment as a share of GDP, and that it has the worst balance of trade figures for more than three years and the lowest share of world trade in a century.
Britain is 14th in the European Union in balance of trade figures. The Financial Secretary will not mention, because he does not like the facts, that Britain has fallen from 13th to 18th in the world prosperity league.
We judge the Government on what they have done for jobs, investment opportunities and fairness, and they have failed on each account. The statistics blow apart their pathetic claim to be making Britain the enterprise centre of Europe. They need to be reminded that one in five non-pensionable households have no one in work--trapped in isolation, without hope and without a job. This Budget does nothing for those people.
"I understand that you will be disappointed with our decision."
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