HC Deb 25 July 1977 vol 936 cc226-33

Amendment made: No. 106, in page 78, column 3, leave out lines 12 to 16 and insert 'Section 29(1) and (4)'.—[Mr. Denzil Davies.]

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown. and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified.]

1.6 a.m.

Motion made, and Question proposed, That the Bill be now read the Third time.

Mr. David Howell

We now come to the end of a long journey. I am sure that it will be a sense of relief to both sides of the House that we have reached this point. We are glad to learn on Third Reading that there is to be signified not only Her Majesty's Consent but also the Consent of His Royal Highness the Prince of Wales, as you, Mr. Speaker, have so graciously indicated. I hope that it will not be improper for me to ask the Chief Secretary in passing whether he will indicate why the Prince of Wales's Consent, which we greatly welcome, is also to be signified on this occasion?

This has been an unusual Finance Bill. I think that the Chief Secretary will concede that. It has been unusual because the Bill has been almost totally changed during its passage through Second Reading to Third Reading. It has been unusual because throughout the Bill the Opposition have shown the initiative in shaping and changing it. That, of course, is a reflection on the political context in which we live. We have gradually seen a crumbling Government and an Opposition preparing to take over government.

This has been reflected in the Bill where again and again the shape and intent of the Bill has been changed in line with the proposals from this side of the House. What we now have is totally different from that which was presented to us back in April.

At the heart of the Bill are proposals which were introduced against the judgment and the arguments of Treasury Ministers. The increase in personal allowances were condemned as being "utterly irresponsible" by the Chief Secretary when they were first introduced in Committee. But what was "utterly irresponsible" in Committee became—. surprise, surprise—responsible and acceptable at the Report stage.

The amendments, introduced through a combination of the persistence of the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and the persistence and ingenuity of my hon. Friend the Member for Blaby (Mr. Lawson), now bring us nearer some truth and explicit understanding on behalf of the public about the level of tax to which they are being subjected.

These things were introduced in the face of Government opposition, but now the tune has changed from upstairs to downstairs and we have acceptance of these things by the Government. As the Minister of State made clear in candid and frank exposition this evening, this acceptance is totally against his own judgment and presumably that of his Treasury colleagues about what they thought was right. We have seen acceptance because the Government face the realities of a political situation which leaves them in a near powerless minority. In these respects, the Bill has changed greatly.

What is more, the Bill has reached its Third Reading in a totally different economic climate from that in which we began. When we began, the talk was all of deals and of how irresponsible it was of the Opposition to do anything which might embarrass or tarnish the little relationship which was supposedly being built up between the Government and leaders of the trade union movement. All that has gone. The deal has been washed away, and we have a new situation in which free collective bargaining prevails. The great contract which was the bedrock of the Government's existence turns out to have been made of soft sandstone, and we now have responsible collective bargaining, and the Government have arrived totally unprepared to deal with the new situation.

The Opposition have tried gently to lead the Government towards realities which they will have to face if they are to carry the country through the next phase into responsible collective bargaining. I believe that their will to do so is not there, because they have always argued for the opposite policies and said that free collective bargaining was anarchy and that it had to be avoided at all costs. Therefore, far from preparing their own policies for a return to responsible pay bargaining, they have done the opposite. We have tried to lead them away from that absurd position. We have pointed out that they need new fiscal and social policies and new policies in a range of areas if there is to be a sensible return to responsible pay bargaining. We see little sign of them, but we have done our best in this Bill to turn their eyes in the direction of reality.

This will be the last Finance Bill brought forward by the present Labour Government. It brings to an end three years of tax legislation of a kind more disastrous, more complicated and leaving the people more highly taxed under a more burdensome cobweb of tax statutes than ever before in history. Any hyperbole used about the state of the British wage earner under the present tax system is always overtaken by events. A starting rate for the wage earner at 34 per cent. plus the national insurance contribution still puts him at the top of the world league, and that is one league of which we do not intend to remain top once a Conservative Government come to power.

We are left with our tax statutes in unparallelled chaos, with personal taxation still far too high and with appalling disincentives operating at every level. Hon. Members on both sides have done their best to attempt to alleviate this, but we have made very little impact on a situation which requires a far more radical approach. All this will be changed with the change of Government. It will take time, patience and great effort. But, meantime, we must be content with this Bill which, taking account of ever-rising prices throughout the time that we have processed this legislation, brings in net terms to all levels benefit and which is yet another token and symbol of the financial incompetence and fiscal ineptitude of a Government whose end is now very near.

1.15 a.m.

Mr. John Moore

I sat with interest and some patience through all the Report stage of this Bill. When I read the reports of the Committee stage, I felt that it was clearly a Bill of some historical import.

I want first to compliment Back Benchers on both sides and, therefore, the House as a whole. This Bill was a unique opportunity, which was seized by many hon. Members, to reassert to some extent Back-Bench and parliamentary control. I also acknowledge the extent to which Ministers on the Treasury Bench reconciled themselves to the realities of a greater degree of parliamentary control. In the history of this country this is an important change and, whichever party is in office, I welcome it because it produces ultimately better parliamentary control of expenditure—which is one of the prime rôles of the House of Commons.

Secondly, I wish to touch on the subject of taxation. I do not follow my hon. Friend the Member for Blaby (Mr. Lawson) in the extent to which he and some Liberal Members seems to be so wedded to that principle, but I understand much of the rationale behind the debate. I agree with the Chief Secretary about the degree to which we might become committed and trapped, especially in terms of partial indexation.

I wish that the right hon. Member for Down, South (Mr. Powell) were present for this Third Reading debate because many of us value his comments in scrutinising fiscal matters. I should have liked to pursue some of his points on the limitations of indexation. It may be said that one can trust no politician, whichever political party is in power, under the pressure of modern democratic society, to do other than to seek to spend, and in many cases for justifiable and humane reasons. To that extent we must give a great deal of thought to any changes that are introduced. But even though I do not agree with the principle of indexation in the Bill, I believe that inflation is not just a disease in our society but takes away from both sides of the House fundamental control over expenditure decisions. No politician of repute should be pleased about that.

The other matter I deplore in the general strategy is the degree to which the Budget and its reflection in the Finance Bill does not seem to have faced the fundamental tax problem in Britain. I accept that lower rates are the key with which we must concern ourselves. But we must all face that fact that we are concerned only with the redistribution of a relatively diminishing cake. To that extent we must be concerned to approach the matter in a far more radical fashion. Our country is more than ready for radical changes. To that extent I do not think the Bill justifies the expectations of our country.

I conclude by saying that I do not welcome the Finance Bill—other than to say that there have been exciting historical changes presaged in it, which I do welcome.

1.18 a.m.

Mr. Ian Gow (Eastbourne)

I wish to comment on the extraordinary saga that has taken place since the Chancellor of the Exchequer introduced his Budget on 29th March, nearly four months ago. We have seen a continuance of the partial conversion of the Treasury Bench to the economic policies put forward by my right hon. and learned Friends. We have seen a commitment by this Administration to the importance of monetary control, although its monetary policies have not been as strict as they ought to have been. [HON. MEMBERS: "Oh."] I am talking of the past, not of the present. There has been a welcome conversion of the present Administration to the importance of monetary control.

Secondly, we have seen an acceptance by the Treasury Bench of the overriding importance of cash limits. That conversion, too, has taken place during the past four months. It is all very well for the Chief Secretary to chuckle, but the important thing to remember is that the Government Front Bench has been converted to the economic policies of my right hon. and hon. Friends.

Lastly, we have seen the conversion of the Treasury Bench away from the policy of the quasi-statutory control of wages. That conversion has not come full circle. We still persist in the nonsensical policy of the so-called statutory control of prices. But I believe that if the Chief Secretary should be occupying his position a year from now we may look forward to a substantial reduction in the level of price control, just as the Treasury Bench has had forced upon it a reduction in the level of wage control.

So we find that the Treasury Bench is inexorably moving on to the common ground that has been laid before it by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph). The extraordinary truth is that the policies of those below the Gangway have been discarded by the Government. We welcome the Government's conversion. It is not total, but we look forward confidently to Treasury Ministors moving further towards the economic policies of my right hon. and hon. Friends between now and next year.

1.21 a.m.

Mr. Joel Barnett

This brief debate began with the hon. Member for Guildford (Mr. Howell) not quite understanding why, Mr. Speaker, you told us about the Consent of Her Majesty and the Prince of Wales. You forgot to mention that it has my consent, too, and that of my right hon. and hon. Friends. I am sure that it will be clear to every other hon. Member that the reason we had to have the Consent of the Prince of Wales as well as of Her Majesty had to do with Clause 50, which is crystal clear to anybody who has read the Bill. I am sorry the hon. Gentleman had not noted the importance of that clause. I am sure that his hon. Friend the Member for Blaby (Mr. Lawson) had understood it.

It has been suggested that this is a somewhat unusual Finance Bill. Certainly there were odd occasions in Committee which were different from other occasions. The hon. Gentleman spoke of it as a historical Bill, because of indexation—

Mr. Lawson

Hear, hear.

Mr. Barnett

However, the hon. Member for Guildford also said that it was the tiniest of tiny little mice of change, forced upon us by his hon. Friend the Member for Blaby and some of my hon. Friends. The hon. Gentleman did not quite put it in that way, because he is very modest, but he did say that it was a small matter. We have noted how little the hon. Member for Blaby has managed to drag his hon. Friend along behind him.

What is interesting about the Bill, despite the interesting changes made during its passage, is that the basic Budget strategy remains. The total levels of tax relief set out in the Budget are now set out in the Bill, and are broadly in line. The personal allowances have been tilted in favour of married couples in the way we have suggested, and the House has been pleased to accept that tilt.

The hon. Member for Guildford said that the Third Reading took place in a different climate, and he was absolutely right. The House will rise on Friday and, happily, we shall not see each other again until the end of October, by when the economy will be well on the way to recovery.

The hon. Gentleman also said that this would be the last Finance Bill of this Administration. It will be the last Finance Bill of this Administration this year, but there will be another in 1978 and another in 1979, and I am sure that they will continue the trend to bring relief in the tax system to those who reqiure it, in fairness and equity, improving the system as we go along, with the help of my hon. Friends and some Opposition hon. Members.

I have the greatest pleasure in commending the Bill for Third Reading, which I am sure it will receive with acclamation.

Question put and agreed to.

Bill accordingly read the Third time and passed.