§ 9. Mr. Strawasked the Chancellor of the Exchequer what evidence he has that the opportunities and incentives provided to business and to individuals in his 12 June 1979 Budget are working as intended.
§ Sir Geoffrey HoweThe large income tax cuts in my first Budget, together with later improvements in the taxation of enterprise, have greatly helped business and industry.
§ Mr. StrawIs the right hon. and learned Gentleman aware that he is the only person in the House who believes that answer?
§ Mr. Marlow indicated assent
§ Mr. StrawWill the right hon. and learned Gentleman publish in the Official Report details of the evidence that suggests that these incentives are helping business? Is the absence of such real evidence the reason why the Chief Secretary came out with his extraordinary about-turn before the Conservative finance committee on Monday? For the third time, will the right hon. and learned Gentleman confirm or deny that the Chief Secretary said that the time had come to abandon monetary targets in favour of a flexible policy to help meet the grave economic recession? Did the right hon. Gentleman use those words?
§ Sir Geoffrey HoweMy right hon. Friend will no doubt answer the question himself if he has the opportunity to do so. [HON. MEMBERS: "Get up".] However, I am 1060 happy to repeat his assertion that he did not use those words. The Government, including my right hon. Friend as much as myself, are committed to the maintenance of firm monetary policy by the measures that we have outlined.
I turn to the proposition underlying the hon. Gentleman's supplementary question. Far from it being the case that nobody in the House believes what I have said, I am happy to cite the support of the right hon. Member for Stepney and Poplar (Mr. Shore), who in a distinguished lecture that he gave about two years ago said:
financial incentives … play an important part".He went on to pay tribute to the record of the Government of whom he was a member by saying:in the last four years … the whole nation has been enmeshed … far more deeply in the tax net than anyone planned or indeed wished.The Government are undoing the net that that Government created.
§ Mr. Beaumont-DarkIs my right hon. and learned Friend aware of the considerable unease of manufacturing industry in the interpretation that the Revenue is placing upon his excellent idea of helping industry with the new stock relief scheme? I can quote a company that may lose £8 million as a result of the new scheme, which is supposed to help manufacturing companies. If companies suffer losses in this way, will my right hon. and learned Friend examine the scheme and consult the Revenue to ensure that the benefit accrues not only to storage and service industries but to the sector that needs most to benefit—namely, manufacturing industry—which, I believe, was his intention?
§ Sir Geoffrey HoweI am happy to confirm to my hon. Friend the Government's concern for manufacturing industry and the need to restore success and profitability in that part of the economy. The stock relief changes that I announced were designed to provide that sort of help. A substantial part of the help that is intended to result from the changes is designed to go to manufacturing industry. My proposals were deliberately put out in consultative form. The Revenue will be prepared to listen to representations from my hon. Friend or anyone else. It is not possible to give an assurance that the changes are bound to have an automatic effect of the same sort in every company. There are different circumstances in different cases.
§ Mr. StoddartDoes the right hon. and learned Gentleman recall that before the 1979 election he and his right hon. Friend the Prime Minister held out as their main incentive the prospect that they would leave more money in people's pockets for them to spend as they wished? Is it not a fact that over these past 18 months people have had less money left in their pockets to spend and that they are having to spend out more of it in higher prices, higher VAT and other increased taxes on products?
§ Sir Geoffrey HoweNo. The proportion of tax being raised by the direct tax system is lower now than when we came into office. The change was designed precisely to give people a greater choice as to how they spent their money.