Corporate Taxation (Spare Capacity) (Hansard, 17 December 1981)

§ 6. Mr. Latham
asked the Chancellor of the Exchequer whether he will take into account in formulating proposals for corporate taxation the level of spare capacity at which British industry is currently operating.

§ Mr. Bruce-Gardyne
In formulating the forthcoming Budget my right hon. and learned Friend the Chancellor of the Exchequer will take full account of the position of British industry.

§ Mr. Latham
As, in view of the level of unemployment, industrial capacity and consumer demand are clearly not satisfactorily balanced, will my right hon. and learned Friend endeavour, in preparing his Budget, to make further progress towards honouring Conservative promises about lower taxation?

§ Mr. Bruce-Gardyne
The Government would like to make further progress towards lowering taxation in next years's Budget, but it depends on progress in controlling expenditure and the problem of financing the borrowing requirement which will emerge from that Budget.

§ Mr. Skinner
Is not the main reason why the Chancellor cannot fulfill Conservative pledges to cut taxation and give pensioners more simply that the Government's unemployment policy is costing them well over £12 billion, according to the Manpower Services Commission, which is a greater sum than the PSBR? Would it not make good business sense to cut the number on the scrap-heap and thus have more money to take the measures that we should like the Government to take for pensioners and so on?

§ Mr. Bruce-Gardyne
The Government are as keen as anyone to see unemployment reduced, but it will come not from so-called reflation but only from the restoration of the competitiveness of British industry, with which we are making great progress.

§ Mr. Heddle
When formulating the Budget proposals, will my hon. Friend consider that the service sector, at least as much as the manufacturing sector, is capable of playing its part to reduce unemployment? Therefore, will he consider extending the industrial buildings allowance facility not only to the manufacturing but to the service sector?

§ Mr. Bruce-Gardyne
My right hon. and learned Friend would entirely agree that the service sector has a vital role to play in economic recovery, but I ask my hon. Friend to await his Budget Statement.

§ Mr. Robert Sheldon
Does the Minister agree that one way in which our capacity is being reduced is by firms closing and selling machinery to others in more successful countries? Is he aware that in Tameside, an area of small manufacturing companies, in the past two years one in four 439 firms has closed, which shows that the Government have done more damage to industry than any other force, internal or external?

§ Mr. Bruce-Gardyne
I am afraid that what did most damage to industry was the enormous growth in earnings that took place during the period when the right hon. Gentleman had a hand in our affairs and which was quite unconnected with improvements in output and had to be taken out of profits. That is what we are paying for today. I remind the right hon. Gentleman that we have provided small and start-up businesses with the most generous tax package available anywhere in the world.