BASIC RATE LIMIT, HIGHER RATE BANDS AND INVESTMENT INCOME THRESHOLD

HC Deb 12 July 1983 vol 45 cc782-812 4.45 pm

Mr. Cook

I beg to move amendment No. 2, in page 1, line 17, leave out `f14,600' and insert '£12.800'.

The Chairman

With this I understand that it will be for the convenience of the Committee to take the following amendments: No. 3, in page 1, line 25, leave out '£7,100' and insert '0,250'.

No. 4, in page 2, line 2, leave out '£14,600', and insert `£12,800'

Mr. Cook

The Committee wil be aware that I quote myself sparingly, but I cannot resist at the outset of our deliberations referring to my intervention last week when the Chief Secretary was moving Second Reading. I said: Before the Bill goes through the House, can he assure us that he does not intend to come back in the autumn with panic measures to cut public expenditure". As hon. Members who were present will recollect, I received the following reply: I hope that panic measures will not characterise this Administration."—[Official Report, 6 July 1983; Vol. 45, c. 283–4.] I did not have to wait long for the panic measures. [HON. MEMBERS: "They were not panic measures." ] I shall come to the definition in a moment. I did not have to wait until the autumn, as I expected when I made my intervention. It was not even possible for the Bill to get through the House before the Government came forward with measures to cut public expenditure, and we know that they were panic measures. First, we know that the Cabinet was bounced that morning into agreeing to a sum of money without any idea how it was to be found or what would be cut to find it. Secondly, when we pressed the Chancellor at Treasury Question Time that afternoon for a copy of the statement that he was due to make to the House the same afternoon, he said that the statement was not yet written. If that is not evidence of panic measures, I do not know what the Government would characterise as cool, calm and deliberated measures.

There is an entertaining consequence. What panicked the Government and drove them to those measures was their anxiety to convince the City that everything was all right. As inevitably is the case with panic measures, they convinced the City that something was wrong. We understand from the briefing that the Chancellor gave to the press that there were two reasons for the measures—first, to stop interest rates rising and, secondly, to deal with his difficulty in selling gilts on the market. But what happened the next day? Interest rates rose by 0–25 per cent. and the price of gilts fell.

I asked the Chief Secretary that question not to ascertain whether the Government would cut public expenditure in panic or with dignity, but to ascertain whether, in their judgment, they felt that they could afford the tax handouts provided for in the Bill, most notably in clause 1. The answer the next day was clearly that the Government, in their judgment, could not afford the handouts proposed in the clause.

I see from The Guardian today that the Chancellor has been expressing the same view in Brussels. He is quoted as having said: We will reduce taxation as soon as we believe we have the headroom to do so … But to talk about it now is inappropriate. The Chancellor has just said that it is inappropriate to talk about reducing income tax, but the Committee is now being invited to consider a measure which, by this clause alone, will result in a reduction of tax of £280 million, all of it going to the better-off section of the population.

On Wednesday we were told by the Chief Secretary that the Government could afford the handouts to the rich. On Thursday the Chancellor told us that the Government could not afford a similar sum to maintain public services such as the health services to the sick and the disabled. On Tuesday, having hit the weak and the vulnerable by cutting their services, the Financial Secretary is presumably about to tell us that the Government can, after all, afford the handouts to the rich. That conjunction of statements is an insult to the intelligence of the Committee.

Let no one be in any doubt that we are dealing with the better-off section of society. Those who are caught by the investment income surcharge, after this clause is agreed, will only be those who have interest-bearing assets worth £70,000. Those people, on the whole, with doubtless the odd exception, are the better-off members of society.

The same is true of those who are caught in the higher rate tax bands. When we debated this matter on 11 May, shortly after the announcement of the election, the then Chief Secretary, who has been summoned to a higher plane, attempted to belittle the income of those who were caught in the higher rate tax bands. He produced the interesting statistic that it would be possible for a married couple, in which both partners were working, to be caught in the 40 per cent. tax band if they both received—and I quote his own definition—"the average male wage".

That is a curious statistical concept. On the whole, one does not find two males married to each other, and even when one does, they are not allowed to claim the married man's allowance. It would be more realistic to contemplate the average couple of a male and female receiving the respective average income, which would leave them comfortably below any of the higher rate tax thresholds. There was, of course, another equally unrealistic assumption in that interesting example, in that the couple received no other form of tax relief whatever, other than the tax allowances. They had no mortgage, insurance or superannuation payments. In reality, virtually everyone caught in the higher rate bands would have at least one, if not all, of those tax reliefs.

The Inland Revenue statistics show that the people in the higher rate tax bands, the people affected by this clause, are the top 4 per cent. of all top taxpayers, and an even smaller proportion of all income earners. They total 820,000. I am indebted to the Financial Secretary for his reply of 11 April, giving a breakdown—as near as we can get one—of what they earn: 200,000 earn over £25,000 a year; 500,000 earn over £20,000; and only 120,000 of them earn less than £20,000. It is not possible to segregate them from the million who earn between £15,000 and £20,000, but as there are only 12 per cent. of the total number in that band, it is reasonable to assume that they are not far below £20,000.

Those sums measure a salary that leaves the recipient, by any normal definition, comfortably off. We could use another measure —a measure that I am sure will hit home to all members of the Committee—in that each of those whom we are considering and each of those who is affected by the clause earns more than Members of Parliament earn. In saying that, I am not suggesting a new tax principle that the threshold for the higher rate tax band should be set just above a Member of Parliament's salary, although that principle may commend itself to the Committee. I advance the principle because we can now assert with some confidence—

Mr. Ridley

The hon. Member for Livingston (Mr. Cook) is suggesting that Members' salaries should be set just below the higher rate tax threshold. That is how what he says could be interpreted.

Mr. Cook

I suspect that if the Financial Secretary is offering to negotiate with me across the Dispatch Box, I would be well advised to seize what he is offering with both hands, because it is likely to be well in excess of anything that the Chancellor of the Exchequer will allow US.

That brings me to the point that I was coming to: the vigorous and vehement opposition of the present Chancellor of the Exchequer to implementing the proposed increase in salaries of Members of Parliament. [HON. MEMBERS: "Oh."] I see that one or two hon. Members share his opposition to the increase. There is, of course, force and reason behind that opposition, if we accept that Members of Parliament are intolerably overpaid and that any increase would be an offence to human decency. If the Chancellor of the Exchequer urges that view of Members' salaries, he cannot then turn round and say that those who are earning even more than those bloated Members of Parliament deserve our sympathy for the modest incomes on which they are forced to survive, subject to penal rates of taxation.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

As the hon. Gentleman has drawn so much attention and expressed so much bitterness to the pay of Members of Parliament, will he say where he stands? Does he believe that Members of Parliament should take a bigger increase than the man in the street or not? The hon. Gentleman seems very virtuous. How virtuous is he for himself?

Mr. Cook

If the hon. Member for Birmingham, Selly Oak (Mr. Beumont-Dark) reflects on what I said, and if he reads it tomorrow in Hansard, he will see that I spoke without a taint of bitterness. Indeed, I find the contradiction into which the Treasury Bench is forced mildly amusing. I accept entirely that Members should get the rise enjoyed by the man in the street, and no more, and should get it each year and not every fifth year.

There are two other reasons why those who find themselves among those 820,000 can live without an extra sou. The first is that they are precisely the people who have benefited most from the tax policy of the last Government. That Government came to power on a pledge that they would take the poor out of tax, and succeeded in doing so only by taking 2 million of them out of work altogether. Those who managed to remain in work, and receive average income, have seen the tax burden go up, not down. A married couple with no children—I take that example to avoid the controversy about child benefits—have seen the proportion of their income paid in income tax and national insurance contributions go up by 4.5 per cent. By comparison, the married couple with no children earning five times the average income have seen their tax burden, similarly measured, go down. Nevertheless, the latter group is singled out for the most favourable treatment in this Bill, even judged in the context of the predecessor Bill that we considered before the general election.

When we debated this matter on Second Reading, the Treasury Bench attempted to persuade us of its neutrality of treatment of the basic rate taxpayer and the higher rate taxpayer, because they both had increases in the thresholds of 14 per cent. I am sorry to say that that increase of 14 per cent. in both thresholds is not neutral in its effects on the different groups to which it applies. The total package benefits those who are in the higher income groups primarily because the increase in the national insurance contributions does not bite with equal neutrality across all income groups. The operation of the upper ceiling in the national insurance contribution means that it affects least those who earn most.

I am indebted to the Institute for Fiscal Studies for having worked out the real benefit of total Budget package, including the national insurance contributions, the increase in the basic rate threshold and the increase in the higher rate threshold. The figures show that if we take the example of an average household on average income, that household has received from the Budget package 83p real benefit—that is, over and above indexation. It is equivalent to 0.66 per cent.—two thirds of 1 per cent. —of its net income. On the other hand, a household with five times the average income has benefited in real terms from the Budget package by £11.32 per week. That is 2.21 per cent. of its net income. In other words, the households that have done best in the past under this Government's tax policies are the households that do best now, despite the apparent neutrality of the proposals on the tax thresholds.

There is a second reason why we may perhaps withhold our sympathy. The highest marginal rates are no longer those paid by the highest income earners. The highest marginal rates are now paid by those with the lowest income. This Government began their life after the previous general election by abolishing the highest rates. They reduced the 83 per cent. band to 60 per cent. I remember the then Chief Secretary, now the Leader of the House, justifying that cut—and I quote his words—"on humanitarian grounds".

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Following the abolition of the 83 per cent. tax rate there is only one group in society that now pays a marginal rate in excess of 60 per cent. It is not the top deck of income earners; it is the bottom deck. Anyone at the bottom of the income heap who finds that he is subject both to income tax and to loss of family income supplement for each pound paid will now find that he pays a marginal rate of tax on every pound that is earned, not of 30 per cent., nor even 39 per cent., which is the joint national insurance contribution and standard rate of taxation, but 89 per cent., which takes into account the 50p per pound that is lost in family income supplement.

The Government have acted heroically to cut the higher rate tax band. If the clause goes through unamended it will take out of the higher rate tax bands 25 per cent. of all those liable to the tax. Yet at the same time that we have legislation in the Finance Bill to reduce the numbers liable for higher rates of tax we have seen the Government's policies driving more and more people into the poverty trap so that the numbers in that trap over the past four years have doubled.

I am indebted to the Treasury and Civil Service Select Committee for the calculation that there are now seven times as many households caught paying a marginal rate in excess of 60 per cent., because of the joint operation of the tax system and the means tested benefits that they lose, as there are well-off households paying the 60 per cent. higher rate of tax in the upper higher tax band rate. That grotesque contrast is an offence to reason, to our social conscience and to those caught in the poverty trap from which they find that they cannot escape.

If there were a humanitarian case for cutting those higher rates of tax, plainly there is a far stronger humanitarian case for concentrating our resources to help most those who earn least rather than those who earn most. Here, I am bound to refer to the remarks of the Financial Secretary at the end of the Second Reading debate last week. In the course of those remarks he sought persistently to belittle the sums involved in the Bill. He offered us the calculation that were we to save all the money that is given away in the Bill it would amount to only 0.25 per cent. of an increase in the basic rate threshold.

Let me try to disabuse the Committee of the belief that £280 million is a mere bagatelle. The £280 million which is at stake in the amendment would enable us to increase child benefit by 50p per week. That is the single most constructive and positive way in which we could reduce the poverty trap, as the Treasury and Civil Service Select Committee has pointed out. If that were felt inappropriate, it would enable us to extend the long-term rate of supplementary benefit to the long-term unemployed—those who have been unemployed for over a year, half of whom have been unemployed for over two years—who find that however long they are unemployed they continue to receive the short-term rate of supplementary benefit. Not only would it enable us to do that but it would leave us enough to increase the standard rate of unemployment benefit by 5 per cent.

Alternatively, we could use the money to give the pensioners the 2 per cent. of which they are being defrauded by the fiddle in the uprating calculation this year. Indeed, not only would it give the pensioners the 2 per cent., equivalent in their case to one week's income, it would also leave us enough change to improve the Health Service.

I am conscious that there is no point in my appealing to the heads of Conservative Members with the case for increasing child benefit in order to abolish the poverty trap. It may be no use appealing to their hearts with the case for increasing the pension to improve pensioners' living standards. Therefore, let me appeal to the real decision-making centre. Let me appeal to their guts. Let me put this contrast to them. If we carried these amendments and stopped the Government giving away £280 million to the top 4 per cent., they could save the £230 million of cuts that have just been imposed on the defence budget. Yes, indeed, they could employ 20,000 more soldiers or buy a frigate and a half. That is the scale of the resources that we are discussing this afternoon.

I wince at having to reduce the debate to terms to which Conservative Members can relate, but such a task is necessary to expose the full absurdity of what the Government are doing. In one and the same week they are telling us that they do not have the revenue to support the welfare services, about which they care, nor to maintain their most cherished defence priorities. At the same time they have the room to disburse this largesse to the top 4 per cent. of the population.

It is only one month since we concluded our last Parliament. In the month in which this Parliament has sat, the Treasury Bench is well on course for sustaining the reactionary record of its predecessor. The previous Government, in their period in office, took from the poor a total of £2,680 million. They did that by taking £2,030 million in social security cuts and by taxing unemployment benefit, which brought them in another £650 million. The Government also cut the higher rates of tax, investment income surcharge, capital gains tax and capital transfer tax. Through the total of those cuts on the wealthy they gave away a total of £2,600 million.

There is a precise correlation between the sums that the Government took from the poor by cutting social security expenditure and the sums that they gave to the rich by cutting the taxes on them. It is a precise correlation which is accurate to within 3 per cent. of both sums. The Treasury Bench is in danger of becoming nothing other than an organised conspiracy to pauperise the poor in order to line the pockets of the rich. The intrusion into our proceedings on the Finance Bill of last Thursday's statement, in which they admitted that they could not find the money to maintain welfare services, exposes that conspiracy to full view. Therefore, the Opposition will take even greater relish in voting against the this squalid measure tonight than we did in voting against it last week.

Mr. J. Enoch Powell (Down, South)

The Committee is engaged in an unusual if not a unique operation, the nature of which was explained in a point of order of remarkable lucidity by the hon. Member for Livingston (Mr. Cook). It is engaged in an operation whereby the Opposition seek to increase the charge upon the public by way of income tax, taking advantage of what, in the course of proceedings upon a Finance Bill, is, as the hon. Gentleman explained, a quite exceptional conjuncture.

There are two reasons which might justify such a step. It was upon one of those that the hon. Gentleman placed the principal weight of his argument, though at several points he glanced at the other ground. It is on the latter that I wish principally to rely in supporting the amendment that he has just moved.

The ground upon which he justified taking advantage of his opportunity was the inequity of the proposed application of a given quantum of resources deemed to be available either for expenditure or for the relief of taxation; and he argued at length the inequity of the method that had been chosen in the clause to which his amendment relates. That point was made by the Opposition at several earlier stages in our proceedings on the Bill and no doubt it will be further illustrated before we vote on the amendments.

However, ever since the Bill entered its Committee stage — and certainly since it received its Second Reading—the other ground has moved sharply into the foreground of the economic scene and of political decision. We have learnt what some of us had been suspecting for months—that the Government's monetary and budgetary calculations are going awry. At the end of April, I invited the Chancellor of the Exchequer to provide me, in a written answer, with the information corresponding to that which he had provided in a similar answer a year before. The written answer of the year before contained the assurance that in 1981–82 the Government's borrowing will have been fully funded by sales … to the non-bank private sector."—[Official Report, 16 March 1982; Vol. 20, c. 63.] In other words, there had been no requirement of borrowing net from the banks in order to meet the Government's needs in the financial year 1981–82.

When I studied the reply that I received from the Chancellor in April, I noted that there was no corresponding observation. I concluded that if he had been able to make so satisfactory an observation, he would certainly not have failed to include it in his answer. So remarkable did I think that, and so significant for those engaged in watching the Government's operations, that I took the liberty of bringing it to the attention of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), though at the time, the right hon. Gentleman may not have been fully seized of the potentiality — or perhaps on ideological grounds, he did not find the observation as useful as I found it.

At any rate, we know that the Government had been finding difficulty in funding their borrowing requirements even before the end of the previous financial year, and have learnt that that difficulty has rapidly increased during the past two months, and is still increasing—so fast that the Chancellor of the Exchequer was fain to come to the House last week to make a statement that must have been disagreeable to him, and even more disagreeable for his Cabinet colleagues to support. It bore witness to the Government's anxiety about their inability to meet mounting requirements without an excess borrowing from the banks.

In that predicament, there were—as always—two courses for the Government to take, or a combination of both: they could operate upon the expenditure side, or upon the revenue side, or upon both. Before I consider what they chose to do—part of it is before us now—I must draw attention to a recurrent feature in recent political history that appears to be building up to the dignity of a law of politics. On three successive occasions, Conservative Administrations have made the mistake of premature reductions in taxation immediately upon being returned to office. There was the episode at the beginning of the Aministration of the right hon. Member for Old Bexley and Sidcup (Mr. Heath)—that of Lord Barber's `jolly jolly sixpence', when the incoming Government rushed into tax reductions — minor, but premature —which preluded the inflationary difficulties that were destined to drive that Government on to shipwreck.

When the Conservative party was again returned under it present leader in 1979, it plunged into tax reductions in its first months of office before even it had laid out the lines of its budgetary policy for the expected four years of Parliament, before even it had taken the measure of the difficulties which confronted it in achieving control over borrowing.

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One would have thought that the lesson the Conservative party was taught in the previous Parliament would at least have carried over to this. One would have thought that the recent experience of the years 1979 to 1980 — which had to be dearly paid for before the Government could recover the position in 1982–83 — would have been a sufficient lesson. But no. The intoxicating effect on an incoming Conservative Government of success at the polls appears by some law, or at least some governing tendency in politics, to drive them into premature and excessive tax reduction.

Mr. Tony Marlow (Northampton, North)

Why is the right hon. Gentleman putting this measure across as though it were a sort of tax reduction that the Government have just brought forward? The right hon. Gentleman knows, as the whole Committee knows, that it has been part of the Government's budgetary policy throughout the year. That is the policy on which the Government went to the country and it is a continuation of what the Government have stood for. If there has been extravagance in public expenditure, and if certain programmes have overrun, is it not better that the Government should keep the lid on public expenditure? Otherwise, the lesson to those in spending Departments is that if they spend more, the Government will tax more. Is it not better that the spending Departments should be battened down and kept within their limits?

Mr. Powell

If that line is adopted, it might be argued that one should not increase one's difficulties at the same time by a reduction in taxation. It would be one thing to hold out to the public the prospect that as a reward for fiscal and monetary probity consistently pursued during the lifetime of a parliament, they will be taxed less at the end than at the beginning; but in the previous Parliament it did not work out that way. For the Government to give the public a tax reduction at the start and then tighten up and see whether they can achieve probity seems to be the wrong way of going about it.

The situation is the more remarkable in that we are now going about things the wrong way for the third successive time. The Government are faced with a rapid increase in their borrowing needs which they find themselves unable to fund by borrowing from the public. They know perfectly well that the consequences of that for the future course of inflation—although the reasoning behind that deduction is not always accepted on the Opposition Benches, I notice that the conclusion is accepted implicitly —are that we face the danger of an increase in the level of inflation. Now is exactly the wrong time for the Government to increase their difficulties by persisting in giving tax reductions at the earliest possible moment. It turns out to be a singularly unfortunate moment; indeed, even before the election, it was becoming clear that it would be unpropitious.

The hon. Member for Livingston (Mr. Cook) was right when, addressing himself with some reluctance to what he regarded as the susceptibilities of the Treasury Bench, he pointed out that in the package of £500 million of cuts plus £500 million of sales—the first instalment of what is to come that was revealed to us last week—there was contained an act of choice by the Government. One alternative was to persist with the tax reliefs and try to offset them with hoped-for reductions in public expenditure. The other was to follow the course of probity itself and not to enjoy the tax reductions until they had, according to the Government's philosophy, been earned by the Government's ability to borrow without creating inflation to fund debt.

It will be insufficient excuse for the Government to say, "We didna' ken." It will be insufficient for them to say that they did not know when they reintroduced the Finance Bill with its tax remissions at the end of the last Parliament. The Government already knew before the general election that they would be in trouble. Yet, knowing that, they repeated their old mistake of premature remissions in taxation and increased the difficulty of funding debt.

There are two sides from which the equation can be handled—from the side of revenue and from the side of expenditure. It is a melancholy fact, but a fact nevertheless, that one of those can be handled much more swiftly and surely than the other. I leave out any political considerations by which the House Committee might be divided; but one thing is certain—one can operate much more surely and rapidly to restore the revenue than one can operate to reduce the total quantum of public expenditure. That should not need stressing after we have lived through a whole Parliament when a Government bent upon reducing in actual as well as relative terms the quantum of public expenditure, found that with all their endeavours they were unable to do so by the end. How much more must it be clear, therefore, that if one has to act speedily and efficiently it is upon revenue that one must act? The Government took the opposite decision. They decided not to act upon revenue. They decided that the reductions in the yield of revenue should be maintained and that an intention to go shopping for cuts across the whole of the public expenditure should be announced—an operation not unknown to Chancellors of the Exchequer and not particularly distinguished for its success in the past.

Whatever objection of inequity can be brought against the clause to which this is the maximum permissible amendment under our rules of order and procedures, it must be said that it is improvident to persist with it in the financial circumstances, of which the evidences are undeniable, and of which admission was made by the Chancellor of the Exchequer in his statement to us last week. So not only those who object to the inequity should support the amendment. Those who know and have frequently explained the dangerous consequences of running into unfunded debt should support the amendment too.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I associate myself with the remarks of the right hon. Member for Down, South (Mr. Powell) when he complimented the hon. Member for Livingston (Mr. Cook) on his lucid explanation of the procedural difficulties confronting the Committee. I have seen the hon. Gentleman demonstrate that ability before. It will serve him well when he is required to put an intellectual veneer on the Labour party. It is plainly necessary for someone who is a novice on taxation also to become an expert in procedural Committee party wrangling. I am grateful to the hon. Gentleman for his explanation.

The alliance faces difficulties because we would have preferred a debate based upon our amendments. We were denied that opportunity because of procedural difficulties. I am told by my Chief Whip that I shall have to become accustomed to the difficult choice between following the Financial Secretary or the hon. Member for Livingston through the Lobby. It is a choice between the red devil and the deep blue sea. I can say with confidence that my colleagues will follow the lesser evil and proceed through the Lobby behind the red devil, the hon. Member for Livingston.

You, Mr. Walker, have an unenviable task in identifying about 150 new hon. Members. I am sure that the Government will spare you future difficulties by introducing a sensible electoral system. The first-past-the-post system is as capricious with policies as it is with personalities. If we had a sensible system involving single transferable votes and multi-Member constituencies, you, Mr. Walker, would be spared such difficulties.

Although this is my first speech in the Commons, I am no stranger to the precincts of the Palace of Westminster. Thanks to the philanthropy and the assistance of the Joseph Rowntree social service trust, in 1971 I was granted a fellowship that enabled me to serve under my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) in his previous incarnation as the right hon. Member for Roxburgh, Selkirk and Peebles when he was party Whip between 1971 and 1975. I am pleased to be able to return to the House and to renew many valued friendships among hon. Members, Officers of the House and the staff. It is a great pleasure for me to be here.

I have the honour to represent an entirely new constituency created by the Boundary Commission, which has at least realised the impossibility of having one parliamentary seat encompassing Hawick and Galashiels in an area that takes its rugby almost as seriously as its religion. It is a relief not to have to make the impossible choice between the two clubs. Since the better team—Hawick—falls to me I have the best of the bargain. My right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale may take a different view. The argument will, no doubt, be resolved in the coming seasons on the terraces at Mansfield park and Lauderdale

The two districts of Roxburgh and Berwickshire have been represented in Parliament by remarkable men. The late and much lamented John P. Mackintosh represented Berwick district as part of his former constituency of Berwick and East Lothian, before his untimely death in 1978. He was a man who demonstrated eloquence, learning, wit and integrity. His influence and inspiration extended outwith and beyond the reaches of his political party. He was an inspiration to a generation in Scottish politics.

The by-election after his death was won by the present hon. Member for East Lothian (Mr. Home Robertson) who has quickly and effortlessly assumed the Mackintosh mantle. He too has a reputation for being honest and sticking to his political beliefs.

The Roxburgh district was formerly represented by my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale, who has been a close friend and mentor for 10 years. I look forward to many happy years working with him to further the best interests of the Border area and the country as a whole.

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I could rehearse at some length the considerable beauty and history surrounding the former royal burghs and principal towns of Roxburgh and Berwickshire. The principal towns of Roxburgh are Hawick, Jedburgh and Kelso, and of Berwickshire, Eyemouth, Duns, Churnside and Coldstream. But there are great problems in those areas, and rather than rehearse the more romantic aspects of the areas I shall stress the problems that they face.

My constituency suffers severely from a combination of two disadvantages. First, because of the Government's stringent cutbacks in the industrial area and through the withdrawal of industrial development status from the Border region in August 1982, industry and commerce suffered a severe blow and are at a considerable disadvantage when trying to attract inward investment. Secondly, the public expenditure cuts have savagely attacked the infrastructure of the Border region. I shall make it my business in the coming years to redress that disadvantage. Similar difficulties are being experienced in light engineering, food processing, paper making and the other small craft industries. The agricultural service and fishing industries have suffered severe economic trauma during recent months and years.

In his maiden speech in April 1965, my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale referred to depopulation in the Borders during the census period 1951–1961. I was privileged to serve as a census officer in the Roxburgh district during the 1981 census. It showed a small but significant increase in the overall population of the area. It also showed clearly that there had been a significant decrease in the population in the landward areas of the region. There had been a 6 per cent. increase in the size of populations with 500 souls or more, and a decrease of 11 per cent. in the population in the landward areas. Unless the Government take urgent action, the Border area will suffer a period of rural decline and deprivation.

The Scottish Development Agency has done a great deal of good work, but it is not an appropriate vehicle for the area. It has proven its worth in urban areas such as the central industrial belt, but the Government must face the problems of rural development in a different way. I am pleased that both Strathclyde regional council and the Border regional council now agree that we need a new status of development area. A rural development status should be specially drawn up to take account of the real and urgent needs of the area. During the coming weeks and months I shall press for such an agency.

I wish to say a few words about the business before the Committee. The people in the Border area, almost to a man, are in the low wage-earning category. They are mainly involved with the agriculture industry, which is notorious for its bad wages. The provisions that the Committee is discussing are vital for people in my constituency. The Liberal party has a distinctive policy which it has promoted for many years. The Committee will not be surprised to learn that the Liberal party is in favour of a total reform of the tax, rates and benefits system. We would move as quickly as possible to a system of tax credits, which would remove anomalies and provide a fairer overall system.

A reduced rate band should be introduced to lessen the injustice of those liable to tax at the world record rate, including national insurance contribution, of 39 per cent. The principle of indexation may be reasonable, but although we would accept a 5.5 per cent. indexation, a 14 per cent. indexation on top of the increases in personal allowances is wholly unacceptable. It will shift the burden further from the shoulders of the rich to the backs of the low-paid.

As I said earlier, my Chief Whip warned me that the Liberal party would eventually have to make the choice between the red devil and the deep blue sea. After due consideration, we shall reluctantly follow the red devil, the hon. Member for Livingston, into the Lobby tonight.

Mr. David Winnick (Walsall, North)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on his maiden speech during the Committee stage of a Finance Bill. He spoke with confidence and fluency. I am sure that he will advance his arguments on many other occasions.

The right hon. Member for Down, South (Mr. Powell) said that he supported the amendment moved by my hon. Friend the Member for Livingston (Mr. Cook). He was critical of the Government and lectured them for not having learnt the lesson of previous occasions when they gave tax relief. I say with all humility to the right hon. Gentleman that he may not recognise enough—he has perhaps always underestimated this in his long political life — the issue of class. The reason why the Government are using the first possible opportunity to reduce the tax rate for the rich—the 3 or 4 per cent. highest earners—is simple and clear. They consider that they have an obligation to such people because they represent them. It does not come as any surprise to Labour Members that the Government are acting as they did previously. Perhaps the right hon. Gentleman underestimates class because of the territory that he now represents. On the mainland class divides the main political parties and is likely to do so for some time to Come.

The House debated the Bill's Second Reading last Wednesday, and the Opposition strongly criticised then, as we have done today, tax cuts of £280 million for the well off. On Second Reading the Government said that the cuts were in order and the country could afford them. Yet the very next day, the Chancellor of the Exchequer came to the House to explain the need for further cuts in public expenditure. That was only a day after the House agreed, on a Government majority, to tax cuts of £280 million for the richest people.

Press reports show that the City is not satisfied with the Chancellor's cuts. The signs are that when the House returns after the recess—or even before it rises—there will be a further statement from the Chancellor to the effect that, because of the state of the economy, there must be further cuts on a much greater scale than those he announced last week. I doubt that any Conservative Member can challenge me on that point. Yet we are today discussing whether the richest 3 or 4 per cent. of taxpayers should receive reductions in their tax liability which total £280 million.

As my hon. Friend the Member for Livingston argued, if such cuts are to be allowed, and if there is to be any justice—not that I expect justice from the Government—we would ensure that the poorest were relieved of much of their tax liability. People on very low incomes should not be in the tax bands at all. The needs of those who live on the smallest incomes are far greater than those of the 3 or 4 per cent. of income tax payers whom we are now discussing.

There is more than a possibility that next year, in 1984, unemployment benefit and perhaps short-term supplementary benefit will not be increased in line with inflation. That will mean hardship not only for the unemployed but for families, for the young children of families where the head of the household is unemployed. What possible justification, except class politics and the organised conspiracy that my hon. Friend the Member for Livingston correctly pointed out, is there for taking the measures that the Government are advancing again today? The cuts to which I have referred could take place within 12 to 18 months.

Many retired people rely entirely on the state pension and supplementary benefit—I refer to the retired in our community who do not have private provision and who must rely on the amount that they receive from the state. They will receive an increase this year of just over 3 per cent. If there is to be a priority and if there are ways in which the Treasury can help, the pensioners should be assisted.

But we know that those who least need assistance will get it while those in the greatest need will receive no assistance at all. It is likely that some of the people in the latter category will face cuts in their living standards and cuts in services which will undoubtedly affect them in many different ways. Once again a Conservative Government are using their majority in the House of Commons to advance the interests of the richest and most prosperous. I wonder how many Conservative Members will benefit from the measures that will be taken. How many of those Members will vote against the amendment because it would be against the interests of their pockets to oppose what their Government are doing?

We often hear criticism of class politics and of trade union leaders who talk about extra-parliamentary action, but the Government are demonstrating once again that the Tory party represents the interests of the rich and that whenever it has a majority in the House of Commons—after 1979 and now — it will use that majority to advance the interests of its class and the people whom it is in politics to represent. When one considers that all those other people in the community who are in desperate need of assistance will not get anything of the kind, one recognises how justified was my hon. Friend when he said that the Tory party is indeed an organised conspiracy for the rich. I hope that, when we do have a Labour Government, they will use their majority in the interests of the people whom they represent, the overwhelming majority of people in this country, in the same way as the Tory Government always use their majority in the interests of a small, rich minority.

Dr. Jeremy Bray (Motherwell, South)

I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on his maiden speech. It is a pleasure to welcome to the Committee another hon. Member from north of the border and, if I may say so, a chocolate soldier into a later incarnation. It is a breed of which I think we will see increasing numbers. I would regret it if too many Members were to follow his career path, but we shall value him for his uniqueness while he is here.

The Financial Secretary will, I hope, carefully consider the impact of our amendment on one of the most absurd anomalies in the tax system — the reduction in the marginal rate of tax as the income of the taxpayer rises through the upper limit for national insurance contributions. At that point, the marginal rate of tax falls from 39 per cent. to 30 per cent. and then afterwards rises to 40 per cent. Had the Government implemented something like the Opposition's amendment, there would have been a transition to the 40 per cent. rate of tax just about at the point where the national insurance contributions come to an end. One would have removed that anomaly without raising the difficult issue of principle of whether or not one should integrate national insurance contributions with income tax and so on.

The problem with the higher rates of tax is not simply the cost of changing the system and the much greater cost of changes in the lower rates of tax but the fact that there is a logical progression. If higher rates of tax are set on a certain principle there are implications for what goes on lower down the scale. The Financial Secretary will find that he cannot achieve a sensible structure of taxation lower down unless he is prepared to see changes at the upper end of tax rates.

There is widespread feeling in the Committee that there should be a reduced rate band. I agree with my hon. Friend the Member for Livingston (Mr. Cook) that the first priority should be an increase in child benefit, but after that the priority should be a reduced rate band. That would commend itself to Conservative Members because the benefits of the reduced rate band would be felt all the way up through the incomes scale. It would not simply be an unrequited tax increase for people who moved on to a 40 per cent. rate at a lower level. What is the Government's thinking on the removal of the anomaly of the step reduction in the tax rate as income rises through the national insurance contribution upper limit?

5.45 pm

Mr. Ridley

I should like warmly to congratulate the hon. Member for Roxburgh an Berwickshire (Mr. Kirkwood) on his maiden speech. I congratulate him on choosing a debate in which he was the only maiden competing for your eye, Mr. Armstrong, which in itself is no mean achievement. I congratulate him on an attractive and eloquent speech in which he went over the history of the constituencies which, by various amalgamations, now provide for us the pleasure of his company as well as that of the right hon. hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). I am sure that the Committee will look forward to hearing him again. The hon. Gentleman told us that he had been a sheepdog to the Ettrick shepherd. The hon. Gentleman will have much to do because the shepherd is no longer looking after the sheep. We hope that, with his lack of experience, the responsibilities that fall on him will not prove too onerous.

The hon. Gentleman sought to support the economic analysis of the right hon. Member for Down, South (Mr. Powell) and then went on to advocate the Liberal scheme for tax credits. I shall refer in a moment to those two slightly inconsistent parts of what he said.

Mr. Kirkwood

I wish to make it clear to the Committee that I was following the right hon. Member for Down, South (Mr. Powell) only in so far as he was complimenting the hon. Member for Livingston (Mr. Cook) on the way that he explained the procedural wrangles before the Committee. Thus far I would go, and no further.

Mr. Ridley

I am grateful to the hon. Gentleman for making that point in that it helps me to answer the right hon. Member for Down, South, who advocated two possible grounds on which the amendment could be supported. First, he said that if the quantum of resources were moved from one place to another, that would be more equitable, the argument which the hon. Member for Livingston (Mr. Cook) deployed with his usual skill. The second ground for opposing the clause, the right hon. Gentleman said, was a monetary reason — that the monetary aggregates were awry and that the Government might even be forced to borrow from the banks.

Those are the grounds which have been argued today, but I do not believe that those who argued the first have the slightest intention of agreeing with the right hon. Member for Down, South about the second, and I know him well enough to believe that, although he argued the second, the economic ground, quite persuasively, he did not share the view of the Labour and Liberal parties about there being something inequitable in what the Government sought to do.

I shall deal with the two grounds in turn. I must at the outset tell the right hon Member for Down, South that the tax reliefs to which he seemingly objects have been in place since April, the start of the financial year, and that people have been receiving in their coding notices both this tax relief — the investment income surcharge — where applicable, and the mortgage interest increase relief, to which I shall come shortly, where applicable. Therefore, those economic forces are already at work.

If one were to decide that for macro-economic reasons those reliefs should not have been made and should now be terminated—if, after the election, that had been the first decision of the Government—one must then ask from what date they should be terminated; and presumably the only fair date would be from August, when the measure becomes law. In that event, the savings would be almost negligible. Even if the termination of the reliefs were backdated to April 1983, the beginning of this financial year, the saving from not making the investment income surcharge reduction, being zero in this financial year, and the saving from the higher rates of tax, being only £125 million, would be under half the total cost of the measure.

Mr. Campbell-Savours

"Only" £125 million?

Mr. Ridley

Much more than £125 million would have to be clawed back in 1984–85. Thus the economic effects of what the right hon. Member for Down, South appears to be supporting would be extremely small and would in effect result in a tax increase by taking away a tax relief which was already in place. Indeed, the chances of recovering £125 million during the current financial year must verge on fine tuning, considering that the total revenues of the Government are well over £100 billion in terms of economic management.

Mr. Cook

The Financial Secretary will recognise that when we press the Government for public expenditure decisions we do not find them so cavalierly dismissing £150 million as fine tuning the economy. He cannot rest any case on the ground that these reliefs have been granted since 6 April, as they have been granted without explicit parliamentary statute. We are now debating that statute and coming to a conclusion on it. Parliament is being placed in an impossible position in being asked that the Committee should agree to continue the reliefs when, without the authority of Parliament, the reliefs have been in operation for the past three months.

Mr. Ridley

I was dealing with the criticism of the right hon. Member for Down, South about the monetary consequences of the clause. The figure is not £150 million but £125 million, which is the most that could be clawed back towards the end of this financial year. Although I do not suggest that that is a trifling sum, in terms of economic management it is fine tuning; £125 million against a gross national product approaching £300 billion is well within the definition of fine tuning, first eloquently advanced by that well-known Socialist Brian Walden when he was a Member.

Mr. Campbell-Savours

The British people would say that that money would be better used in retaining public expenditure on the NHS, instead of using it to cut taxes in this way. Is the right hon. Gentleman not aware that the people support our case and oppose his?

Mr. Ridley

Those who, like the hon. Member for Workington (Mr. Campbell-Savours), believe that the people of Britain support the Labour party have had a rude knock in the last month or so. The hon. Gentleman, who was not in his place for some of the debate, may not be aware that I was dealing with the point made by the right hon. Member for Down, South. I now come to the argument advanced by Opposition Members.

The spokesmen for the Liberal and Labour parties will not remotely quarrel over a reflation of £125 million, if that is how it can be described, for economic and monetary reasons. They have been demanding far greater reflations than that. Indeed, the Liberal party wants reflation of about £11 billion and, as usual, Labour wants double that. I should have thought, therefore, that it would have got a grudging and minor welcome for monetary reasons from the Opposition.

It is clearly not that which worries them, and therefore the three Opposition parties would be uneasy bedfellows should they find themselves in the Lobby voting against the Government, because they do not agree about the reasons for being there. The reason for the Labour party's opposition to this proposal is that Labour Members feel that it is inequitable that these tax cuts should be made at a time when spending cuts must be increased. I shall come to their argument of substance, but first let us consider what they have proposed.

The hon. Member for Livingston is in some difficulty about the amendment but, as he pointed out, by a freak he can break out of that difficulty in the circumstances of the Bill and, as he put it, feel free to amend the clause as he sees fit. He therefore suggests that the thresholds for all higher rate bands should be cut back from the projected £14,600 to the £12,000 existing before the Budget. On the other hand, he would leave the band widths between the different higher rates as proposed in the Budget.

The effect of that is that for the 40 per cent. tax rate there is no increase in thresholds proposed; for the 45 per cent. band rate, there is a 2 per cent. increase in thresholds; for the 50 per cent. band there is a 4.7 per cent. increase; for the 55 per cent. band it is 7.1 per cent.; and for the 60 per cent. band it is 8.6 per cent. In other words, the hon. Member proposes that by far the biggest increases in relief should go to those with the highest incomes among the highest rates. And for those on the lowest of the higher rates—that is, 40 per cent.—there should be no increase, not even indexation. That is what the amendment says.

Let us compare the rates proposed in the amendment with the rates that were bequeathed to us. The threshold for the 40 per cent. tax rate is 8 per cent. lower, as proposed in the amendment, than when the Labour Government last introduced a Budget. It is minus 2 per cent. for the 45 per cent. rate, plus 14 per cent. for the 50 per cent. rate, plus 40 per cent. for the 55 per cent. rate and plus 56 per cent. for the 60 per cent. rate. The effect of the amendment is a sharpening of the lack of progressivity between the 40 per cent. rate and the 60 per cent. rate.

6 pm

Mr. Straw

The Financial Secretary advanced this argument on Second Reading and, with respect, he was no more convincing then than he is now. It is not significant to make a direct comparison between thresholds now and the thresholds in 1978–79 because, as he well knows, the rates have changed. The rates in 1978–79 were significantly higher than they are now.

I ask the right hon. Gentleman to address himself to the argument of my hon. Friend the Member for Workington (Mr. Campbell-Savours). How can he justify spending even £125 million on those who have already benefited by substantial tax reductions over the past four years, the richest in our society, when the Government are cutting the same amount from the Health Service moneys, which will hit the poorest and the sickest in our society? How can he justify that on the ground of morality or that of fairness?

Mr. Ridley

I am coming to the latter part of the hon. Gentleman's question. As for the former part, I must tell him that he is wrong, as was the hon. Member for Livingston when he interrupted me on Second Reading. It is true that the Labour Government had absurdly high rates of income tax that went up to 83 per cent. They also had exactly the same rates that we have now—40–45 per cent., 50–55 per cent. and 60 per cent. My argument about thresholds, and the comparison that I have made between thresholds in 1978–79 and those that currently apply, may be directed precisely to those who are paying income tax that is levied at between 40 per cent. and 60 per cent. For those who are on the 40 per cent. rate, the threshold would be 8 per cent. lower in real terms if the amendment were accepted.

If the Opposition wish to obtain £125 million this year, or more in a full year, they will be increasing the tax on those in receipt of middle incomes who are paying 40 per cent. income tax. These are people who are earning between one and three quarters and two times average earnings. If we are to index tax thresholds for those with that sort of means, the vast bulk of the yield, even that from the amendment as proposed, will disappear. It would be very much less than £125 million.

It has been proposed that we should take whatever sum can be gained by implementing the amendment we know what order of magnitude that would be but we are not arguing about that—and use it to increase the short-term rate of supplementary benefit for those who are unemployed by advancing the time when the long-term rate is introduced. The hon. Member for Livingston railed against the unemployment trap. If he is to increase taxation at whatever level to enable benefits to be increased, the only conceivable consequence is that he will make the trap more difficult to avoid. He has given a good example that was based on the best of intentions. By increasing taxation and using the additional revenue to increase benefits, he is advocating making the trap wider. He must think again about that approach. The right approach is to increase personal allowances with every penny that can be found from public saving.

Mr. Cook

The right hon. Gentleman will recollect that I suggested a variety of ways of spending the money with great effect. The first option in my list was increasing child benefit. That is not a means-tested benefit, and to increase it would diminish rather than increase the poverty trap. It would mean that the reduction of people moving from unemployment into employment would be lessened. Lastly, I asked the Financial Secretary to explain when fine tuning stops and essential economic judgment starts. Is that stage reached between the £125 million that we are discussing and the £500 million which drove the Chancellor of the Exchequer to make a statement in the House to calm the City markets last week?

Mr. Ridley

The hon. Gentleman will remember that my right hon. Friend's statement concerned £1,000 million, which is much more significant than the sum which we are discussing. We are talking about monetary consequences and Opposition Members must understand the difference between monetary arguments and arguments that are based on what is equitable in taxation. They must try to separate those arguments.

The hon. Gentleman suggested increasing child benefit. That would benefit rich parents as well as poor parents. If the poverty trap and the unemployment trap are the central worries of Opposition Members, the answer is to increase the thresholds in every way possible. That is what my right hon. and learned Friend the previous Chancellor of the Exchequer did in his Budget. He concentrated all the cash that he could on increasing thresholds. He explained that if that approach were to be equitable it would necessitate increasing all thresholds throughout the tax system. I remind the Committee that when there was a difficulty in 1981 my right hon. and learned Friend could not raise thresholds for anyone. I remember that there was much protest and concern about that. When there is a good year, it must be right to increase thresholds by an identical amount for all classes of taxpayer.

Mr. Straw

I have now had time to recover from the shock of hearing that this is a good year. If it is so good, will the right hon. Gentleman confirm that there will be no more announcements of public spending cuts for this financial year?

Mr. Ridley

I was talking about the Budget which my right hon. and learned Friend the previous Chancellor of the Exchequer introduced, when it was possible to increase thresholds by 14 per cent. across the board. I was advancing the argument in the context of the relief of poverty. The best way of helping those at the bottom of the scale is to remove them from income tax thresholds. That is my answer to the hon. Member for Motherwell, South (Dr. Bray). If thresholds are increased, many families are taken out of tax completely and more help is given to those on the lowest incomes. Those who benefit from reduced rate thresholds are in many instances not breadwinners. They are often not the heads of families who depend upon their income to sustain their families. The Labour party and the fiscal experts who have studied this issue will, I think, agree with that priority.

It has been suggested that in some miraculous way the revenue which we are seeking to take from the taxpayers should by sleight of hand be switched into some other activity—higher public spending.

Dr. Bray

Before the Financial Secretary moves on to public spending, will he answer the point about the anomaly of the reduction in the marginal rate of tax on national insurance contributions when people's incomes rise above the upper limit for national insurance contributions? Does he agree that the anomaly could have been removed if he accepted that the 40 per cent. tax band, as proposed in the amendment, had started at about that point?

Mr. Ridley

To remove that anomaly—I accept that it is, in a sense, an anomaly—would probably involve the abolition of the upper earnings limit for national insurance contributions. It would not be suitable to do that in a Finance Bill. It would require a national insurance Bill. The hon. Gentleman must remember the objections to it. The national insurance contribution is, I confess, a compulsory payment which entitles people to the benefits of the social security system. Therefore, if everyone is to pay a certain amount to qualify for such benefits, removing the upper earnings limit would make it into a tax.

Dr. Bray

I understand that there are points of principle on which different views are taken. Nevertheless, the anomaly could be removed if the Government arranged for the 40 per cent. tax rate to start near the point where the 9 per cent. national insurance contribution, in addition to the 30 per cent. rate, ceased. This could be achieved easily by incorporating within the Finance Bill a measure such as the one that we have been discussing.

Mr. Ridley

I accept that that would be possible, but one would then have to look at the distribution effects. That has not hitherto commended itself to any Government. Of course it is possible to do as the hon. Gentleman suggests.

Mr. Marlow

Perhaps I can help my right hon. Friend. It is not as simple as the hon. Member for Motherwell, South (Dr. Bray) makes out. Many other things, including the parental contribution, make an impact on people on those income levels. Many parents make the parental contribution, which is a type of tax which comes in at that income level. It is not correct for the hon. Gentleman to say that if we went in the direction he suggests everything would be fine, easy, fair and balanced. There are other considerations within the tax system which would make it not so.

Mr. Ridley

I accept what my hon. Friend says, but in suggesting any tax reform one must not be carried away by the beauty or simplicity of one's curves and profiles. One must always consider the effects on the groups involved. Some gain and others lose.

The right hon. Member for Down, South talked about the quantum of resources. I do not believe that he would regard it as a quantum of resources—be it £125 million or whatever—that can be suddenly plucked from a tax relief. I say, almost in parenthesis, that we were pledged to maintain this relief. We fought the election on the promise to bring in the Finance Bill with this clause in place. To resile from that now would involve a breach of promise.

We cannot turn that money, which is working through the economy and is in people's expectations and calculations, into cash which is available to be spent—

Mr. Campbell-Savours

rose—

Mr. Ridley

Let me complete my sentence—even if that was what the Government sought to do. That is totally irrelevant, because the National Health Service has not suffered a cut, as we have so often pointed out. The National Health Service was given an increased cash limit for this financial year. It showed every sign of exceeding that cash limit. Therefore, my right hon. and learned Friend felt that it was right to cut the totality of public expenditure to the levels which were agreed by the House when it considered the expenditure White Paper.

Mr. Straw

Does the Financial Secretary accept that the hospital service and all the health services, other than the family practitioner service, are suffering cuts? The hospital services' budgets, which are not overspent, will be cut.

6.15 pm

Mr. Ridley

I asked the hon. Gentleman to address detailed questions about the Health Service to my right hon. Friend the Secretary of State responsible for it. I believe, Mr. Armstrong, that I deserve some protection. We are now debating higher rates of taxation rather than spending on the general practitioner service. We are not suggesting cuts in the Government spending programme as a whole; we are merely suggesting returning them to the course set and approved by the House.

I hope that, with the full answers that I have given to the many points, disparate and conflicting though they are, the Committee will feel that it is right to allow the clause to remain part of the Bill and to reject the amendment.

Mr. Jack Straw (Blackburn)

I begin by congratulating the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on his interesting and eloquent maiden speech. My hon. Friend the Member for Motherwell, South (Dr. Bray) referred to part of his background as a "chocolate soldier" and I hope that it is not being too indiscreet if I relate other aspects of the hon. Gentleman's background that may be of interest. I understand from my hon. Friend that the hon. Member for Roxburgh and Berwickshire was a member of the general management committee of the Edinburgh Central Labour party. While still having his Labour party ticket in his back pocket, he went to work for the right hon. Gentleman, the leader of the Liberal party. Only subsequent to that employment did the hon. Member for Roxburgh and Berwickshire finally decide to hand in his card.

It is customary, when acknowledging maiden speeches, to be complimentary. I hasten to add that, in any event, we should have been complimentary about the hon. Gentleman's speech. Such conventions do not apply, however, when one is commenting upon speeches from old hands such as the Financial Secretary. I noticed that the hon. Gentleman joined all my hon. Friends in the feeling of incredulity at the Financial Secretary's insensitivity, at the trivial way in which he dealt with the points that have been raised, and his cavalier refusal to address himself to the two central issues at the heart of the debate. First, in terms of economic and financial policy and given the parameters that the Government have set themselves, is it sensible for the Government to be giving away major tax handouts to those who, self-evidently, do not need them, thereby boxing themselves in even more in economic terms?

Secondly, in moral terms, if there is this money within the economy to give away, is it fair and justifiable to use it on those people who again self-evidently, need it least, when other major services and groups of individuals are crying out for money and when many major services, including the National Health Service, are suffering an absolute cut in resources to be allocated to them for this year?

The debate and the events of the past two weeks have revealed to us all the extent of the profound change that has occurred in the modern Conservative party under the Prime Minister's stewardship. In the old days, when the Conservative party was run by those who are now pejoratively described as "grandees", although there was a major difference of ideology across the Floor of the House, there was an appreciation and knowledge of the condition of the poorest and most vulnerable in our society. Based upon that appreciation, comparison and a sense of fairness were factors that weighed heavily in the balance when decisions came to be made. However, today all that has changed. Of course, we all acknowledge that many Conservative Members are desparately worried about what it is like to bring up a family on £60 or £70 a week. Many more show compassion in their dealings with individual constituents. However, to be compassionate in policy terms is to be wet, and to be wet is to suffer the greatest damnation of all in the modern Conservative party.

Mr. Nicholas Soames (Crawley)

Rubbish.

Mr. Straw

If it is rubbish I invite the hon. Gentleman to vote with us.

Institutionally, in the modern macho Tory party there is no room for compassion or the appreciation of the appalling condition of many of our people. The Government do not wish to know about that condition. When they are forced to know, they do not wish to care. That can be the only explanation for the brutal remarks of the Chancellor of the Exchequer last week about the need to cut unemployment benefit and with it short-term supplementary benefit. If he and other Tory Members thought for a moment, they would realise that it is virtually impossible for a couple to subsist on unemployment benefit of £43.75. People have to live on that amount for a week. It is less than is often spent when Members of Parliament are taken out by journalists to lunch in the west end or the City. I do not exclude Opposition Members any more than I exclude Tory Members from that. Does any hon. Member believe that he could, with all the trimming and cutting in the world, live on £43.75 a week? The answer is that most of us would find it difficult to live on £43.75 a day. Tory Members would find it difficult to live on £43.75 for two or three hours. That is the reality of many Tory Members' incomes.

Mr. Marlow

Come off it.

Mr. Straw

That is the reality. Those who earn £40,000 and £80,000 are about to be given tax handouts of more than £20 a week.

The truth is that the Chancellor refuses to contemplate what it is like to be poor and out of work. He refuses to contemplate what it is like to be poor and in work. He refuses to contemplate the condition of a couple in my constituency of Blackburn who came to see me only a week ago at my surgery. That family had a total income of £68 a week. The man had to take two buses to work and two buses from work at a total cost of £6.50 a week. Because the family could not make ends meet, that man now has to walk one way to work—five miles not only in sunshine but in rain and hail. That is the reality of poverty in Britain and of the poverty to which the Government have reduced people.

Mr. Marlow

The hon. Gentleman has been savage in his attack on the Government, particularly my right hon. Friend the Chancellor of the Exchequer. My right hon. and hon. Friends wish, probably more than the hon. Gentleman, that the poor and needy in society had more money and more resources, and more to spend per week, but before they can get those resources, we have to create wealth. If the hon. Gentleman addressed himself to creating wealth, he might get somewhere.

Mr. Straw

I am delighted to hear that. However, the hon. Gentleman knows only too well that people are judged not by their words but by their deeds. The serious point that was lurking behind what he said was that the tax cuts are needed to provide incentives for entrepreneurs to work harder. However, there is no evidence to support that theory. The period when we had the most rapid economic growth since the war, as Mr. Douglas Jay said in a debate in the House on 9 March, was when we had the highest rates of tax at the higher level. The period when we had the most catastrophic decline in the British economy in this century coincided with the period when taxation on the higher rates was cut.

If the hon. Gentleman wants to help the needy and poor in our society, there is £236 million on the table. The choice is stark. I invite the hon. Gentleman to think about it. Do we give it to those who have already received the largest tax cuts of all over the past four years, who, even if they are denied the proposed tax cuts, will still uniquely among taxpayers have a tax burden that is lower than it was in 1978–79? Alternatively, do we give it to those in work whose tax burden has increased by one fifth or more and to those out of work whose living standards have collapsed, not only because they have been forced out of work but because the Government abolished earnings-related supplement and held down the real level of benefits?

That is the choice. The problem for hon. Members such as the hon. Member for Northampton, North (Mr. Marlow) and the Government, particularly the Chancellor and the Financial Secretary, is that they always refuse point blank to make the connection between the decisions that they make one day and the plight and poverty of so many of our people. Unemployment benefit must be cut because there is no money. The National Health Service must be cut because there is no money. Education must be cut because there is no money. The local authorities must be cut because there is no money, but suddenly the Government can find the money—hundreds of millions of pounds—to pay for substantial tax reductions for the wealthy. It will not do for the Financial Secretary to go through his usual manoeuvres to try to trivialise the amount involved. The Chief Secretary told us only last week that the total net cost of the Bill for this year is £236 million. On any basis, £236 million is a great deal of money.

It is a further sign of the closed minds of the new Tories that they regard—certainly the Financial Secretary does —the £236 million as a completely different kind of money. In fact, he regards it as being hardly money at all compared with the money that is needed to be put into the Health Service or to pay for an increase in child benefit. He uses that warped logic to avoid having to convince himself that there is a choice and that the money could be spent in other ways.

My hon. Friend the Member for Livingston (Mr. Cook) went into detail about the way in which, last Wednesday, the Financial Secretary tried to trivialise the total involved and told the House that if we used it to cut the basic rate of tax, it would result in a cut of only one quarter of 1p in a full year.

Mr. Ridley

Hear, hear.

Mr. Straw

The Financial Secretary is cheering the remarks that he made last week. He went on to say with oozing complacency that if we had used the money in some other way, it would not have had a dramatic effect. Where has the right hon. Gentleman been? Does he have no idea of the effect that cuts of half the sum of £236 million will have on the NHS? When I saw the chairman of my regional health authority yesterday, the North-West regional health authority, he was in no doubt that his budget is being cut by 2 per cent. The people there have got out their calculators and know how much is coming off their capital and current programmes. They know how many people they will have to get shot of over the next year. Were it not unparliamentary, I would say that it was a lie, but it is certainly a deception and a fraud for the Financial Secretary and anybody in the Government to suggest that no cuts are taking place. Of course there are cuts. They know very well that that is the reality.

I asked the Financial Secretary where he had been. He knows that the money could be spent on restoring cuts in the NHS. He knows that if the money is not spent on it, many hundreds and thousands of jobs will be lost, many thousands of patients will suffer and he will not know whether some patients will die, yet he can stand there and say in the face of NHS job losses and deterioration in patient care that the expenditure of £236 million will not have a dramatic effect if it is spent elsewhere. If it is not spent elsewhere, it will have a dramatic effect. Moreover, it will illustrate the Financial Secretary's incomprehension and ignorance of the margins that people live on.

When the Financial Secretary discussed how the money might alternatively be used, to trivialise the amount he suggested that if it were used on child benefit, it would be raised by only 40p a week. That is a lot of money to many families. It could buy two loaves in the stale bread shop that has been opened in my constituency to cater for the unemployed — [Interruption.] The hon. Member for Crawley (Mr. Soames) is tut-tutting. I should be glad to take him round the shop. The unemployed and the poor queue up there every morning because they cannot afford to buy fresh bread. It is no use the hon. Gentleman shaking his head. That is the reality of the poverty to which the Government have reduced people. I should be delighted to give way to the hon. Gentleman if he wishes to intervene. He does not. He does not like the truth of the grinding poverty to which the Government have reduced people.

6.30 pm

Mr. Winnick

My hon. Friend's point is important and it is quite clear that many Conservative Members—not just the hon. Member for Crawley (Mr. Soames)—do not understand or wish to understand the poverty and near poverty that my hon. Friend referred to. An extra 40p to 60p a week is a great deal to some of our constituents who are living on the barest minimum. Surely that is the accusation that we are making against the Government today.

Mr. Straw

I entirely agree. I am shocked by the attitude of the hon. Member for Crawley. In former days, he would have been regarded as a grandee and shown some compassion. However, it is obvious that he also has been taken over by the new macho Tory party. He refuses to accept the truth of what I am telling him has happened in the past four years. If a family saves 40p a week, it can buy a pair of cheap shoes for the children every three months. Perhaps the hon. Gentleman has no idea of how quickly children's shoes are worn out. The 40p would be most helpful.

When the Financial Secretary discussed such an increase, he said that the objection to spending money on child benefit was that it would also benefit the rich. We are on to something here. If the Financial Secretary wants to spend money so that it benefits only the poor, I assure him that the Opposition can make many suggestions. We object to spending that benefits only the rich. No spending can be less equitable in present conditions when 3.5 million people are unemployed than the spending of £236 million on those who need it least.

Mr. Campbell-Savours

Is not one of the more interesting aspects of the debate the fact that when the "News at Ten" headline bulletins are broadcast tonight there will be no mention of what really matters—how the Committee will divide on the use of these moneys? The Chief Secretary knows that, is using that fact and hiding behind it to press the measure through. "News at Ten" will no doubt comment on silly little news items that have no bearing on the real debate in society. Would not society be far better if the news media concentrated their attention on what matters and the inequitable arrangement of the division of wealth rather than on nonsense?

Mr. Straw

rose—

The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong)

Order. I hope that the hon. Member for Blackburn, (Mr. Straw) will address himself to the amendment and not follow that line of argument.

Mr. Straw

I share my hon. Friend's anxiety. Far too many newspapers last week failed to make the connection between the sick and needy being hit to allow for £236 million-worth of tax cuts for the rich.

If the moral argument falls on deaf ears—it is clear that it does—I hope that the type of argument that the right hon. Member for Down, South (Mr. Powell) advanced about the wider economic arguments will not. The Government have got themselves into a terrible jam on public expenditure, not because vast overspending by public authorities has suddenly been discovered, but because their pre-election public expenditure White Paper did not and could not add up. It was a pre-election fraud and we told them so. The hon. Member for Crawley and his right hon. and hon. Friends cannot say that they were not warned. Mr. Joel Barnett, our distinguished colleague, the loss of whom we were lamenting only last week, accused the Chancellor of the Exchequer in terms of fiddling the figures. In an intervention, on 9 March, ray hon. Friend the Member for Oldham, West (Mr. Meacher) asked the then Chief Secretary who is now the Home Secretary whether the Government were coming up with completely unrealistic estimates for the contingency reserve that had been cut by £1 million and the general allowance for shortfall that had been increased to £1.2 billion. That action has cut the contingency reserve from £2,400 million last year to a mere £300 million this year. The then Chief Secretary replied: I see no grounds for thinking that the plans are unrealistic … because they are too heavily dependent on shortfall which might not arise or because too little has been set aside for contingencies. I am satisfied that the plans for 1983–84 are robust and we do not expect them to be exceeded." — [Official Report, 9 March 1983; Vol. 38, c. 854.] The Prime Minister confirmed in a television interview on 5 June that the plans were robust and would not be exceeded. The Government knew that their figures did not add up. They knew, as do every Government, that it is impossible to estimate accurately the cost of demand-related services such as the cost of benefits and prescription charges. That is precisely why there is a reasonably sized contingency reserve. That is the way in which the contingency reserve has been used every year since public expenditure planning came into vogue. The Government wanted to avoid saying that because they did not wish to give the impression that they would cut public expenditure — which was their true intention — or increase planning totals so as not to offend their friends in the City. They have now been hoist by their own petard.

If the Government refuse to accept the moral case that the Opposition have made, it is utter madness for them to box themselves in unnecessarily by giving gratuitous and unnecessary tax handouts to people who do not need them. It is no wonder that the City has got the jitters. While it does not get too much information from "News at Ten", and despite the Financial Times not being published, it must realise that it is madness for a Government to scream that they are short of money and have an overrun public borrowing requirement while sitting here increasing expenditure by £236 million this year and £403 million next year on a group of people who plainly do not need the money.

If a choice must be made either to protect vital services or to give away such sums of money to those who need them least there can be no question which way the decision should go. There can be no doubt in economic terms. Industry will suffer if the Government choose not to maintain vital services—it has already suffered from the 2 per cent. cut in public spending—and jobs will go in private and public industry. Nor is there any doubt about the choice to be made in social terms because people will suffer from cuts in expenditure unless the tax reductions are abandoned. Nor can there be any doubt in moral terms. The Committee is faced with a moral issue. Should it be party to the straightforward deception of the electorate? Should it permit such largesse to a small number of people who do not need it when many others need it desperately? Given the economic crisis, the Government should withdraw the Finance Bill. Failing that, Conservative Members should vote with the Opposition for the amendment and stop this madness and immorality.

Question put, That the amendment be made:

The Committee divided: Ayes 157, Noes 247.

Division No. 14]	[6.41 pm
AYES
Adams, Allen (Paisley N)	Gourlay, Harry
Alton, David	Hamilton, W. W. (Central Fife)
Anderson, Donald	Hardy, Peter
Archer, Rt Hon Peter	Harrison, Rt Hon Walter
Ashton, Joe	Hattersley, Rt Hon Roy
Atkinson, N. (Tottenham)	Haynes, Frank
Bagier, Gordon A. T.	Heffer, Eric S.
Barnett, Guy	Hogg, N. (C'nauld & Kilsyth)
Barron, Kevin	Hoyle, Douglas
Beckett, Mrs Margaret	Hughes, Mark (Durham)
Beith, A. J.	Hughes, Robert (Aberdeen N)
Bell, Stuart	Hughes, Sean (Knowsley S)
Bermingham, Gerald	Hughes, Simon (Southwark)
Bidwell, Sydney	John, Brynmor
Blair, Anthony	Jones, Barry (Alyn & Deeside)
Boothroyd, Miss Betty	Kaufman, Rt Hon Gerald
Boyes, Roland	Kennedy, Charles
Bray, Dr Jeremy	Kirkwood, Archibald
Brown, Gordon (D'f'mline E)	Lambie, David
Brown, R. (N'c'tle-u-Tyne N)	Lamond, James
Buchan, Norman	Leadbitter, Ted
Caborn, Richard	Lewis, Ron (Carlisle)
Callaghan, Rt Hon J.	Lewis, Terence (Worsley)
Callaghan, Jim (Heyw'd & M)	Lloyd, Tony (Stretford)
Campbell-Savours, Dale	Lofthouse, Geoffrey
Canavan, Dennis	Loyden, Edward
Cartwright, John	McCartney, Hugh
Clark, Dr David (S Shields)	McDonald, Dr Oonagh
Clarke, Thomas	McKay, Allen (Penistone)
Clay, Robert	McKelvey, William
Cohen, Harry	Mackenzie, Rt Hon Gregor
Coleman, Donald	McTaggart, Robert
Conlan, Bernard	Madden, Max
Cook, Frank (Stockton North)	Marek, Dr John
Cook, Robin F (Livingston)	Martin, Michael
Corbett, Robin	Mason, Rt Hon Roy
Cowans, Harry	Meadowcroft, Michael
Craigen, J. M.	Michie, William
Cunliffe, Lawrence	Mikardo, Ian
Dalyell, Tam	Millan, Rt Hon Bruce
Davies, Ronald (Caerphilly)	Miller, Dr M. S. (E Kilbride)
Davis, Terry (B'ham, H'ge H'l)	Morris, Rt Hon J. (Aberavon)
Deakins, Eric	Oakes, Rt Hon Gordon
Dewar, Donald	O'Brien, William
Dixon, Donald	O'Neill, Martin
Dormand, Jack	Orme, Rt Hon Stanley
Dubs, Alfred	Owen, Rt Hon Dr David
Duffy, A. E. P.	Park, George
Dunwoody, Hon Mrs G,	Patchett, Terry
Eadie, Alex	Pavitt, Laurie
Eastham, Ken	Penhaligon, David
Evans, Ioan (Cynon Valley)	Pike, Peter
Evans, John (St. Helens N)	Powell, Rt Hon J. E. (S Down)
Ewing, Harry	Powell, Raymond (Ogmore)
Fatchett, Derek	Prescott, John
Faulds, Andrew	Radice, Giles
Field, Frank (Birkenhead)	Redmond, M.
Fisher, Mark	Richardson, Ms Jo
Flannery, Martin	Rogers, Allan
Foot, Rt Hon Michael	Ross, Ernest (Dundee W)
Forrester, John	Rowlands, Ted
Foulkes, George	Sedgemore, Brian
Freud, Clement	Sheerman, Barry
Garrett, W. E.	Sheldon, Rt Hon R.
George, Bruce	Shore, Rt Hon Peter
Godman, Dr Norman	Short, Ms Clare (Ladywood)
Golding, John	Skinner, Dennis
Gould, Bryan	Smith, C.(Isl'ton S & F'bury)

Smith, Cyril (Rochdale)	Wallace, James
Smith, Rt Hon J. (M'kl'ds E)	Warden, Gareth (Gower)
Soley, Clive	Wareing, Robert
Stewart, Rt Hon D. (W Isles)	Welsh, Michael
Stott, Roger	Wigley, Dafydd
Strang, Gavin	Wilson, Gordon
Straw, Jack	Winnick, David
Thomas, Dr R. (Carmarthen)	Wrigglesworth, Ian
Thompson, J. (Wansbeck)
Thorne, Stan (Preston)	Tellers for the Ayes:
Tinn, James	Mr. James Hamilton and
Varley, Rt Hon Eric G.	Mr. Austin Mitchell.
Wainwright, R.
NOES
Adley, Robert	Eggar, Tim
Alexander, Richard	Emery, Sir Peter
Amess, David	Evennett, David
Ancram, Michael	Eyre, Reginald
Arnold, Tom	Fallon, Michael
Ashby, David	Farr, John
Aspinwall, Jack	Fenner, Mrs Peggy
Atkins, Rt Hon H. (S'thorne)	Fletcher, Alexander
Atkins Robert (South Ribble)	Fookes, Miss Janet
Atkinson, David (B'm'th E)	Forsyth, Michael (Stirling)
Baker, Nicholas (N Dorset)	Fox, Marcus
Baldry, Anthony	Franks, Cecil
Banks, Robert (Harrogate)	Fraser, Peter (Angus East)
Batiste, Spencer	Freeman, Roger
Beaumont-Dark, Anthony	Gale, Roger
Bellingham, Henry	Galley, Roy
Bendall, Vivian	Gardiner, George (Reigate)
Benyon, William	Gardner, Sir Edward (Fylde)
Berry, Hon Anthony	Glyn, Dr Alan
Biffen, Rt Hon John	Goodlad, Alastair
Biggs-Davison, Sir John	Gorst, John
Blackburn, John	Gower, Sir Raymond
Blaker, Rt Hon Peter	Greenway, Harry
Body, Richard	Gregory, Conal
Bonsor, Sir Nicholas	Griffiths, Peter (Portsm'th N)
Boscawen, Hon Robert	Ground, Reginald
Bottomley, Peter	Grylls, Michael
Braine, Sir Bernard	Gummer, John Selwyn
Brandon-Bravo, Martin	Hamilton, Neil (Tatton)
Bright, Graham	Hanley, Jeremy
Brinton, Tim	Hannam, John
Brooke, Hon Peter	Hargreaves, Kenneth
Brown, M. (Brigg & Cl'thpes)	Harris, David
Bruinvels, Peter	Harvey, Robert
Bryan, Sir Paul	Hawkins, C. (High Peak)
Buchanan-Smith, Rt Hon A.	Hawkins, Sir Paul (SW N'folk)
Buck, Sir Antony	Hayes, J.
Bulmer, Esmond	Hayhoe, Barney
Burt, Alistair	Hayward, Robert
Butler, Hon Adam	Heathcoat-Amory, David
Butterfill, John	Heddle, John
Carlisle, John (N Luton)	Heseltine, Rt Hon Michael
Carlisle, Kenneth (Lincoln)	Hickmet, Richard
Carttiss, Michael	Hicks, Robert
Chalker, Mrs Lynda	Hind, Kenneth
Chapman, Sydney	Hogg, Hon Douglas (Gr'th'm)
Chope, Christopher	Holland, Sir Philip (Gedling)
Clark, Hon A. (Plym'th S'n)	Holt, Richard
Clark, Dr Michael (Rochford)	Hooson, Tom
Clark, Sir W. (Croydon S)	Howarth, Alan (Stratf'd-on-A)
Clegg, Sir Walter	Howarth, Gerald (Cannock)
Conway, Derek	Howell, Ralph (N Norfolk)
Cope, John	Jackson, Robert
Cormack, Patrick	Jenkin, Rt Hon Patrick
Corrie, John	Jessel, Toby
Couchman, James	Johnson-Smith, Sir Geoffrey
Cranborne, Viscount	Jones, Gwilym (Cardiff N)
Critchley, Julian	Jones, Robert (W Herts)
Crouch, David	Kellett-Bowman, Mrs Elaine
Currie, Mrs Edwina	King, Roger (B'ham N'field)
Dickens, Geoffrey	Knight, Gregory (Derby N)
Dicks, T.	Knight, Mrs Jill (Edgbaston)
Douglas-Hamilton, Lord J.	Knowles, Michael
Dover, Denshore	Knox, David
Dykes, Hugh	Lang, Ian

Lawrence, Ivan	Sainsbury, Hon Timothy
Lawson, Rt Hon Nigel	St. John-Stevas, Rt Hon N.
Leigh, Edward (Gainsbor'gh)	Sayeed, Jonathan
Lennox-Boyd, Hon Mark	Shaw, Sir Michael (Scarb')
Lester, Jim	Shepherd, Colin (Hereford)
Lewis, Sir Kenneth (Stamf'd)	Silvester, Fred
Lightbown, David	Sims, Roger
Lilley, Peter	Skeet, T. H. H.
Lloyd, Ian (Havant)	Smith, Tim (Beaconsfield)
Lord, Michael	Soames, Hon Nicholas
McNair-Wilson, M. (N bury)	Speller, Tony
McNair-Wilson, P. (New F'st)	Spence, John
Madel, David	Spencer, D.
Major, John	Spicer, Jim (W Dorset)
Malone, Gerald	Spicer, Michael (S Worcs)
Mawhinney, Dr Brian	Stanbrook, Ivor
Mellor, David	Steen, Anthony
Merchant, Piers	Stern, Michael
Meyer, Sir Anthony	Stevens, Lewis (Nuneaton)
Miller, Hal (B'grove)	Stevens, Martin (Fulham)
Mills, Ian (Meriden)	Stewart, Allan (Eastwood)
Mills, Sir Peter (West Devon)	Stewart, Andrew (Sherwood)
Miscampbell, Norman	Stewart, Ian (N Hertf'dshire)
Montgomery, Fergus	Stradling Thomas, J.
Moore, John	Tapsell, Peter
Morris, M. (N'hampton, S)	Taylor, John (Solihull)
Morrison, Hon C. (Devizes)	Taylor, Teddy (S'end E)
Morrison, Hon P. (Chester)	Temple-Morris, Peter
Moynihan, Hon C.	Terlezki, Stefan
Murphy, Christopher	Thomas, Rt Hon Peter
Needham, Richard	Thompson, Donald (Calder V)
Nelson, Anthony	Thorne, Neil (Ilford S)
Neubert, Michael	Thornton, Malcolm
Nicholls, Patrick	Thurnham, Peter
Normanton, Tom	Townend, John (Bridlington)
Norris, Steven	Tracey, Richard
Onslow, Cranley	Trippier, David
Oppenheim, Philip	Trotter, Neville
Ottaway, Richard	Waddington, David
Parris, Matthew	Wakeham, Rt Hon John
Patten, Christopher (Bath)	Waldegrave, Hon William
Patten, John (Oxford)	Walker, Rt Hon P. (W'cester)
Pawsey, James	Wall, Sir Patrick
Peacock, Mrs Elizabeth	Waller, Gary
Pink, R. Bonner	Warren, Kenneth
Pollock, Alexander	Watts, John
Porter, Barry	Wells, Bowen (Hertford)
Powell, William (Corby)	Wells, John (Maidstone)
Prentice, Rt Hon Reg	Wheeler, John
Proctor, K. Harvey	Whitfield, John
Raffan, Keith	Wilkinson, John
Rathbone, Tim	Winterton, Mrs Ann
Rhodes James, Robert	Winterton, Nicholas
Ridley, Rt Hon Nicholas	Wolfson, Mark
Ridsdale, Sir Julian	Wood, Timothy
Roberts, Wyn (Conwy)	Woodcock, Michael
Roe, Mrs Marion	Yeo, Tim
Rost, Peter
Rowe, Andrew	Tellers for the Noes:
Rumbold, Mrs Angela	Mr. David Hunt and
Ryder, Richard	Mr. Tristan Garel-Jones.
Sackville, Hon Thomas

Amendment accordingly negatived.

Amendment proposed: No. 3, in page 1, line 25, leave out '£7,100' and insert '£6,250'.—[Mr. Robin Cook.]

Question put, That the amendment be made:—

The Committee divided: Ayes 159, Noes 241.

Division No. 15]	[6.52 pm
AYES
Adams, Allen (Paisley N)	Barnett, Guy
Alton, David	Barron, Kevin
Anderson, Donald	Beckett, Mrs Margaret
Archer, Rt Hon Peter	Beith, A. J.
Ashton, Joe	Bell, Stuart
Atkinson, N. (Tottenham)	Bermingham, Gerald
Bagier, Gordon A. T.	Bidwell, Sydney

Blair, Anthony	Lamond, James
Boothroyd, Miss Betty	Leadbitter, Ted
Boyes, Roland	Lewis, Ron (Carlisle)
Bray, Dr Jeremy	Lewis, Terence (Worsley)
Brown, Gordon (D'f'mline E)	Lloyd, Tony (Stretford)
Brown, R. (N'c'tle-u-Tyne N)	Lofthouse, Geoffrey
Buchan, Norman	Loyden, Edward
Caborn, Richard	McCartney, Hugh
Callaghan, Rt Hon J.	McDonald, Dr Oonagh
Callaghan, Jim (Heyw'd & M)	McKelvey, William
Campbell-Savours, Dale	Mackenzie, Rt Hon Gregor
Canavan, Dennis	McTaggart, Robert
Cartwright, John	Madden, Max
Clark, Dr David (S Shields)	Marek, Dr John
Clarke, Thomas	Martin, Michael
Clay, Robert	Mason, Rt Hon Roy
Cohen, Harry	Meacher, Michael
Coleman, Donald	Meadowcroft, Michael
Conlan, Bernard	Michie, William
Cook, Frank (Stockton North)	Mikardo, Ian
Cook, Robin F. (Livingston)	Millan, Rt Hon Bruce
Corbett, Robin	Miller, Dr M. S. (E Kilbride)
Cowans, Harry	Morris, Rt Hon J. (Aberavon)
Craigen, J. M.	Oakes, Rt Hon Gordon
Cunliffe, Lawrence	O'Brien, William
Dalyell, Tam	O'Neill, Martin
Davies, Ronald (Caerphilly)	Orme, Rt Hon Stanley
Davis, Terry (B'ham, H'ge H'l)	Owen, Rt Hon Dr David
Deakins, Eric	Park, George
Dewar, Donald	Patchett, Terry
Dixon, Donald	Pavitt, Laurie
Dormand, Jack	Penhaligon, David
Dubs, Alfred	Pike, Peter
Duffy, A. E. P.	Powell, Rt Hon J. E (S Down)
Dunwoody, Hon Mrs G.	Powell, Raymond (Ogmore)
Eadie, Alex	Prescott, John
Eastham, Ken	Radice, Giles
Evans, Ioan (Cynon Valley)	Redmond, M.
Evans, John (St. Helens N)	Richardson, Ms Jo
Ewing, Harry	Rogers, Allan
Fatchett, Derek	Ross, Ernest (Dundee W)
Faulds, Andrew	Rowlands, Ted
Field, Frank (Birkenhead)	Sedgemore, Brian
Fisher, Mark	Sheerman, Barry
Flannery, Martin	Sheldon, Rt Hon R.
Foot, Rt Hon Michael	Shore, Rt Hon Peter
Forrester, John	Short, Ms Clare (Ladywood)
Foulkes, George	Skinner, Dennis
Freud, Clement	Smith, C.(Isl'ton S & F'bury)
Garrett, W. E.	Smith, Cyril (Rochdale)
George, Bruce	Smith, Rt Hon J. (M'kl'ds E)
Godman, Dr Norman	Soley, Clive
Golding, John	Stewart, Rt Hon D. (W Isles)
Gould, Bryan	Stott, Roger
Gourley, Harry	Strang, Gavin
Hamilton, James (M'well N)	Straw, Jack
Hamilton, W. W. (Central Fife)	Thomas, Dr R. (Carmarthen)
Hardy, Peter	Thompson, J. (Wansbeck)
Harrison, Rt Hon Walter	Thorne, Stan (Preston)
Hattersley, Rt Hon Roy	Tinn, James
Haynes, Frank	Varley, Rt Hon Eric G.
Heffer, Eric S.	Wainwright, R.
Hogg, N. (C'nauld & Kilsyth)	Wallace, James
Holland, Stuart (Vauxhall)	Wardell, Gareth (Gower)
Hoyle, Douglas	Wareing, Robert
Hughes, Mark (Durham)	Welsh, Michael
Hughes, Robert (Aberdeen N)	Wigley, Dafydd
Hughes, Sean (Knowsley S)	Wilson, Gordon
Hughes, Simon (Southwark)	Winnick, David
John, Brynmor	Wrigglesworth, Ian
Jones, Barry (Alyn & Deeside)
Kaufman, Rt Hon Gerald	Tellers for the Ayes:
Kennedy, Charles	Mr. Austin Mitchell and
Kirkwood, Archibald	Mr. Allen McKay.
Lambie, David
NOES
Adley, Robert	Ancram, Michael
Alexander, Richard	Arnold, Tom
Amess, David	Ashby, David

Aspinwall, Jack	Gower, Sir Raymond
Atkins, Rt Hon H. (S'thorne)	Greenway, Harry
Atkins Robert (South Ribble)	Gregory, Conal
Atkinson, David (B'm'th E)	Griffiths, Peter (Portsm'th N)
Baker, Nicholas (N Dorset)	Ground, Reginald
Baldry, Anthony	Grylls, Michael
Banks, Robert (Harrogate)	Gummer, John Selwyn
Batiste, Spencer	Hamilton, Neil (Tatton)
Beaumont-Dark, Anthony	Hanley, Jeremy
Bellingham, Henry	Hannam, John
Bendall, Vivian	Hargreaves, Kenneth
Benyon, William	Harris, David
Berry, Hon Anthony	Harvey, Robert
Biffen, Rt Hon John	Hawkins, C. (High Peak)
Biggs-Davison, Sir John	Hawkins, Sir Paul (SW N'folk)
Blackburn, John	Hayes, J.
Blaker, Rt Hon Peter	Hayhoe, Barney
Body, Richard	Hayward, Robert
Bonsor, Sir Nicholas	Heathcoat-Amory, David
Boscawen, Hon Robert	Heddle, John
Bottomley, Peter	Heseltine, Rt Hon Michael
Braine, Sir Bernard	Hickmet, Richard
Brandon-Bravo, Martin	Hicks, Robert
Bright, Graham	Hind, Kenneth
Brinton, Tim	Holland, Sir Philip (Gedling)
Brooke, Hon Peter	Holt, Richard
Brown, M. (Brigg & Cl'thpes)	Hooson, Tom
Bruinvels, Peter	Howarth, Alan (Stratf'd-on-A)
Bryan, Sir Paul	Howarth, Gerald (Cannock)
Buchanan-Smith, Rt Hon A.	Howell, Ralph (N Norfolk)
Buck, Sir Antony	Hunt, David (Wirral)
Bulmer, Esmond	Jackson, Robert
Burt, Alistair	Jenkin, Rt Hon Patrick
Butler, Hon Adam	Jessel, Toby
Butterfill, John	Jones, Gwilym (Cardiff N)
Carlisle, John (N Luton)	Jones, Robert (W Herts)
Carlisle, Kenneth (Lincoln)	Kellett-Bowman, Mrs Elaine
Carttiss, Michael	King, Roger (B'ham N'field)
Chapman, Sydney	Knight, Gregory (Derby N)
Chope, Christopher	Knight, Mrs Jill (Edgbaston)
Clark, Hon A. (Plym'th S'n)	Knowles, Michael
Clark, Dr Michael (Rochford)	Knox, David
Clark, Sir W. (Croydon S)	Lang, Ian
Clegg, Sir Walter	Lawrence, Ivan
Colvin, Michael	Leigh, Edward (Gainsbor'gh)
Conway, Derek	Lester, Jim
Cope, John	Lewis, Sir Kenneth (Stamf'd)
Cormack, Patrick	Lightbown, David
Corrie, John	Lilley, Peter
Couchman, James	Lloyd, Ian (Havant)
Cranborne, Viscount	Lord, Michael
Critchley, Julian	McNair-Wilson, P. (New F'st)
Crouch, David	Madel, David
Currie, Mrs Edwina	Major, John
Dickens, Geoffrey	Mawhinney, Dr Brian
Dicks, T.	Mellor, David
Douglas-Hamilton, Lord J.	Merchant, Piers
Dover, Denshore	Meyer, Sir Anthony
Dunn, Robert	Miller, Hal (B'grove)
Dykes, Hugh	Mills, Ian (Meriden)
Eggar, Tim	Mills, Sir Peter (West Devon)
Emery, Sir Peter	Miscampbell, Norman
Evennett, David	Montgomery, Fergus
Eyre, Reginald	Moore, John
Fallon, Michael	Morris, M. (N'hampton, S)
Farr, John	Morrison, Hon C. (Devizes)
Fenner, Mrs Peggy	Morrison, Hon P. (Chester)
Fletcher, Alexander	Moynihan, Hon C.
Fookes, Miss Janet	Murphy, Christopher
Fox, Marcus	Needham, Richard
Franks, Cecil	Nelson, Anthony
Freeman, Roger	Nicholls, Patrick
Gale, Roger	Normanton, Tom
Galley, Roy	Norris, Steven
Gardiner, George (Reigate)	Onslow, Cranley
Gardner, Sir Edward (Fylde)	Oppenheim, Philip
Garel-Jones, Tristan	Parris, Matthew
Glyn, Dr Alan	Patten, Christopher (Bath)
Goodlad, Alastair	Patten, John (Oxford)
Gorst, John	Pawsey, James

Peacock, Mrs Elizabeth	Stradling Thomas, J.
Pink, R. Bonner	Tapsell, Peter
Porter, Barry	Taylor, John (Solihull)
Powell, William (Corby)	Taylor, Teddy (S'end E)
Prentice, Rt Hon Reg	Tebbit, Rt Hon Norman
Proctor, K. Harvey	Temple-Morris, Peter
Raffan, Keith	Terlezki, Stefan
Rathbone, Tim	Thomas, Rt Hon Peter
Rhodes James, Robert	Thompson, Donald (Calder V)
Ridley, Rt Hon Nicholas	Thorne, Neil (Ilford S)
Ridsdale, Sir Julian	Thornton, Malcolm
Roberts, Wyn (Conwy)	Thurnham, Peter
Roe, Mrs Marion	Townend, John (Bridlington)
Rost, Peter	Tracey, Richard
Rowe, Andrew	Trippier, David
Rumbold, Mrs Angela	Trotter, Neville
Ryder, Richard	Waddington, David
Sackville, Hon Thomas	Wakeham, Rt Hon John
Sainsbury, Hon Timothy	Waldegrave, Hon William
St. John-Stevas, Rt Hon N.	Walker, Bill (T'side N)
Sayeed, Jonathan	Wall, Sir Patrick
Shaw, Sir Michael (Scarb')	Waller, Gary
Shepherd, Colin (Hereford)	Warren, Kenneth
Silvester, Fred	Watts, John
Sims, Roger	Wells, Bowen (Hertford)
Skeet, T. H. H.	Wells, John (Maidstone)
Smith, Tim (Beaconsfield)	Wheeler, John
Soames, Hon Nicholas	Whitfield, John
Speller, Tony	Wilkinson, John
Spence, John	Winterton, Mrs Ann
Spencer, D.	Winterton, Nicholas
Spicer, Michael (S Worcs)	Wolfson, Mark
Stanbrook, Ivor	Wood, Timothy
Steen, Anthony	Woodcock, Michael
Stern, Michael	Yeo, Tim
Stevens, Lewis (Nuneaton)
Stevens, Martin (Fulham)	Tellers for the Noes:
Stewart, Allan (Eastwood)	Mr. Douglas Hogg and
Stewart, Andrew (Sherwood)	Mr. Michael Neubert.
Stewart, Ian (N Hertf'dshire)

Question accordingly negatived.

Clause 1 ordered to stand part of the Bill.