§ The ChairmanWith this it will be convenient to discuss amendment No. 11, in page 9, line 1, leave out subsection (2).
§ Mr. StrawThese are probing amendments. The Government have never explained in detail why the relief should be increased from 20 per cent. to 30 per cent. They have never given the cost of the change.
§ Mr. Spencer Batiste (Elmet)I am grateful to you, Mr. Dean, for calling me to make my maiden speech. If I rise with trepidation, it is in part because of the natural awe of the amateur historian participating for the first time in the proceedings of the Mother of Parliaments and partly because of the nervousness of a new boy who is conscious of the high standard set by those who have gone before him.
As befits a lawyer, before embarking upon my maiden speech I inquired of senior colleagues about advice on timing. And as is usual when a lawyer takes advice, the advice was divided and contradictory. Some said that I should seize the first possible opportunity of catching Mr. Speaker's eye and relieve myself of the inhibitions of maidenhood. Others said that I should first sit and watch, learn and understand the ways of the House. The compromise that I have adopted was suggested to me. I was advised to wait until I had first been allocated a desk and a telephone so that no one could accuse me of acting precipitately and I would have first-hand experience of the ways of the House.
Due to the ministrations of the Boundary Commission, for me this is a double maiden. Not only is this my first speech in the House, but it is the first occasion on which any hon. Member has spoken in the House on behalf of the Elmet constituency. As a name, Elmet has the advantages of brevity and mystery. The name has not been widely used since 617 AD. Indeed, a significant part of my election campaign entailed explaining to people who had for many years voted in Barkston Ash, Leeds, East and 1051 Normanton that they lived in a new constituency. It is an example of what the hon. Member for Livingston (Mr. Cook) referred to as "moving the countryside around."
One can imagine, therefore, how impressed I was with the erudition and store of learning in the House when on my first day here I explained to an hon. Member whom I had met for the first time that I was the Member for Elmet and he said, without prompting, "That's the old post-Roman British kingdom between the Wharf and the Aire which is now in west Yorkshire and which was conquered by Northumbria in the seventh century." There is little that I can add to that, save that the tradition of tough-mindedness, independence, self-resolution and self-help are still very evident in the people of Elmet and that they typify the right hon. and hon. Members who represented for many years its three component parts.
I pay tribute to my right hon. Friend the Member for Selby (Mr. Alison) and the right hon. Member for Leeds, East (Mr. Healey) who represent neighbouring constituencies to the east and west, and to Mr. Albert Roberts who was a very popular and hard-working Member until his retirement at the general election after 32 years' service in the House. Their erstwhile constituents hold them all in the highest regard and I shall do my best to continue the high standards of service and dedication to constituents set by those right hon. and hon. Members.
My task is particularly challenging because, while many hon. Members have spoken of the diversity of their constituencies, few can be quite so rich in diversity as the modern Elmet. It contains the thriving market town of Wetherby, with its famous racecourse, much beautiful countryside, fine villages and prime agricultural land. It contains Allerton Bywater at which is the area headquarters of the National Coal Board and which is at the centre of many close-knit mining communities. Around Boston Spa is the Thorp Arch trading estate, the national lending division of the British library and various penal establishments.
Many of my constituents live in areas such as Garforth Kippax and Whinmoor and work in the many trades, industries and professions that make Leeds and west Yorkshire so famous around the world. And in the centre of my constituency is Barwick in Elmet, a beautiful village which boasts the biggest maypole in the world. Few issues to be discussed in the House will not affect the richly varied constituency that I am privileged to represent. As my right hon. Friend the Member for Selby said of Barkston Ash in his maiden speech in 1964, it is
a microcosm of the country as a whole."—[Official Report, 17 December 1964; Vol. 704, c. 638.]The same is true of Elmet, as I have taken over a significant proportion of my right hon. Friend's former constituency.There are few issues of greater long-term importance for the economic prosperity and the long-term employment prospects of my constituents and the country as a whole than the need to encourage investment in the creation, development and growth of small businesses not only in existing industries but in the new industries that will take us into the 21st century.
I declare an interest in that I am a solicitor in a firm which has for many years represented a university, and I have been actively involved in trying to bring the technologies of the universities into industry. I know only too well the problems and obstacles which so often face us. The lesson that we learn from America's success in 1052 fields in which we have so often performed relatively badly is that we need to plan long-term. We must bring together the inventor, the entrepreneur, the manager and the financier, and we must keep them together for a long time because the fruits of success rarely come quickly.
Over a long period the practical effect of our tax structure, including capital transfer tax, is that private investment in industry has been increasingly inhibited. Hence, the organic growth of our small businesses into medium-sized businesses has also become increasingly inhibited. That is at the heart of my objection to the amendment.
The incentive which business has now is always to maximise short-term profits, to puff up the company and sell it off to realise a quick capital gain rather than to plan for the gradual development of the company, often over two generations or more, as so often happens in Europe and the United States. I have lost count of the number of times when clients come to me as a solicitor in practice with a depressingly familiar story. They have built up a successful private company, and they are faced with trying to decide where to go. Often they say, "It just isn't worth our while expanding, bringing in more money, taking greater risks, when we cannot have the commensurate benefit that goes with it. We cannot pass it on to our children without incurring the heavy cost of insurance to meet the capital transfer tax. Our private Investors similarly feel the effects of the capital transfer tax and want to grasp the profit while they can."
The hon. Member for Livingston referred to the fact that in this country venture capital is often the prerogative of the institution. It is that fact, compared with the position in the United States where venture capital is often shared between the private investor and the institution, which lies at the heart of our relatively poor performance in this sector. The flexibility, the speed of response and the good working relationships of a well-managed, owner-run business are essential to the health of British industry and will become more so as the years go by. For as long as these businesses are under-capitalised, because death duties and other tax burdens strangle the supply of long-term income, capital and finance, we will see them diminish. We will find this problem—and this is one of my interests—as we try to involve small businesses in the new technologies that are coming out of our universities. If one thing is true of new technology more than other industries, it is that we have to think in the long term. The rewards will not come tomorrow. They must plan for a long-term fight to bring their product on to the market and to sell it profitably. Our attitude to the taxation of venture capital which has built up over the years is counter-productive to this.
I have heard the arguments that were advanced earlier, but surely the right place to start is by asking, "Where do we want to go? What do we want to achieve?" If the answer is that we seek to create new industries and jobs, we must abandon preconceived ideas and old-fashioned commitments which are counter-productive to those aims. We must reach out to achieve our goals. If that means taking what some people may regard as unpalatable measures, so be it.
I recognise fully and applaud the Government's great achievement over the past four years in introducing a large number of measures designed to help small businesses. It has been a start. I am sure that the Government will 1053 recognise, as I do, that much still remains to be done to bring private enterprise and capital into the small and medium business sector.
In that context I should like to pay a special tribute to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) who, as national chairman of the Small Business Bureau, has done so much to carry the banner of small businesses into the political arena with such success. I am proud, as a member of the national board of the Small Business Bureau who has represented Yorkshire and Humberside, to have played a small part in that success. I am particularly delighted that so many members of the Small Business Bureau were elected to the House in the general election to reinforce my hon. Friend the Member for Surrey-North West in his task.
The task before us now is to build upon the achievement of the past four years. In doing that, we shall have to face the fact squarely that capital transfer tax is an obstacle to the end that we seek. The additional relief contained in clause 10(1) will be gratefully received. It is a step in the right direction, but I urge that there should be a radical reappraisal of the basis of capital transfer tax as part of long-term strategic thinking at the earliest possible opportunity insofar as it impacts upon small and medium business and venture capital in such businesses. The revenue involved is relative small. The hon. Member for Livingston described it earlier as "crumbs". I call it seedcorn.
Venture capital is the basis upon which our industrial development will depend. In response to the request for evidence to prove that our tax structure has discriminated against the provision of private venture capital in the past, I invite the Opposition to look in detail at the contrasting experience of the United States of America where money from private investors for high risk venture capital investments is readily forthcoming and where many jobs in many high technology industries have been created as a consequence.
We sit upon a gold mine of inventive genius in our universities, of entrepreneurial flair and financial acumen. We must not allow our tax structure to prevent us from exploiting those resources to the fullest possible extent because, if we do, the Americans, the Japanese and the Germans will exploit to the full the opportunites that we miss just as they have done so often before.
I quoted earlier from the maiden speech of my right hon. Friend the right hon. Member for Selby. I conclude by paraphrasing part of the maiden speech of the right hon. member for Leeds, East. He said that he knew that he had touched upon ground which might be considered controversial, but he assured the House that he had no intention whatever of being polemical or partisan.
I hope that my contribution today will be received as a sincere effort to think the problem out. I thank the Committee for its forbearance and courtesy.
§ Mr. HayhoeIt is a most agreeable task to congratulate my hon. Friend the Member for Elmet (Mr. Batiste) on his splendid maiden speech. He was able to speak from personal knowledge and experience of small businesses. He spoke with great clarity. He combined passion and humour and he was brief. Those qualities commend themselves as the essential elements of the best 1054 parliamentary speeches. Every hon. Member will wish to hear him speak again on these matters. His comments on the clause about capital transfer tax, especially for small businesses, will have been noted.
I was especially interested in what my hon. Friend said about linking the research done in universities with the industrial applications. It is good that he is facilitating that in his part of the world. So often in Britain marvellous work has been done in our universities or research institutes, but the industrial application has been exploited in other parts of the world. His message on that issue will commend him to the Committee. I hope that we will find ways to facilitate that to which he has set his hand.
The hon. Member for Blackburn (Mr. Straw) asked about the cost of the measures. It is £2 million for the business side and £3 million for the agricultural side, giving a total of £5 million for a full year. The reasons for pursuing relief for industry were amply given by my hon. Friend the Member for Elmet in his speech. I endorse what he said. The increase in agricultural relief will alter the present balance of relief between let and owner-occupied land and should provide further encouragement to owners to relet land when a tenancy falls, rather than take it in hand themselves.
The propositions are warmly endorsed in all parts of the Committee. I hope that the Committee will support the clause and that the Opposition will withdraw their amendment.
§ Mr. StrawWhen I wrote amendments to clause 10 to provide a vehicle for discussion, I little thought that they would also become the vehicle for a maiden speech. Even less did I think that they would be the vehicle for such an eloquent and witty speech, which was also thoughtful and provocative. I congratulate the hon. Member for Elmet (Mr. Batiste). I regret that not more hon. Members were present to hear his speech.
I thank the Minister for the information that he gave, and I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 10 ordered to stand part of the Bill.