HC Deb 30 June 1983 vol 44 cc710-6 3.58 pm
The Chief Secretary to the Treasury (Mr. Peter Rees)

I beg to move, That income tax for the year 1983–84 shall be charged—

  1. (a) in respect of so much of an individual's total income as exceeds £14,600 at such higher rates as are specified in the Table below; and
  2. (b) in respect of so much of the investment income included in an individual's total income as exceeds £7,100 at the additional rate of 15 per cent.

Part of excess over £14,600 Higher rate
The first £2,600 40 per cent.
The next £4,600 45 per cent.
The next £7,100 50 per cent.
The next £7,100 55 per cent.
The remainder 60 per cent.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

As the House will see, these motions open the way for the Finance Bill, which the House will debate next week and which is designed largely to restore various clauses which had to be dropped from the earlier Finance Bill because of the imminence of the general election.

3.59 pm
Mr. Robert Sheldon (Ashton-under-Lyne)

In welcoming the Chief Secretary to our debate, I must tell him that he is coming on to well-chewed food, as we have discussed these matters at considerable length. I also offer my good wishes to you, Mr. Deputy Speaker.

I happen to hold a minority opinion in the House, although not on the Opposition Benches, that the last Finance Act of the previous Government was the best one that they produced. It was the only good one, mainly because of the part played by my hon. Friends who filled their notable role in its final production. It was the only good one because it raised income tax thresholds for the ordinary man and woman and did not widen the gap between the rich and the poor.

I recall the Government's threats to reintroduce some of the lost clauses of the previous Finance Bill, and we see some of them in regurgitated form in the motions before us. We shall, of course, express ourselves amply and fully in the various stages of the Finance Bill produced as a result of these Ways and Means motions, and that will take place in the next week or so.

At the time of the Budget motions in March, we did not divide the House on the motions that have now been presented to us. The only one on which we intend to vote is the first. This is the most offensive, as it continues the Government's philosophy by giving to those with the highest incomes the greatest tax reliefs. The other matters will appear in greater detail in the Finance Bill and they will be subject to the same examination, scrutiny, debate and opposition as we have always provided for the Government's fiscal proposals.

4 pm

Mr. Richard Wainwright (Colne Valley)

As you, Mr. Deputy Speaker, know so well in your high office, on which Liberal Members warmly congratulate you, the motions before us are a key part of the House of Commons' fundamental responsibility for taxation.

Although I and my hon. Friends are quite content to go along with the proposal of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) to have, as it were, a token vote, it is nevertheless inappropriate that the debate should be greatly foreshortened simply because some hon. Members, though not the 150 new hon. Members, have been over this ground before. I take slight issue with the right hon. Gentleman when he says that we have discussed these matters at great length before, because, although that is literally true of some of us, it is not true of the 150 new Members.

I am sure that Treasury Ministers will not take refuge in the threadbare alibi that all this can be debated satisfactorily in a one-day Second Reading debate. So many matters will be covered in the Finance Bill that it will be impossible for every party now represented in the House to cover the important ground contained in these proposals.

It may be suggested that because Treasury Ministers have simply dragged a dead sheep out of the freezer and brought its form back to the House exactly as it was in March we need not go over the ground again. However, since the middle of March the economy has changed substantially and is in quite different shape. For example, mortgage interest rates have risen substantially, the rate of inflation looks as if it is beginning to rise again, and the balance of trade appears to have deteriorated sharply. We cannot be complacent and take the view that all that was said by some hon. Members in the middle of March covers the ground today.

I should make it plain that, just as they did in March, Liberal Members continue strongly to oppose three of the motions. The first is the raising of all income bands subject to higher taxation by an appalling 14 per cent. —two and a half times the appropriate rate of inflation. Secondly, we continue to oppose strongly the raising of the mortgage threshold on which tax relief is given. Thirdly, we oppose, as we did previously, the sharp reductions in capital transfer tax.

On the raising of mortgage interest relief thresholds, the Prime Minister said that in the big cities of the south-east about one third of new mortgages are for more than £25,000". That was the sole point on which the right hon. Lady based her defence for bringing the proposal back to the House three months after it first appeared.

In reply to the hon. Member for Bolsover (Mr. Skinner), who was as pertinent as ever, the Prime Minister said: The demand for mortgages is so great that the building societies must obtain more savings to meet that demand, which has arisen because Tory Governments give greater opportunities for home ownership".—[Official Report, 22 June 1983; Vol. 44, c. 5–55.] I assent to that proposition entirely, and that is why we object to this move. As the Prime Minister made so crystal clear, if the Government encourage some people to take out larger mortgages, thus adding to the excessive demand, there is bound to be an increase in the interest rate for everyone.

Mr. D. N. Campbell-Savours (Workington)

The hon. Gentleman registers an objection. Does he intend to take it as far as voting against these motions?

Mr. Wainwright

I have already explained that I assent to the token vote proposition, because there is no purpose in asking hon. Members to vote on everything —[HON. MEMBERS: "Ah!"]— but we shall take our opposition to the country and make it plain in our vote on Second Reading of the Finance Bill

Mr. David Winnick (Walsall, North)

Will the hon. Gentleman give way on this point?

Mr. Wainwright

I shall incur the wrath of the Chair if I give way any further.

How right Sam Brittan was when he said in the Financial Times, on the day after the Budget in March, that this is the type of distortion which does more to raise interest rates than a quite substantial increase in the Budget deficit would do".

Mr. Winnick

Will the hon. Gentleman give way?

Mr. Wainwright

I will now.

Mr. Winnick

I am grateful to the hon. Gentleman, whose argument I am following closely. As he knows, he has expressed the views of Labour Members. During the election campaign, did the Liberal party or did the Liberal leader make clear that objection to raising the tax relief on higher mortgages?

Mr. Wainwright

I am surprised at that question. It is precisely 20 years since the Liberal party published its policy on mortgage interest relief, and up and down the land I have been eloquent in commending it ever since.

It follows from the Prime Minister's excellent analysis of the economics of encouraging larger mortgages that, when additional tax relief is given on larger mortgages, the building societies will be in a worse demand-supply position, and that is bound to mean higher interest rates. Thus, the average first-time buyer—and it was the first-time buyer about whom the Prime Minister was so deeply concerned — will gain no benefit whatever from this proposal but will suffer considerable harm as a result of the higher interest rates which he or she will have to pay.

It may already be well known that at present the average mortgage taken out by first-time buyers is reported by the Nationwide Building Society to be about £18,690 and by the Leeds Permanent Building Society, as of last month, to be £16,634. It will be seen from those figures that the means of the average first-time buyer are a long way off even the present threshold of £25,000. Even those in the big cities of the south-east will in the end be no better off, because of the extra interest that they will have to pay.

There are many big cities outside the south-east. As you, Mr. Deputy Speaker, know from your constituency, the aggregate urban population is larger elsewhere in the country than it is in London. I have made some brief inquiries of the daily and 13 evening newspapers in that area, including Liverpool, Leeds, Bradford, Manchester and Sheffield. It is clear that the typical house sought after by the first-time buyer is available on the market. There are perfectly reasonable properties at between £15,000 and £20,000 — miles away from the present maximum figure.

Mr. Jeff Rooker (Birmingham, Perry Barr)

Did the Liberal party vote against this Ways and Means motion in March?

Mr. Wainwright

No one voted against this Ways and Means motion in March. We all went along with the civilised view that one or two votes on these motions were sufficient to register our disapproval pending the arrival of the Finance Bill.

One of the features of this largest aggregate of urban population is that, for the first time in many years, that area has returned a substantial number of Conservative Members. I am sure that all of them, being diligent representatives of constituents, will consider carefully whether there is a single first-time home buyer in their constituencies who needs to borrow more than £25,000. All the rest will be put at a serious disadvantage by the effects of this proposal. Certainly, constituencies such as Dewsbury, Pudsey, Batley and Spen and Calder Valley will find that that is the position.

Mortgage tax relief in its present form and context ought to have been allowed to wither on the vine. Why should there be tax relief on adding a room to one's home when there is no tax relief on borrowing money to buy anything else as an adjunct to the quality of life? I ask Treasury Ministers why there is no tax relief on interest of £100 a year—

Mr. Campbell-Savours


Mr. Wainwright

I shall not give way — incurred solely to acquire an asset that brings in a taxable income of £200 a year? How can the Treasury Ministers say that they will tax credits but conveniently ignore the essentially linked debits? To pick out one form of expenditure and borrowing on which to give tax relief is unjustifiable and primitive and flies in the face of all business sense. It is a symbol of Victorian superstition about bricks and mortar which the House ought to forget as soon as possible.

4.12 pm
Mr. A. J. Beith (Berwick-upon-Tweed)

During the course of the debate, Labour Members showed some zeal for voting against motion No. 3. It was not intimated beforehand by the Labour Front Bench spokesman, who told me that they would be unwilling to vote against this provision for reasons which they might like to explain. [Interruption.] Therefore, we can use the procedures of the House to give those hon. Members the opportunity to vote with us against the motion.

4.13 pm
Mr. Robert Sheldon

Perhaps the hon. Member for Berwick-upon-Tweed (Mr. Beith) did not hear what I said. I made it clear that no one voted against the Ways and Means motion on the Budget. That does not preclude us from any decision on any of these motions or any other clauses of the Finance Bill as they come up and are debated in the House. That is the position and always was.

Question put:

The House divided: Ayes 228, Noes 115.

Division No. 4] [4.15 pm
Aitken, Jonathan Beaumont-Dark, Anthony
Alexander, Richard Bellingham, Henry
Alison, Rt Hon Michael Benyon, William
Amess, David Berry, Hon Anthony
Arnold, Tom Best, Keith
Atkins, Rt Hon H. (S'thorne) Biggs-Davison, Sir John
Atkins, Robert (South Ribble) Blackburn, John
Atkinson, David (B'm'th E) Blaker, Rt Hon Peter
Baker, Kenneth (Mole Valley) Body, Richard
Baker, Nicholas (Dorset N) Bottomley, Peter
Baldry, Anthony Bowden, Gerald (Dulwich)
Banks, Robert (Harrogate) Braine, Sir Bernard
Batiste, Spencer Bright, Graham
Brinton, Tim Jones, Robert (Herts W)
Brown, M. (Brigg & Cl'thpes) Kershaw, Sir Anthony
Bruinvels, Peter Key, Robert
Bryan, Sir Paul King, Roger (B'ham, N'field)
Buchanan-Smith, Rt Hon A. Knight, Gregory (Derby N)
Buck, Sir Antony Knight, Mrs. Jill (Edgbaston)
Budgen, Nick Knowles, Michael
Burt, Alistair Lang, Ian
Butterfill, John Latham, Michael
Carlisle, Kenneth (Lincoln) Lawler, Geoffrey
Carttiss, Michael Lawson, Rt Hon Nigel
Chope, Christopher Lee, John (Pendle)
Clark, Michael (Rochford) Lennox-Boyd, Hon Mark
Clegg, Sir Walter Lester, Jim
Cockeram, Eric Lewis, Sir Kenneth (Stamf'd)
Colvin, Michael Lilley, Peter
Conway, Derek Lord, Michael
Coombs, Simon Luce, Richard
Cope, John Lyell, Nicholas
Couchman, James MacKay, Andrew (Berkshire)
Cranbourne, Viscount Major, John
Crouch, David Malins, Humfrey
Currie, Mrs. Edwina Maples, John
Dicks, T. Marland, Paul
Dorrell, Stephen Marshall, Michael (Arundel)
Douglas-Hamilton, Lord J. Mates, Michael
du Cann, Rt Hon Edward Mather, Carol
Dykes, Hugh Mawhinney, Dr Brian
Evennett, David Maxwell-Hyslop, Robin
Eyre, Reginald Mayhew, Sir Patrick
Fallon, Michael Mellor, David
Favell, Anthony Meyer, Sir Anthony
Fenner, Mrs. Peggy Miller, Hal (B'grove)
Finsberg, Geoffrey Mills, Iain (Meriden)
Fookes, Miss Janet Mills, Sir Peter (Devon, West)
Forsyth, Michael (Stirling) Moate, Roger
Fox, Marcus Montgomery, Fergus
Franks, Cecil Moore, John
Fraser, Sir Hugh Morris, M. (N'hampton, S.)
Freeman, Roger Morrison, Hon P. (Chester)
Gale, Roger Moynihan, Hon C.
Galley, Roy Murphy, Christopher
Gardiner, George (Reigate) Neale, Gerrard
Garel-Jones, Tristan Needham, Richard
Gilmour, Rt Hon Sir Ian Nicholls, Patrick
Glyn, Dr. Alan Norris, Steven
Goodlad, Alastair Onslow, Cranley
Greenway, Harry Ottaway, Richard
Gregory, Conal Page, Richard (Herts, SW)
Griffiths, Peter (Portsm'th N) Pawsey, James
Ground, Patrick Peacock, Mrs Elizabeth
Gummer, John Selwyn Percival, Rt Hon Sir Ian
Hamilton, Hon A. (Epsom) Porter, Barry
Hamilton, Neil (Tatton) Powell, William (Corby)
Hanley, Jeremy Powley, John
Hannam, John Prentice, Rt Hon Reg
Hargreaves, Kenneth Price, Sir David
Harvey, Robert Proctor, K. Harvey
Hawkins, C. (High Peak) Raffan, Keith
Hawksley, Warren Rathbone, Tim
Hayes, J. Rees, Rt Hon Peter (Dover)
Hayhoe, Barney Rhodes James, Robert
Hayward, Robert Rhys Williams, Sir Brandon
Heathcoat-Amery, David Ridley, Rt Hon Nicholas
Heddle, John Robinson, Mark (N'port W)
Hickmet, Richard Roe, Mrs Marion
Higgins, Rt Hon Terence L. Rost, Peter
Hirst, Michael Rowe, Andrew
Hogg, Hon Douglas (Gr'th'm) Ryder, Richard
Hordern, Peter Sackville, Hon Thomas
Howard, Michael Sainsbury, Hon Timothy
Howarth, Alan (Stratf'd-on-A) Sayeed, Jonathan
Howarth, Gerald (Cannock) Shaw, Sir Michael (Scarb')
Howell, Rt Hon D. (G'ldford) Shelton, William (Streatham)
Hubbard-Miles, Peter Shepherd, Richard (Aldridge)
Hunt, John (Ravensbourne) Silvester, Fred
Hunter, Andrew Sims, Roger
Hurd, Rt Hon Douglas Skeet, T. H. H.
Johnson-Smith, Sir Geoffrey Smith, Tim (Beaconsfield)
Jones, Gwilym (Cardiff N) Soames, Hon Nicholas
Speller, Tony Trippier, David
Spence, John Twinn, Dr Ian
Spencer, D. van Straubenzee, Sir W.
Spicer, Michael (Worcs, S) Waddington, David
Stanbrook, Ivor Wakeham, Rt Hon John
Stern, Michael Walden, George
Stevens, Lewis (Nuneaton) Wall, Sir Patrick
Stevens, Martin (Fulham) Waller, Gary
Stewart, Andrew (Sherwood) Wardle, C. (Boxhill)
Stokes, John Watson, John
Sumberg, David Watts, John
Tapsell, Peter Wells, Bowen (Hertford)
Taylor, Teddy (S'end E) Wheeler, John
Terlezki, Stefan Whitfield, John
Thatcher, Rt Hon Mrs M. Wiggin, Jerry
Thomas, Rt Hon Peter Wood, Timothy
Thompson, Donald (Calder V) Woodcock, Michael
Thompson, Patrick (N'ich, N) Yeo, Tim
Thorne, Neil (Ilford, S) Young, Sir George (Acton)
Thornton, Malcolm
Thurnham, Peter Tellers for the Ayes:
Townend, John (Bridlington) Mr. David Hunt and
Tracey, Richard Mr. Michael Neubert.
Abse, Leo Hughes, Sean (Knowsley S)
Alton, David Hughes, Simon (Southwark)
Archer, Rt Hon Peter John, Brynmor
Ashdown, Paddy Kaufman, Rt Hon Gerald
Ashton, Joe Kilroy-Silk, Robert
Atkinson, N. (Tottenham) Kinnock, Neil
Bagier, Gordon A.T. Lewis, Ron (Carlisle)
Barron, Kevin Lloyd, Anthony (Stretford)
Beckett, Mrs. Margaret Lofthouse, Geoffrey
Beith, A. J. Loyden, Edward
Bennett, A. (Dent'n & Red'sh) McCartney, Hugh
Bermingham, Gerald McDonald, Dr Oonagh
Bidwell, Sydney McKelvey, William
Boothroyd, Miss Betty Maclennan, Robert
Bray, Dr Jeremy Madden, Max
Brown, N. (N'c'tle-u-Tyne E) Marek, John
Bruce, Malcolm Mason, Rt Hon Roy
Buchan, Norman Meadowcroft, Michael
Callaghan, Rt. Hon. J. Mikardo, Ian
Campbell-Savours, Dale Millan, Rt Hon Bruce
Clarke, Thomas (Monkl'nds) Mitchell, Austin (G't Grimsby)
Cocks, Rt Hon M. (Bristol S.) Morris, Rt Hon A. (W'shawe)
Cohen, Harry Nellist, David
Cook, Frank (Stockton North) O'Neill, Martin
Cook, Robin (Livingston) Orme, Rt Hon Stanley
Corbett, Robin Owen, Rt Hon Dr David
Corbyn, Jeremy Patchett, Terry
Cowans, Harry Penhaligon, David
Cunliffe, Lawrence Pike, Peter
Davies, Rt. Hon. Denzil (L'lli) Powell, Raymond (Ogmore)
Davies, Ronald (Caerphilly) Randall, Stuart
Deakins, Eric Redmond, M.
Dixon, Donald Rees, Rt Hon M. (Leeds S)
Dobson, Frank Richardson, Jo
Dormand, Jack Roberts, Ernest (Hackney N)
Douglas, Dick Robinson, G. (Coventry NW)
Duffy, A. E. P. Rooker, J. W.
Dunwoody, Mrs. G. Ross, Stephen (Isle of Wight)
Fatchett, Derek Rowlands, Ted
Faulds, Andrew Sheldon, Rt Hon R.
Field, Frank (Birkenhead) Shore, Rt Hon Peter
Fisher, Mark Silkin, Rt Hon J.
Forrester, John Skinner, Dennis
Foster, Derek Smith, Rt Hon J. (M'kl'ds E)
Freud, Clement Soley, Clive
George, Bruce Spearing, Nigel
Hamilton, W. W. (Fife Central) Stewart, Rt Hon D. (W Isles)
Harman, Ms Harriet Straw, Jack
Harrison, Rt Hon Walter Thomas, Dafydd (Merioneth)
Hattersley, Rt Hon Roy Thompson, J, (Wansbeck)
Haynes, Frank Tinn, James
Heffer, Eric S. Wainwright, R.
Hoyle, Douglas Wallace, James
Hughes, Mark (Durham) Wareing, Robert
Hughes, Robert (Aberdeen N) Welsh, Michael
Wigley, Dafydd
Wilson, Gordon Tellers for the Noes:
Winnick, David Mr. Allen McKay and
Woodall, Alec Mr. Mr. Norman Hogg.
Young, David (Bolton SE)

Question accordingly agreed to.

Resolved, That income tax for the year 1983–84 shall be charged—

  1. (a) in respect of so much of an individual's total income as exceeds £14,600 at such higher rates as are specified in the Table below; and
  2. (b) in respect of so much of the investment income included in an individual's total income as exceeds £7,100 at the additional rate of 15 per cent.

Part of excess over £14,600 Higher rate
The first £2,600 40 per cent.
The next £4,600 45 per cent.
The next £7,100 50 per cent.
The next £7,100 55 per cent.
The remainder 60 per cent.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Mr. Deputy Speaker (Mr. Harold Walker)

I am now required under Standing Order No. 114(3) to put successively and without further debate the Question on each of the Ways and Means motions Nos. 2 to 9.

Does any hon. Member wish to divide the House on any of those motions?

Mr. Beith

We wish to divide on Motion No. 3, Mr. Deputy Speaker.

Mr. Deputy Speaker

In that case, instead of reading out each motion in extenso, I propose to follow the procedure used in recent years. That is to say, I shall first state the title of the motion and then simply put the Question, That the motion be agreed to.