HC Deb 24 January 1985 vol 71 cc1116-7
4. Mr. Campbell-Savours

asked the Chancellor of the Exchequer whether he will estimate the potential cost to Her Majesty's Government of the Johnson Matthey resuce operation.

The Economic Secretary to the Treasury (Mr. Ian Stewart)

None, Sir. Any cost will be met by the banking department of the Bank of England.

Mr. Campbell-Savours

Is it not true that the rescuing banks can offset any of their losses on the guarantee against tax? Is that not a potential cost to the Exchequer, and why did the Chancellor of the Exchequer not admit that when he made a statement on 14 December, when he deliberately misled the House by denying it?

Mr. Speaker

Order. The hon. Gentleman must not say "deliberately misled". He may use the word "inadvertently".

Mr. Stewart

My right hon. Friend did not mislead the House on that point. Any call under a guarantee of indemnity in commercial practices is always allowable as a charge against tax and this case is no different. The question of any call under such an indemnity does not yet arise.

Mr. Skinner

Is the hon. Gentleman aware that this is the second occasion when the Government have allowed banks to take part in tax indemnities on a large scale— thereby putting the burden on every other taxpayer— when taking part in rescuing banks? The first occasion was when it was suggested that they could rescue the central American banks in respect of Argentina and other countries, which resulted in a £200 million loss to the taxpayers of Britain. Now, to save Johnson Matthey, the Government have given a nod and a wink to all those banks which refuse to contribute to the rescue so that they will not have to pay a penny piece themselves. That is hoodwinking the British electorate, and does it not mean that there is one law for the banks and another for the British people, many of whom are up to their necks in debt as a result of this Government's policies?

Mr. Speaker

Order. It does not help to have long supplementary questions, as they keep out other hon. Members.

Mr. Stewart

It is interesting to hear the hon. Gentleman's comments on the lifeboat and rescue operations, similar operations to which were conducted by the Labour Government in the 1970s. I do not recall him making the same comments then. The operation relating to the rescue of Johnson Matthey was conducted because the Bank of England Act 1946, also introduced by a Labour Government, gives the Bank of England freedom to use its own resources.