Finance (No. 2) Bill

HC Deb 14 July 1988 vol 137 cc625-55

Question again proposed, That the Bill be now read the Third time.

7.48 pm

Ms. Joyce Quin (Gateshead)

Throughout our debates on the Budget and on the Finance Bill—including the Committee stage— the Government and their supporters have steadfastly refused to accept the truth of their Budget measures: that they represent huge benefits for the rich and create an almost unbridgeable chasm between rich and poor.

In Committee, Conservative Members claimed that only Labour had criticised the Budget for its handouts to the very rich. That is absolute nonsense. Let me quote one or two of the headlines that greeted the Budget when it was first presented to the House: Dramatic gains for the rich. An end to old-fashioned egalitarianism. A gain for high earners with little to offset it. Those are from the Financial Times. Super-rich net big bonus from tax changes. Low earners lose out from tax reform. Those are from The Guardian.Virtually throughout our press—which is not normally hostile to the Conservative Government—similar headlines showed us how the Budget was received.

Organisations concerned with the plight of the poorest sections of the country—organisations such as Shelter, Age Concern, the Low Pay Unit and many charities and welfare organisations—expressed their utter dismay at what the Budget contained.

In a rather strange speech, the hon. Member for Spelthorne (Mr. Wilshire) enlisted the aid of John Wesley in support of the Budget and the Bill. Apart from thinking that it is a dubious practice to try to enlist the aid of someone who has been dead for a great many years and to quote him as being in favour of a particular Bill or clause when he is not in a position to make his views known, I believe that what the hon. Gentleman said was far from being the view of most Methodists and most Church people in today's society. It was foolish of him to single out a particular cleric when it was clear from the recent Methodist conference that the views of that cleric were supported by nearly all the delegates. A motion passed virtually unanimously condemned the divisive nature of the Government's economic policies. That was not the view of one person alone; it represented a wide spread of opinion.

We must also recognise that the Methodist Church is in the same camp on these issues as the Church of England, and indeed the Roman Catholics, particularly the Catholic bishops, who made very similar statements. They are taking that view not because they have suddenly become party political or because they all want to join a particular political party, but because they see the reality of Government policies in their parishes and in all parts of the country where they have a presence. It is the reality of the poverty that has been created in the Government's period of office that is giving rise to such widespread sentiments of concern.

Some elements of the business community have also criticised the Budget and the Bill. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) pointed out in an earlier intervention that the CBI in the northern region had tremendous misgivings about the Budget because of the regional effect of the measures, which, it was felt—particularly in view of the extension of the business expansion scheme to private housing—would benefit the south-east more than the north-east. Moreover, the top earners tend to be concentrated in the south-east, and it was therefore felt that the money coming from tax cuts would circulate in the already prosperous parts of the country rather than in the areas that most need a cash injection.

Several myths have appeared during our discussions in Committee and on the Floor of the House. One is the myth of the low-tax society that the Government claim to be creating. With the shift towards indirect taxation, many people find that they are paying more in tax overall, although the richest are paying up to 40 per cent. less. The head of the Low Pay Unit calculated that today's super-taxpayers were the poor rather than the rich, given the way in which the Budget measures and the allied social security measures have combined.

An article in the Financial Times of 4 May contrasts the circumstances of two similar couples: Income tax and national insurance for a married couple on 10 times the average earnings and with a part-time working spouse and no children counted for 61.1 per cent. of earnings in 1978–79, compared with 36.9 per cent. in the current financial year. For the same type of household on half the average earnings, the tax burden this year will be higher than in 1979. That is a disgraceful situation. It is figures like that that the Government cannot avoid when they try to soft-soap us into believing that everyone has benefited substantially from the Budget. My hon. Friend the Member for Dunfermline, East (Mr. Brown) was told in answer to a question that more than 7.5 million households were worse off under the Budget measures and the social security changes combined.

Another myth, propounded yet again by the Chief Secretary this evening, is that the Budget is a Budget for incentives. The only incentive created in this Budget is the incentive to import. The cuts in income tax and the lack of investment in manufacturing industry mean that the likely gainers from the tax cuts will be those producing goods in other countries which will be imported into Britain in ever-increasing numbers. As we know, the recent trade figures bear that out. This is a fear that we have expressed throughout our debates —a fear that we have expressed for a long time, given the Government's economic strategy —and it certainly seems to accord with the present reality.

Looking at our present tax system, we must face many unpleasant facts. It is still possible for someone earning £1 million to pay no tax. The top 1 per cent. will pay £4.7 billion—in other words, an average of £22,680 per taxpayer less this year than under the Labour Government. Yet, at the same time as the rich have received these enormous benefits, pensioners, because of the broken link between pensions, wages and prices, are earning less than they would have been if the link had been maintained. The pensioner married couple would now be earning about £79 instead of £69. Many people have seen their standard of living plummet, as I know from my constituency and from parts of Tyneside where poverty has become visible in a way that it was not 10 years ago.

The Chief Secretary has made great play tonight of the improvement in employment figures. We must realise, however, that under the present Government unemployment was at a record level, and that any improvement that there has been represents an improvement of a dire position. Unemployment is still far higher than when Labour was in office. The Chief Secretary's claims struck a very hollow note with me, because this week in my constituency we have faced the loss of 450 highly qualified technological jobs in Marconi Radar, which has more than wiped out any meagre employment gains in Gateshead in recent months.

I want to make that point very loudly. Conservative Members simply do not realise that substantial redundancies are still taking place in the manufacturing sector —redundancies which, in an area such as the north-east, we can ill afford. These are real jobs, which it will be extremely difficult to replace in anything approaching the near future.

The effects of the Government's measures on the economy as a whole, as well as on specific regions, are also very worrying. The balance of payments has deteriorated dramatically. Some measures have promoted rapid growth in credit, on which we had a good debate yesterday when many valid points were made. The investment that we need for our country and for the future is still in very short supply. Investment is still below the levels of the last Labour Government. It is not just Opposition Members who say that. Organisations such as the Institution of Civil Engineers and British Aggregate Construction Materials Industries consistently claim in evidence to the Treasury and Civil Service Select Committee that public capital investment is the poor relation in the Government's economic strategy.

The right hon. Member for Shropshire, North (Mr. Biffen) said that Budgets often look different after 24 hours. The judgment on this Budget was harsh as soon as it was announced, but the judgment should be even harsher now, particularly from those who have had the opportunity of scrutinising its grisly details throughout the long sittings in Committee. It is a disgraceful Bill, and the blatant way in which the wealthy have been showered with benefits shows a deep contempt for society as a whole.

8.1 pm

Mr. James Arbuthnot (Wanstead and Woodford)

It is a pleasure to follow the hon. Member for Gateshead, East (Ms. Quin) because, however much one may disagree with what she says, she always puts it with a care and persuasiveness that I find rather enviable.

This year, there is one Finance Bill; last year, there were two Finance Bills. What this year lacks in quantity, it makes up for in quality. Last year, with some diffidence, I made my maiden speech on the Third Reading of the second Finance Bill on 20 July.

Mr. Andrew Mitchell (Gedling)

It was a very good one.

Mr. Arbuthnot

In that speech I asked for three changes to be considered; first, a change in the taxation of married women, which I regarded as an archaic and insulting antique; secondly, a change in capital gains tax legislation, which was absurdly complicated; and, thirdly, a change in the way in which our tax system relates—or rather, does not—to our benefits system. I am delighted to say that, within less than a year, the Government have changed the taxation of women, they have dealt partly with the taxation of capital gains, and I am sure that they will shortly begin to consider changing the way in which the tax system relates to the benefits system.

The change in married women's taxation is one of the most historic changes of this century, because it begins to treat women as equals. The Government have brought in equality of treatment for women, yet at every step of the way they have been vigorously opposed by Opposition Members, who talk about equality for women, but whenever the scent of equality for women is within their nostrils they run a mile. I am therefore truly grateful to the Government for the change in the taxation of women.

The Government have made a start on the taxation of capital gains. I describe it only as a start, but it is a major start, as it brings the taxation of capital gains closer to the taxation of income by virtually amalgamating the two, although there is still plenty of work to be done. There is much legislation which is now unnecessary, or could at least be simplified, which discourages people from converting capital gains into income, or income into capital gains, to reduce their tax rates. That could perhaps be achieved by abolishing capital gains tax altogether and introducing a new schedule to the Income Tax Acts so that capital gains could be taxed under schedule F. That would necessitate suitable changes to the allowances, and the indexation allowance, which I regard as too complicated to be worth while, might have to be abolished. However, if the Government are serious about abolishing inflation, as I am sure they are, the indexation allowance should become less and less important.

The issue of national insurance is related to the tax and benefit systems and needs consideration. Before the Budget there were rumours that if my right hon. Friend the Chancellor of the Exchequer reduced the higher rates of income tax he would claw back that relief from higher rate taxpayers by increasing the national insurance rates that they would pay. I am delighted that he did not do that, mainly because national insurance is such an abomination. I should like to see it abolished altogether. It is the equivalent of another income tax, but it requires its own bureaucracy. It has the most curious marginal rates of tax, which are sometimes over 100 per cent. It is a con for people who contribute towards their pensions. They contribute towards their pensions in the belief that they are building up a pension fund for themselves in future, when we know that national insurance contributions are spent on today's pensions. If anyone other than the Government tried that sort of thing he would be arrested, and quite rightly too. National insurance no longer has any place in our taxation system. It should be amalgamated with the income tax system, and we would not lose by doing that.

National insurance brings in about £28 billion a year, so it would be the act of a brave man to say that it would cost nothing to abolish it. The Budget is based on the idea that if we reduce taxation we encourage incentives, we encourage people not to go abroad, we encourage tax exiles abroad to come home and we encourage employment prospects. If we reduce taxation, we can increase the tax take. It would cost far less than £28 billion to abolish national insurance. That is not considered in this year's Finance Bill and will probably not be considered in the next year's Bill, and possibly not even in the following year's Bill, but at some time I should like the Government to consider not only the possibility of reducing income tax to 20 per cent., but also the possibility of abolishing national insurance.

8.7 pm

Mr. Nigel Griffiths (Edinburgh, South)

When the Government announced the Budget, they— boasted that is something that they are rather good at —that it was the most generous Budget this century. Few people believed it then— even the Daily Mail and the Daily Express recorded some criticism—and fewer people believe it now. They know that the Government's generosity has been selectively targeted on the rich to an extent unknown in living memory.

It is the rich, not the rest, who make major gains from the capital gains exemptions, who benefit primarily from inheritance tax changes and who enjoy the tax-free gains from the business expansion scheme and other Government tax relief schemes. The poor, and those people on low and modest incomes, saw any tiny gains from the Budget swallowed by gas and electricity prices rises, by rent rises, which were three times the rate of inflation, and by soaring mortgage interest rates.

Many poor people fared even worse than that, including elderly people who have lost housing benefit, handicapped people who have forfeited allowances for heating, laundry and baths, and disabled people who are no longer able to afford diets, let alone home comforts. Those people have viewed the Budget with horror.

My hon. Friends have rightly pointed out many of the inequities that lie within the Budget. There is, however, another element that is a cause for great concern. My constituents and I fear the proliferation of private landlords. People are greatly troubled by the likely effects of the business expansion scheme, details of which are to be found in schedule 4. They are worried that more flats in Marchment will be bought up and let to tenants who have no vested interest in the well-being of the area. They are fearful that unscrupulous methods will be employed to remove current tenants. They are anxious about the Government's failure to impose a social landlords' charter with real safeguards for tenants from landlords who are running establishments that have been set up under the BES.

In Edinburgh and elsewhere we have seen too much use of public money for private landlords. The Conservative-controlled council gave property speculators over £6 million in repair grants. Private property was converted into executive flats for visiting business men. Five years have passed and the flats are still empty. Edinburgh's Labour-controlled council has stopped the grants, but the Government are changing the law and speculative landlords will have a new lease of life. The BES will allow those who enjoy large incomes to offset £15,000 a year or more, and to pay little if any tax on property developments that come within the scheme.

In that way, £40 million of public money this year will go to those investing in housing for rent. Such housing will not be subject to the Rent Acts and there will be no security of tenure for tenants. There will be no obligation on investors to maintain the property for rent at the end of five years. Indeed, there will be an incentive for such investors to get out of it and enjoy capital gains tax exemption from the profit that is made when the property is sold. The BES will give a green light to the Nicholas van Hoogstratens of this world. The Evening Standard tells us that thug factors in property development will enable investors to double their money in five years.

The Financial Secretary to the Treasury was forced to concede in Committee that nothing in the Budget and nothing in the BES will stop van Hoogstraten from cashing in on the cash bonanza that the BES will open. This is in spite of his criminal record of evicting young families in winter, harassing senior citizens to obtain vacant possession, cutting off gas, electricity and heating supplies and creating explosions to get rid of sitting tenants. Companies, including those which operate under van Hoogstraten, will receive an open-ended subsidy of £200 million over the lifespan of the scheme.

If the Budget was designed to help the homeless and if it was aimed at providing rented housing for the elderly and the handicapped, that money would have been made available to housing associations and local authorities. Instead, the Government have chosen to target it on the undeserving rich. Instead of putting the £200 million to the provision of 5,000 houses for the elderly, the handicapped, the overcrowded and the homeless, Budget money is going to those who clearly have a much higher priority in the mind of the Government—those who have large incomes and who want to make a killing out of the housing misery of thousands of the poorly housed.

This debate takes place after the general public have seen the impact of the Budget on their pay packets. The majority have seen any benefits offset by rises in living costs as a result of the Government's policy. We stand by all the figures that have been quoted by my hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chief Secretary to the Treasury. He argued the case against the Budget so powerfully, piled up the evidence so convincingly, damned the Government with their own figures so forcefully and presented his arguments with such effectiveness that, apart from a limp intervention from the Chief Secretary, no Conservative Member dared to rise during his speech to challenge his figures or the crushing logic of the Labour party's argument.

After nine years of Conservative Government, participant after participant in the debate has voiced concern and alarm at the divided Britain that successive Budgets have brought about. We have the divides of north and south and the rich against the rest. The Government have been warned by the Churches, the charities and even by their own supporters, in addition to the Opposition, of the consequences. The Budget continues the corrosive influence that the Government have sought to impose on our society, an influence that will continue for yet another year. The Chancellor of the Exchequer and other Ministers boast that they intend to continue to allow the corrosion to take place and to bring in more measures that will divide Britain to a greater extent than ever before. For these reasons, we reject the logic of this year's Budget and of future Budgets to be introduced by the Government.

8.17 pm

Mr. Andrew Mitchell (Gedling)

I do not wish to detain the House overlong, but I do wish to make six brief points. Before I do so, I wish to say how much I enjoyed serving as a member of the Committee that considered the Finance Bill. I found it a worthwhile and interesting experience. Much of the debate in Committee was more constructive than some of the debate to which we have listened tonight. It seemed that there was rather more common ground in Committee than has come across so far this evening.

For example, there was common ground on the advantages of fiscal neutrality and on the taxation of women. There was plenty of cross-party agreement on the removal of perks. There was even a glimmer of agreement on the heavy price that countries with high taxation regimes are paying for pursuing that policy.

In that contest, I pay my respects to the Opposition Front-Bench team for its handling of the Bill. I am disappointed that the hon. Member for Islington, South and Finsbury (Mr. Smith) is not in his place. I have been busy moving house within his constituency today and I look forward to receiving his letter of welcome.

It would be churlish not to mention the hon. Member for Newcastle upon Tyne, East (Mr. Brown), who enlivened our discussions with his wit and originality— unfortunately, not usually simultaneously. Each and every one of my hon. Friends returned to the Committee with a lighter step after the dinner break when we knew that the hon. Gentleman would be filling the post-prandial slot.

There is no doubt that we have before us a radical Bill. When we come to examine it in future, it will not he the removal of higher rates of tax that will ensure its longevity and create attention. It will be the integration of taxation of capital and income that will achieve that. That is the road down which we have started to progress, and that will be the hallmark by which the Bill is remembered. It is a key change that will have many beneficial effects. Apart from enhancing the drive towards fiscal neutrality, it will powerfully undermine the avoidance industry. It will ensure that lawyers and accountants do something rather more constructive with their time than working out extremely complicated and ingenious schemes for the very rich. It has the great merit of enhancing simplicity. It dismantles various artificial arrangements dictated by the perception of tax advantage rather than that of an open market view.

The pattern of many past Finance Acts has been to tinker with and change existing arrangements, but the Bill is a major departure from that tradition. Many of the ground rules have been changed. Perhaps that will lead to a couple of years during which highly technical measures will be introduced once the Inland Revenue has had a chance to analyse the effects of the Bill, but I hope that the Government will continue down the path that they have set.

The Budget's approach leads logically to the further integration of the taxation of capital and income and the further elimination of the differences in treatment that now apply. I hope that my right hon. Friend the Chancellor of the Exchequer will bear that closely in mind.

The second main quality of the Budget is the abolition of the higher rate of tax. Despite what Opposition Members have said this evening, that move will be seen in future to be entirely right. We have gone through an era of high taxation regimes throughout the world, and it has now ended. It is interesting to listen to what Ministers of the New Zealand and Australian Governments say when they visit Britain. The New Zealand Minister with responsibilities for trade and his colleague the Finance Minister have visited us, and it is interesting to hear what Socialists who are in power have to say about high taxation.

With the coming of 1992 it will be difficult for any one country in Europe, without massively disadvantaging its industry and commerce, to have a high taxation regime if other countries do not choose such a regime. We can no longer ignore the taxation regimes of other countries in Europe. They have a fundamental effect on whether we can attract industry and business, which is critical to our competitiveness.

Mr. Calum Macdonald (Western Isles)

Did the hon. Gentleman see the report in The Guardian on Monday about a study undertaken by Professor David Birch of Massachusetts Institute of Technology of the various states and districts of the United States? He found that those with high tax regimes have fast-growing economies and low unemployment. He explains that by saying that low tax regimes frequently have a lower level of services and infrastructure. I should point out that Professor Birch is not merely an academic passing an opinion, but is an entrepreneur in his own right, having a firm called Cognetics, which now contains information about 12 million businesses across the United States.

Mr. Mitchell

I must confess that I missed that article in The Guardian on Monday. Although I have not seen the evidence that the hon. Gentleman cited—I try to avoid many articles written by American economists because I find them so difficult to understand—it flies in the face of most other economic evidence that is published in our great newspapers regularly.

Mr. Battle

If the hon. Gentleman had been in the Chamber earlier he would have heard some Opposition Members referring to the adviser who is often cited by the Chancellor—Lawrence Lindsey—who suggested that by cutting taxes a greater proportion of income would go to the Government of whatever country adopted that strategy. Answers to questions that we have put to the Government have shown that strategy to be false. By adopting a policy of low taxation, the Government will lose money. However, the hon. Gentleman missed the evidence because he was not in the Chamber when it was presented.

Mr. Mitchell

I was fortunate enough to hear much of the hon. Gentleman's speech. However, I do not accept his interpretation of that evidence. We are now all familiar with the effect of that policy. The hon. Gentleman has misinterpreted the parliamentary answer that he was given and has therefore drawn an erroneous conclusion.

I believe that the lowering of the top rates of tax will mean a tremendous increase in revenue for the future. Many now accept that it is fair to pay a top rate of 40 per cent. I have always believed that it is immoral in a free society for the state to take away more than 50 per cent. of what someone earns, and I continue to hold strongly to that view.

My third point relates to the taxation of women. I think all hon. Members agree that this has been a running sore for years and deeply insulting to women. For years we have been saying that something must be done. Now someone has done something, and all hon. Members should give credit to the Government for producing an economy that is sufficiently strong and productive to pay for such an important and long-overdue concession to women.

However, one of the significant side effects of this measure has not been sufficiently well advertised, and that is the downward effect on taxation paid by old folk and women. There are 900,000 women over 65 who will benefit from that one change in the Budget, and 1.5 million married women of all ages will pay less tax. Nearly all of those—1.2 million—have an income of less than £5,000 a year. There are 160,000 elderly couples who will cease to pay tax altogether, and 130,000 elderly men will qualify for age allowance. Those are substantial spin-offs to the benefit of the least well-off in society that result from this important measure.

My fourth point relates to the simplification of taxation of employees' shares in non-approved schemes. I fully understand the Inland Revenue's anxiety that there used to be room for abuse by employees being remunerated for tax reasons, by converting their income into shares. That was clearly wrong, and clearly an abuse, but with the increasing integration of capital gains tax and income tax, could not more of that anti-avoidance legislation be swept away? I hope that my right hon. Friend the Chancellor of the Exchequer will look carefully at that next year.

It is important to encourage the spread of employee share ownership. We can now do that within a framework where people pay tax regardless of whether it is on income or capital. I hope that we shall continue such charges, which move us more closely towards a share-owning democracy. Anything that encourages employee share ownership, or any other form of share ownership, must be welcome. I was delighted to see in an answer to my question—unfortunately, it was not reached at Question Time today—that, according to the latest Treasury estimates, Britain now has 9 million shareholders—three times as many as in 1979. The Bill simplifies employee share taxation and earns additional praise for that.

Mr. Battle

The hon. Gentleman waxes lyrical on the value of share ownership, but one method of share ownership is co-operative share ownership in the co-operative movement. Only yesterday on Report the Opposition moved an amendment to give relief to co-operatives to enable share ownership ventures to prosper. I wonder why the hon. Gentleman did not support that.

Mr. Mitchell

Not for the first time this evening, the hon. Gentleman is taking what I am saying out of context. I do not intend to be drawn down that path. Instead, let me move to my fifth point, which concerns company residence and migration rules.

As we are major exporters of capital overseas, it is important for the Inland Reveue to be able to tax profit earned overseas, but it is equally important to encourage other countries to operate sensible, pragmatic and liberal tax regimes. We must be careful to maintain a balance, which is why I particularly welcome the changes made on Report.

My final point relates to our discussions in Committee on the business expansion scheme. I was substantially reassured by what my right hon. Friend the Financial Secretary had to say on that. However, I hope that he will keep in mind two points for the future. First, in order to encourage those businesses that the Government most want to help, particularly in the manufacturing industry, it may be helpful to review the £500,000 limit next year. Not all manufacturing industries are now started in a garage under an arch. Some require extensive capital and the business expansion scheme may have an important role to play in that, which needs to be continually assessed.

Secondly, the business expansion scheme attracts very favourable tax treatment. One receives a tax break on one's way into the scheme and on the way out through not paying any capital gains tax. This is now a mature scheme and we should look carefully at whether we need that sort of web of tax reliefs to sustain it and ensure that it continues to benefit those parts of the economy that we particularly wish to support.

I want to end by enthusiastically commending the Bill. It addresses the needs of our economy. It is a bold and confident measure and as such it is entirely in keeping with the best traditions of this Government. It deserves the support of the House this evening.

8.27 pm

Ms. Hilary Armstrong (Durham, North-West)

I enjoyed listening to the hon. Member for Gedling (Mr. Mitchell), but I was disappointed with his conclusion. I remember when he contested a constituency near mine. He did not win it, and I hoped that he had learnt something of the problems of a divided country with a divided economy which works in one part of the country but at the expense of other parts. That is essentially what we are trying to address.

I am also disappointed that the hon. Member for Spelthorne (Mr. Wilshire) is not present. I shall not pursue the issues that he raised, but it is naive to believe that giving money to a particular group of people who, whatever Conservative Members were saying earlier, are located in one area to which they are greatly committed, will encourage them to move. Far from leaving the south-east to invest in other parts of the country, they are frightened to leave it. I have discussed that recently with industrialists. Such people feel that if they leave the south-east they will never be able to afford to return. Such problems have been created by the divisions in the economy and by the Government's continuing refusal to deal with them. That is one of the central issues of economic recovery.

It is strange that we were lectured about the changes in unemployment. It is as if the Government simply do not know what is going on. The figures published this morning purport to show a dramatic drop in unemployment, but that has happened in the same week as we have had, I think, 1,500 redundancies forecast for the northern region. A report in The Guardian—and, I think, The Independent—showed that during the past five years there has not been a growth of jobs in the top half of the country. The way that the Government have changed their method of calculating unemployment figures means that in many areas unemployment appears to be dropping, but hundreds of people in my constituency, who are not yet 60, have been written off the unemployment register, and they, and the Government, have accepted that they will never work again.

The Government cannot get away for ever with saying that we have a booming economy, that things are going well, and that as long as we keep doing what we are doing everything will be all right. When I meet people at weekends in my constituency they do not know whether to laugh or cry. They feel that they have been written off by the Government, because what is happening to them is not reflected in the words and sentiments of the Government. That is the essence of what we are talking about today.

Of course, we can talk about who is doing well. There are people in industries and companies in Britain who are doing well, but others are not. We are paying for the prosperity and upward movement that some people are achieving. Such is the unfairness that it is almost as if the Government are telling people that it is all their fault—that, if they are not doing well, it is because they are not entrepreneurial, because they are not behaving in a particular way, and that really anybody who is anybody is doing well. At the same time, the Government have cut and undermined the basic opportunities of many of those people to do anything about their circumstances and they now find it increasingly difficult to hang on, let alone to prosper.

I ask the Government not to dismiss those people. They have as many democratic rights as anyone else. They have the right to be taken seriously and to have their feelings and circumstances taken into account just as much as anybody else. It is irresponsible of Conservative Members to talk as if they and their plight do not exist.

The tragic thing is that the Budget has fuelled the divisions in society. The divisions have become greater during the past 10 years, and the number of people who are living in what is called poverty has increased, as has the number of children. The Government are fuelling problems for the future.

Another division is that between regions. What has the north received from this Budget? It does not have a preponderance of people who are in the top I per cent. of earners, although some have obviously gained. If we forget about individual gains and losses and think about the economy and how the regions are doing overall, we find that this Budget has fuelled the economy in the south-east. The right hon. Member for Shropshire, North (Mr. Biffen) talked about the dangers of an overheated economy in the south-east. The Budget has fuelled that because the preponderance of people who have benefited from the Budget live, work and have their operations in the south-east. The preponderance of people in the north are dependent upon other forms of Government aid—through benefits.

Overall, there has been a cut in Government funding, which will not lead to an economy that can invest, develop and produce a manufacturing and skill base in the northern region. Even if Conservative Members can get away with the argument—which no one has yet managed to do—that giving the richest people additional money will encourage them to invest, the experience of the past few years is that they are not investing in those areas of the economy which desperately need investment. They are not investing in manufacturing, in research and development, in training or in the north—not compared with the amount that is going into the south-east. That leads to all sorts of problems.

In the past, in the House, I have welcomed the principle that women should be taxed independently. I agree with the hon. Member for Gedling that in this day and age we should not expect anyone to disagree with that principle. I do not welcome all the proposals, because, ultimately, they do not give women the independence that they should get. The Bill gives the husband the pickings and the wife the left-overs, and even that happens only if the husband gives his written permission. As I said in Committee, I do not see that as a great step forward. The Chancellor had the opportunity to do a lot more, and he conned us.

We have been urged to bring our taxation system into line with other European countries. For the taxation of women, that may have been a good idea. Other European countries have far more generous child benefit systems. The amount of money that women have lost by the freezing of child benefit is far greater than the Government are allowing them to receive through the independent taxation allowance. Some 85 per cent. of the money going to older women through independent taxation has been lost in housing benefit cuts.

Principles are fine, but they must be built upon with practical measures. The result of the Budget is that most women will lose. Most women are not going to benefit financially from this Budget because other measures have undercut anything that they might have gained financially. Even after all the rhetoric that we had from the Chief Secretary earlier, women will still have to get the written permission of their husbands.

I am very saddened by this Budget. I do not want to live in a society that punishes one group in order to reward another. It is very difficult to get all this right, but to justify a situation in which one group will prosper at the expense of another—not just to do it ideologically, but to justify it —seems to me to be quite absurd.

I hope that the Government will look again at their economic policy. I am interested in people prospering in a country that gives everyone an opportunity to prosper. I know, and the country knows, that this Budget will not make that possible. I shall therefore be voting against it tonight.

8.40 pm

Miss Ann Widdecombe (Maidstone)

I am grateful for the opportunity to speak in this debate. In the many hours that we spent in Committee on the Bill, the thing that caused me most disappointment was the lukewarm nature of the welcome given by the Opposition to what I consider to be the most important and long-overdue measure in this Budget—the final recognition of women as having equal financial rights and being equal earners in our society, with the rights which earning men have had for centuries.

The situation that pertained before the Budget went back 180 years, when not only a woman's income but the woman herself was regarded as the property of her husband. The hon. Member for Durham, North-West (Ms. Armstrong), who I would have expected to welcome the new measure, said that under the new system the husband had the pickings and the wife had the left-overs. She neglected to mention that prior to these changes not only did the wife not even have the left-overs, but the plate belonged to her husband as well.

It is right for us to realise not only the financial but the social importance of independent taxation and what it has done for women. I believe that in years to come, long after we have forgotten to argue about the other fiscal measures in this Budget and the Opposition's argument that somehow it is damaging to give tax concessions to high earners, we shall remember this Budget for its social impact and what it has done for women. That is why I find the niggardly, grudging welcome from the Opposition so disappointing.

I listened very carefully to discover why the Opposition were not welcoming this great social measure. The reason appeared to be based largely on the fact that it was somehow going to benefit disproportionately the better-off, that being the standard response of the Opposition to any new and imaginative measure. They seemed to imply that there should be a sliding scale of equal rights between the sexes and that the better off one is, the less entitled one is, as a woman, to equal rights. The logic of the Opposition's argument is that this is not to be welcomed because the better-off might be disproportionately benefited. But the well-off woman is just as entitled to her independence and dignity as her less-well-off sister.

Mr. Battle

Will the hon. Lady assure us that she would apply that to child benefit? When members of her own party suggest that wealthy women ought not to receive child benefit, will she say that they have the right to have that money for their children?

Miss Widdecombe

The sheer inconsistency of the Opposition's reasoning is summed up in that contribution. In discussing the rates of taxes that people pay and the benefits that they receive, one obviously looks, may look, or may decide not to look at income. But what is never negated are the equal social rights of each category. It was the social right to independent taxation, to privacy and to be responsible for the tax on one's own earnings that I was upholding straight across the income scale. That is totally different from saying what we might or might not take into account when assessing entitlement to benefit.

When the Opposition had exhausted that avenue of argument, they said that it was a very good thing as far as it went but it did not go far enough, because of the transferability of allowances. They homed in on that and said that it completely negated everything else that had been done. But we had a very clear explanation and assurance given to us that, if we tried to reach a position in which we could have complete choice and division of allowances without transferability, it would not be until substantially in the future, if at all. Surely it is better to make a very real benefit which has not existed before, and transferability has not existed before. It is nonsense to say that it does not improve the lot of women. Of course it does. It may not improve it down to the last two inches of the road along which we would like to go, but it does improve it along the major part of the road. I believe that the argument that it does not go far enough does not negate the substantial advantages to women.

Ms. Armstrong

Our argument in Committee was that, if the Government had simply turned things round—if, instead of the man having to give his permission, it had been the other way round—that would have been seen by women as a real gesture. We recognise that it will take time to get the whole of this right, but we were looking for something that would demonstrate recognition of the problems that women have. Very often husbands have not declared, and we are fearful that they will continue not to declare, what they are earning, and so on. Had the Government done it the other way round, that would have been a real measure and would have been just as easy to carry out as the one that they are proposing in the Bill.

Miss Widdecombe

In other words, there should be over-correction, according to the hon. Lady. If there cannot be equal choice, choice should be moved to the woman instead of to the man. I believe in equal rights for the two sexes, and the man should have equal rights with the woman. For years men have been responsible for their wives' taxation, including taxation on the income of a wife who may be earning substantially more than her husband. In my view, the hon. Lady's suggestion would be just as iniquitous as the woman not being independently taxed in her own right. I see no point in over-correction. If we cannot get it exactly equal, it may be administratively convenient to stay with the sort of system that we have been having, but with an added right included.

Nobody can deny that that right has been given. Two enormous advantages have been given to women in this Budget. One is the right to independent taxation, and the second is the right to transferability, even though it may not be given in the way that Opposition Members would like.

The Budget has been an enormous boost for the family. The two biggest disincentives to marriage were the lack of independent taxation for women and the inequitable position with regard to mortgage interest tax relief for unmarried couples. Those disincentives have disappeared at a stroke. Therefore, apart from the financial benefits of the Budget, it is socially one of the most important reforming Budgets this century—certainly the most reforming in recent years. The only reason why Opposition Members are not enthusiastic is that they had the same opportunity but they did nothing about it. It ill becomes them to judge us.

8.50 pm

Mr. Calum Macdonald (Western Isles)

I shall keep my remarks as brief as possible in order to allow those who served on the Committee to take part in the debate. That is only right after the many hours spent on the Bill in Committee. I understand that it was a record number of hours in the post-war period. Every time I picked up a newspaper and read reports about what was happening in the Committee they tended to be dominated by my hon. Friends. They seemed to occupy centre space, and I congratulate them on that. The Chief Secretary admitted that when he referred to the Opposition as masters of the press release. That suggests rather sour and hurt feelings.

There has been a general shift in perception since the Budget was first given in the House. At that time my right hon. Friend the shadow Chancellor, the right hon. and learned Member for Monklands, East (Mr. Smith), described it as a "Budget too far". In the intervening months we have seen a growing public perception that that is so. More and more people are beginning to recognise that in this instance the Opposition have won the argument.

The Chief Secretary referred to the Budget as "monumental". It is monumental, but for the reasons I have just given, not for the reasons about which he was thinking. In the lead-up to the Budget statement it was expected that it would crown Tory rule and anoint the supposed benefits of years of Tory rule in the Exchequer. That was the frenzy of pre-publicity.

When the Budget was unveiled in the House, I remember the excitement of Conservative Back Benchers as each successive tax reduction was announced. Almost immediately, public perception turned sour and began to recognise the unfair and unequal values contained in the Budget. The argument has been slipping away from the Government.

I understand that that would cause some frustration and bewilderment to the Government. After all, they could have expected much greater political kudos from the Budget. How could they have failed? It contains the same old formula of massive tax cuts. They expected popularity as an immediate aftermath.

The Opposition's arguments have rightly focused attention on the inequities in the Budget, as described so clearly by the shadow Chief Secretary, my hon. Friend the Member for Dunfermline, East (Mr. Brown). No matter what the propaganda mounted by the Conservatives, the Budget is now widely seen, certainly in my constituency and probably throughout the country, to be unfair.

The political benefits that the Government expected from the tax cuts, particularly the cut in the basic rate, have been lost because of the profile assumed by the cut in the top rate of tax. That is what people see as unfair. It is particularly unfair when it is compared with the persistent underfunding of the Health Service and the outrageous cuts in social security. Such comparisons have brought home to people the unfairness of the Budget. We see similar unfairness in the smallest details of the Budget. For example, extra money is given to wealthy people who inherit more wealth. That can be compared with the cuts in housing benefit where people who have managed to accumulate savings are being penalised for having done so. The comparison is striking.

It is no wonder that we have seen the Chancellor's reputation dim somewhat over the intervening months. At one time he was the hero of the hour, but now there is talk of resignation and disenchantment and people are asking what he will do now.

Even if the Budget was not popular, the Government might have expected other accolades for it. We have heard some claims tonight. There are claims that it is a radical Budget. In the lead-up to the Budget, the talk was of the virtues of simplicity and neutrality in the tax regime. As people have scrutinised the Budget, they have begun to see how shallow those claims were. The first claim to come under the microscope was that for the independent taxation of women. As my hon. Friend the Member for Durham, North-West (Ms. Armstrong) pointed out, that measure is skin deep when compared to the large claims made for it.

As we look at the Budget in greater detail we see that the claim about its being a move towards a simple and neutral tax regime is shallow. The Budget is far from being neutral or simple. It is biased towards the rich and is loaded with loopholes, exemptions and allowances. As my hon. Friends have pointed out, a millionaire, if he takes advantage of those exemptions and allowances, could get away with paying next to no tax.

The tattered reputation of the Budget as a radical measure has been summed up in a succession of headlines in the financial newspapers. I cite only one. About a month ago, the Financial Times talked about the fading zeal for tax reform on the Government side. That was entirely appropriate.

Bit by bit the Chancellor was losing the argument. It was no longer the popular, vote-winning Budget it was first expected to be. When exposed to scrutiny, it was not the radical Budget that it was trumpeted to be. The emperor may not have been entirely without clothes, but he was getting down to his jockstrap—his ability to manage the economy. The idea has been disproved that the Budget represented the fruits of the Chancellor's careful and prudent management of the economy over the years and that it was an example of his financially sound approach to the economy. Just after the Budget, it seemed that the Chancellor was reinforcing his reputation. The iron Chancellor was becoming the quicksilver Chancellor, able to out-guess, out-manoeuvre and out-finesse the financial markets.

Then the pound rose above levels previously thought to be unsustainable. Interest rates began to climb. The CBI began to squeal about the effects of interest rates. In the past few weeks we have seen mounting evidence that we will have a shocking balance of payments deficit at the end of the year. Such a deficit was unforeseen by the Government. They still have not been able to explain it away. Already it is £4.7 billion more than the figure estimated at the time of the Budget and almost twice the figure that was put about by the Government at the end of last year.

Is this the transformation of Britain into the high-performance enterprise economy that the Chief Secretary talked about? The problem is not one of excessive growth. Our growth is lower than that of Japan, the United States or Germany. It is not a question of sucking in imports. The key problem is stagnating exports. The Government's prediction that exports would grow has already been shown to be false. That is the surest sign of the decay of the economy.

On the point made by the hon. Member for Gedling (Mr. Mitchell) about benefits accruing from a low tax regime, I refer him to a study of 12 million businesses in the United States by Professor David Birch of the Massachusetts Institute of Technology. A newspaper article on his study says: American states and districts which have high tax regimes are the ones whose economies are now growing fast, with significant business and job creation.… Dr. Birch said areas which had low taxes often also had a low level of services and a poor environment. The hon. Member for Gedling said that that flew in the face of the evidence which he had received. We have been looking for proper studies to bear out the claim that the move towards a low tax regime was designed to stimulate growth. We have not found any such studies. None has been advanced. All the studies that have been cited tend to disprove it.

One of the main boasts of the Government is that they have balanced the books and moved into surplus. The Chief Secretary made that point. But at what cost has that happened? It has been at the cost of a reduction in services, and at the cost of undermining and underinvesting in the infrastructure that is desperately required if the economy is to have a sound future. It has also been at the cost of reduced assistance for the poorest.

One of the first actions of the Government was to cut the earnings link with pensions which the Labour Government had established. A recent study for the stockbrokers Greenwell Montagu has shown that if the earnings link had been retained the Government would be spending an extra £4 billion on pensions this year. That is more than the £3.6 billion surplus in the PSBR which the Government claim as a benefit of the wise management which has financed the tax cuts. Add to that all the other earnings-related benefits whose links the Government have cut and we find that we are talking about more than £5 billion in this year alone, which is as much as the privatisation receipts.

The Government have been able to balance the books only by shedding their moral commitment to the poorest people. Today the Chief Secretary said of the Budget that it marked a move away from a tax regime based on envy". Indeed it did. But we have moved instead to a system based on short-sightedness and greed.

9.5 pm

Mr. Rhodri Morgan (Cardiff, West)

I rise in my customary role as the sweeper-up for the Opposition Back Benches to summarise some of the arguments before the winding-up speeches. This is the first Finance Bill in whose proceedings I have played a part. I shall deal principally with the broad effects on the economy of this and previous Budgets, relative to the claims that have been made for them by those responsible—and it is the Government's right to make such claims because they won the last election and the two before it.

When the Government came to power three elections ago in 1979, they claimed, in the famous Saatchi and Saatchi advertisement, that they would lower unemployment and liberate the economy. What actually happened? Initially, they found themselves playing with mechanisms that they did not understand, and unemployment increased by 250 per cent. They then changed their approach to the economy but said, "Britain needs a bit of a cold shower and a large pool of unemployment to restore management's right to manage."

They now see great virtue in creating jobs and are proud of the fact that unemployment—or at least the total number of registered unemployed—has fallen by 1 million in the past 24 months. It is rather sad for the Government that, now that they think they have good news to announce, no one believes them because of the way in which they fiddled the figures, and it is too late to regret the 19 changes that they made.

If it was right for the first 24 months to apply a dose of nanny's cold shower to restore discipline to the economy and restore the right of management to manage—management was extremely pleased by the introduction of the fear factor into labour relations because it felt that it made for better discipline in factories—why, eight years later, is it such a good idea to create jobs?

The Government now claim that their Budgets and adjustments to the fiscal stance have increased activity in the economy. Do they now claim too, that if they reduced unemployment to what it was in 1979—they said that they would reduce it further—they would be able to run the economy without inflation and with no loss of management's right to manage? Do they claim that they can achieve that as well as more investment and greater commitment to training and greater skilling, or will they have to retain a pool of unemployment to ensure what they see as the overriding virtue—breaking the back of the trade union movement and restoring management's freedom to make its decisions without consulting the work force?

That is the problem that they face. Will increased employment release the inflationary forces that built up in the 1960s and 1970s, and with the oil price increases of 1973 and 1979? That is the great unknown, and it is probably something that the Chancellor does not know, and does not wish to know, as the Budget that he presented to the House some weeks ago is probably his swan song.

In studying the Chancellor's final Budget we seek the answer to two questions. I believe that Conservative Members also will be interested in having answers to them, although they probably think that they know them already. First, is there a supply side miracle? Is the British economy more enterprising than it was before? As the economy returns to one in which there is a respectable level of unemployment—still higher than in 1979—will it be able to perform better? Is the economy more efficient? Following all the tax changes, top rate cuts and the "incentivisation" of high-rale taxpayers, will the British economy perform better? Will there be a reduction in the problems that it used to have, of failure to invest. failure to commit to training by comparison with Japan and Germany, and failure to meet delivery times, as that was not thought to be an important obligation?

Secondly, it is constantly rammed down our throats that although taxes are being cut, the tax take from the well-off has increased as a proportion of total tax revenue. Is it true that every time one lowers taxes the tax take from those for whom one has cut rates is also increased? Is it a reasonable proposition to put before the House that there is a causal relationship between lowering taxes and increasing the proportion of tax take from the top rate taxpayers?

Dealing first with the so-called supply side miracle, Conservative Members have told the House during the debates on the Bill that the fundamental basis of the Chancellor's Budget, and of the previous one, in which he also cut top rates of tax and made other changes in switching from lower income taxes to higher expenditure taxes, was that it "incentivised" the economy and encouraged more people to have a go in industry and to take more risks. The odd little tax haven was also introduced, through the BES and enterprise zones. So, in addition to the "incentivisation" that the Government believe is under way in the economy at large, there is to be even more "incentivisation", creating even more enterprise, in the enterprise zones. Those zones have been adjusted in the Bill so that one can now sell unit trusts or organise through unitisation investments in enterprise zones. The business enterprise schemes are not location-specific, but that is done as well in order to get that extra buzz into the entrepreneurship that one would anyway find in the economy.

When enterprise zones were orginally introduced in 1980 by the previous Chancellor of the Exchequer, the picture was given of little beehives of industry—little Hong Kongs full of small textile firms and exporters run by people with bright ideas who wanted to start off new businesses. However, anyone who has visited an enterprise zone knows that it is incredibly difficult to find any beehives of small industry there. One will not find any labour-intensive businesses in an enterprise zone, but instead DIY super-stores and occasionally some hotels. One will not find any manufacturing industry.

Enterprise zones were supposed to provide areas for super-enterprise within an enterprising economy that would serve as examples to everybody else, but that is not what one finds. Instead, there is a lot of property development, with derelict land being covered with buildings. They are a million miles away from being buildings full of labour-intensive industries or little Hong Kongs. One finds there the same types of low-risk investment of a kind that would undoubtedly take place somewhere else if not in an enterprise zone, but with the addition of a tax haven, in opening a DIY super-store or a similar low-risk investment.

I welcomed BES developments when they were first introduced and thought that they were a good idea. I believed that they would help to stimulate risk-taking in British industry. However, we know that the bulk of BES investments went into old people's homes, which were funded in turn by the DHSS allowances brought in by another section of the Government. Those businesses were created by public sector money and provided a tax haven, and they involved no risk. Conservative Members will have to admit that, and, as a result, some adjustments to BES have been introduced in this year's Budget.

The enterprise economy is certainly not to be found in the tax havens that have been created by the Government in the enterprise zones and under business expansion schemes. In general they have further subsidised low-risk investment that would have taken place anyway. If one travels around an enterprise zone, old people's homes and DIY super-stores are what one will find, because BES money has been spent on such things.

The Bill has gone even further with the BES, so that the purchase of existing residential property or the creation of new residential property will be funded by it. A tax haven society has been created rather than an enterprise society.

In the light of the signals that I am receiving I shall sit down, but I trust that some hope will be restored and that a true enterprise society will be created, if only as a result of a change of Government.

9.15 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East)

The Chief Secretary began the debate with characteristic dash and a pretty high standard of parliamentary abuse. He charged that the Labour party was wedded to the orthodoxy of the 1960s. It is unusual for a Conservative spokesman to place us within the 20th century, and I should be grateful to him for that at least. He went on to demonstrate that the Conservative party is wedded to the orthodoxy of the 1860s—the Victorian values in which it takes so much pleasure and in which the Bill is firmly rooted.

As the Chief Secretary went into the details of his speech, my hon. Friend the Member for Cardiff, West (Mr. Morgan), who has just spoken so well, was prompted to intervene. He drew from the Chief Secretary the reluctant admission that this Budget is not a tax-cutting Budget. Income tax has been reduced, but the overall tax burden remains the same.

The Chief Secretary thought it unusual that the Labour party should vote against a shift from direct to indirect taxation. That shift will be regressive because of the way in which it has been designed to affect the top and lower rates. It will advantage the wealthy, not the poor. The figures have been much quoted in the debate. The wealthiest 1 per cent. of our population will be given an extra £2 billion—no doubt they will be extremely grateful for that—and the poorest 70 per cent. will also be given £2 billion. That will not be perceived as fair, unless the recipient is within the top 1 per cent. bracket.

The Chief Secretary went on to describe the Labour party, as he always does, as the party of high taxation. There is no evidence to support that claim. Under the previous Labour Government the total tax take was about 33 per cent. of gross domestic product. Since 1981 the Conservative Government's tax take, measured in the same way, has been about 38 per cent. and the Chief Secretary has said that it is forecast to remain at that level. Despite everything that it says, the Conservative party is committed to high taxation, but the Labour party, despite everything that the Conservatives say, maintains, in practice, lower overall rates of taxation.

The Chief Secretary believes that giving £2 billion to the wealthiest 1 per cent. will not encourage consumption conspicuously. We already know that, on average, such people are earning £75,000. By definition, they already have substantial levels of discretionary expenditure, yet the Government have given them an extra £2 billion. Surely that must encourage consumption.

The historic evidence base is stark. Last year we imported just over £5 billion-worth of motor cars, excluding parts, £131 million-worth of domestic washing machines, £133 million-worth of household fridges and freezers, £402 million-worth of videos, £265 million-worth of televisions, £286 million-worth of watches and clocks, and £308 million-worth of cameras and accessories. Those facts paint a stark picture.

Mr. Timothy Kirkhope (Leeds, North-East)

Will the hon. Gentleman please stop referring to what is being "given" by the Government to those who pay tax? They are not being given anything; they are merely being allowed to retain more of the wealth that they have created.

Mr. Brown

I try to be generous in giving way. Time is limited and I realise that I should not have given way. The hon. Gentleman did not even have the courtesy to attend most of the debate.

As the debate got into its proper swing, my hon. Friend the Member for Edinburgh, Central (Mr. Darling) made a point which dominated the debate when he said that this was a Budget of great contrasts. I got the clear impression that the right hon. Member for Shropshire, North (Mr. Biffen) agreed with him. My hon. Friend spoke about regional policy and decentralisation. He may well have seen the recent DHSS report which dealt with the relocation of a substantial part of that Department to Tyneside. It listed all the merits of the city of Newcastle upon Tyne and the region that surrounds it and then stated that the only reason there could not be a substantial relocation was that senior officials could not take the culture shock of moving to the north. That must be a poor reason for refusing what my hon. Friend calls for.

Ms. Armstrong

May I remind the Government that the Labour Government proposed to relocate the Property Services Agency in Middlesbrough, which would have brought 3,000 jobs north, but the first act of the right hon. Member for Henley (Mr. Heseltine) when he was Secretary of State for the Environment was to cancel that decision?

Mr. Brown

'he north in particular pays a bitter price for the Labour party being in opposition rather than in government—something that is well recognised in the region.

My hon. Friend the member for Leeds, West (Mr. Battle) also sees this as a Budget of great contrast and, in his usual helpful manner, advised the House how God had joined the Labour party when the hon. Member for Spelthorne (Mr. Wiltshire) made that unusual attack on our opposition to the Bill. My hon. Friend pointed to motivations such as greed and avarice as the sort likely to disgust the deity and bring him down firmly on our side, where I am sure he has always been.

My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) spoke of a third of his constituents who live at or below supplementary benefit level and the declining employment base which serves that community. Many Labour Members are confronted with similar circumstances, and it is not surprising that the Budget is met with such hostility from us because there is nothing in it for our constituents.

My hon. Friend the Member for Gateshead, East (Ms. Quin) underscored this theme, which ran through all the speeches of my hon. Friends. As she was bound to do, she especially mentioned the fact that Monday was a black Monday for Tyneside. Not only did the Minister refuse to place important orders for frigates with Swan Hunter—in spite of its meriting them—but the big enemy of Tyneside, GEC, announced the closure of its Marconi plant in Gateshead, East, with the loss of 450 jobs. My hon. Friend the Member for Gateshead, East correctly stated that the Budget would not encourage infrastructure investment or help the unemployed.

Then we discussed one of the Chancellor's great reforming measures—his disaggregation proposals. As my hon. Friend the Member for Durham, North-West (Ms. Armstrong) accurately pointed out, the new right to fill in one's own tax form is not being greeted as the greatest feminist advance of all time by its recipients. The disaggregation proposals remain advantages that apply to rich married men who have unearned income and can trust their wives to transfer the allowances to them. They are the people who will benefit most. As my hon. Friend the Member for Western Isles (Mr. Macdonald) correctly pointed out, the Opposition have won the argument on that and all other points. It is not surprising that many Conservative Members who followed the details in Committee have not turned up to defend the measures enshrined in the Bill in this Third Reading debate. I hope that they have not become so used to remaining silent that they feel obliged to do so even when they are allowed to speak.

The Bill is controversial, yet our proceedings in Committee were not conducted in a stupid war of attrition, as was recommended by the hon. Member for Eastbourne (Mr. Gow). Nor was the Committee an ill-tempered or childish affair. Incidentally, I thank the hon. Member for Gedling (Mr. Mitchell) for his references to my sense of humour. We should like to thank my hon. Friend the Member for East Kilbride (Mr. Ingram), and no doubt the Government will want to thank the hon. Member for Morecambe and Lunesdale (Mr. Lennox-Boyd) for his and my hon. Friend's contribution to progress.

I and my hon. Friends the Members for Dunfermline, East (Mr. Brown), for Wrexham (Dr. Marek), and for Islington. South and Finsbury (Mr. Smith) are grateful to our hon. Friends who served on the Committee—not only to those who have spoken in the debate, although they include my hon. Friends the Members for Cardiff, West (Mr. Morgan), for Edinburgh, Central (Mr. Darling), for Leeds, West (Mr. Battle), for Clydebank and Milngavie, for Durham, North-West. for Gateshead, East, for Edinburgh, South (Mr. Griffiths) and for Newcastle upon Tyne, North (Mr. Henderson). I also thank my hon. Friends the Members for Workington (Mr. Campbell-Savours) and for Oxford, East (Mr. Smith). My hon. Friend the Member for Workington apart, all our Back-Bench Members were drawn from the 1987 intake, and the work that they put into the Bill augurs well for the future of the parliamentary Labour party.

In years to come, when historians of our age study our Committee proceedings on the Finance (No. 2) Bill, perhaps in an attempt to discover why there was no glorious revolution in 1988, or even on 12 July, they will conclude that this legislation emerged in its present form largely as a result of the firm resolve and iron will of one man. I am not referring to the Chancellor of the Exchequer, although we took careful note of his visits to the Committee, presumably and wisely carried out to check up on his fellow Ministers and—if we are to believe the popular press—competitors. If I were in his position I should do the same. I do not mean the Chief Secretary, either. I, unlike his hon. Friends, did not sleep through his speech: I enjoyed it, and I enjoy it every time he makes it.

The Government's hero of the Bill has undoubtedly been the Financial Secretary to the Treasury, and to conclude Third Reading without referring to his role would be like discussing Hamlet without the ham. As he reflects on the 90 per cent. of the total Government Front Bench workload that he undertook during the Bill's passage, he will no doubt recall the Government's resistance to the Labour party's attack on the activities of Mr. van Hoogstraten—an attack continued to the end by my hon. Friend the Member for Edinburgh, South.

My hon. Friend has rightly emphasised the Labour party's fears that the combination of the taxman and Rachman in the business expansion scheme proposals will lead to exploitation, misery and rack renting for private sector tenants. It is not, however, for his predictable resistance to the Labour party that the Financial Secretary will catch the attention of future researchers; nor, I have to say—lest there be any doubt—will it be for his resistance to the parliamentary Liberal party. Let us face it: it could not be.

The first sitting of the Committee began with the hon. Member for Berwick-upon-Tweed (Mr. Beith) saying: I have a vested interest in ensuring that we make progress as quickly as possible. I am sure that the Bill can be improved without unnecessary waste of time."—[Official Report, Standing Committee A, Thursday 12 May 1988; c. 3] The hon. Gentleman did not hang about to see whether that was the case. He went on to absent himself entirely from the third, fifth, sixth, seventh, eighth, ninth, 10th, 11th, 12th, 13th and 14th sittings, and did not turn up yesterday for the Report stage. He has not turned up for Third Reading either.

The Government—in the person of the Financial Secretary—can be forgiven for writing to my hon. Friend the Member for Dunfermline, East: You recently tabled a Parliamentary Question about the political parties currently qualifying for the purposes of section 24 Inheritance Tax Act 1984 … I am now advised that my reply was not as comprehensive as it should have been. The list of political parties currently qualifying for the exemption ought to have included the Liberal Party. The Liberal Party, of course, still exists". It took the Financial Secretary to the Treasury to confirm that to the rest of us. I hope that I have done the whole House a service by reading it into the record, purely for the avoidance of doubt.

The Financial Secretary will be remembered for a triumph that has not yet been remarked on. Let there be no doubt: the right hon. Gentleman has saved the British taxpayer more than £1 billion. Hon. Members are waiting to hear how he did it. He did it by resisting amendments moved by his hon. Friends—both on and off the Committee—designed to give further tax cuts to the wealthy.

When Opposition Members criticise the Tory Front Bench, we should always make sure that we are not blind to what is going on behind the Tory Front Bench. As we sat through the Committee stage, not a word was said from the Conservative Benches about the plight of the poor and dispossessed and the need for enhanced public expenditure on socially useful items such as hospitals, the nurses' pay award and the frigate-ordering programme for the Royal Navy. The overwhelming majority of Conservative Members were making pleas for tax scams for wealthy or corporate interests.

The main theme of the Bill was grotesquely accentuated, and echoed in a distorted way, by the Conservative Back-Bench Members' amendments. Yet the Bill itself remains as it is—a monument to the ever-widening divisions in our country, economic and geographic. Its passage through the House reflects a triumph of corporate over constituency interests, of property over people.

9.33 pm

The Financial Secretary to the Treasury (Mr. Norman Lamont)

The whole House enjoyed the speech by the hon. Member for Newcastle upon Tyne, East (Mr. Brown), as we enjoyed his speeches in Committee. We frequently wished that he had been in charge of some of the filibustering at the beginning, rather than some of his hon. Friends.

I agree with the hon. Gentleman that many of the new Labour Members made excellent speeches. As he says, that bodes well for the future of the Labour party: no doubt there will be an effective Opposition for many years to come.

My right hon. Friend the Member for Shropshire, North (Mr. Biffen), who does not appear to be present, told us that, somewhat incredibly, he had not quite recovered from the experience of being Chief Secretary, but he went on to give my right hon. Friend the Member for Huntingdon (Mr. Major) some advice, which I am sure was well taken. He also commented on the current account. He suggested that the forecast for the current account might be used as an indicator for the economy. It might be difficult to do that, given that the average error in the Industry Act forecast for the current account has been about £3 billion in the past 10 years.

My right hon. Friend expressed concern about inflation. He will recognise that the current account reflects the higher rate of growth that our economy has enjoyed in recent years. It reflects the fact that capital goods imports in the past three months, compared with a year earlier, have increased by about 19 per cent., compared with imports of consumer goods, which have increased by about 10 per cent. The current account deficit is being financed by an inflow of capital which shows that the world outside rightly maintains a high level of confidence in our economy.

My right hon. Friend the Member for Shropshire, North expressed concern and some doubts about the Budget. My right hon. Friend the Chancellor of the Exchequer could hardly be accused of being imprudent in his Budget because, in the second or third sentence of his Budget speech, he announced that in this year's Budget, he did not have the opportunity to reduce taxation and that the share of GDP taken by taxation would remain broadly the same. He also announced that we would be repaying debt this year and that, as a result, he could balance the Budget for the first time for many years. He held out for the future the prospect of a balanced Budget as the lodestar. Given all those factors, I do not think that he could be accused of anything other than taking a stance of considerable prudence.

Mr. Darling

Is the Financial Secretary saying that the comments made by the right hon. Member for Shropshire, North (Mr. Biffen) lack substance? I should have thought that he was saying—and he said so in a constructive way—that there were worrying indicators, such as inflationary pressures, balance of payments problems and the trade deficit. Is the Financial Secretary saying that none of those things matter?

Mr. Lamont

I am sure that the comments of my right hon. Friend the Member for Shropshire, North were intended in a constructive manner. His concerns were about inflation. He and my hon. Friend the Member for Eastbourne (Mr. Gow) asked me to confirm that the containing and further reduction of inflation remain the Government's top priority. That is shown by the five rises in interest rates in the past few weeks, which have been criticised by the Opposition, but which underline our determination to keep inflation down and to get it down further.

The hon. Member for Dunfermline, East (Mr. Brown) complained about inadequate investment in the economy. I am not sure where he has been, because total investment in the economy is at an all-time high. The hon. Gentleman quoted various figures, saying that, if there had been greater investment in the past, our growth rate now would be even higher. I am not sure how he can be so certain about that, because it depends how that investment was directed, where it was directed and what sort of return it earned. That confirms what we have so often suspected of the Opposition—that they are interested in investment for investment's sake. They seek quantity of investment rather than return on investment. It is return that matters for the economy, not the building of a Socialist ideal of machine tools to manufacture machine tools to manufacture more machine tools. Investment in the economy is high and it is growing.

The hon. Member for Dunfermline, East suggested that the benefit of the tax cuts that were announced in the Budget might be wiped out by mortgage interest rate increases. It is not correct to say that a 1 per cent. rise in mortgage rates will wipe out the benefit of the tax cuts for a person on average earnings. Interest rates will no doubt rise and fall in the years to come, but we have reduced tax rates permanently and we shall continue to do so. My right hon. Friend the Chief Secretary to the Treasury confirmed that in his opening speech this afternoon. The cuts in taxes and in national insurance contributions that we have made since coming to power in 1979 are worth nearly £10 a week for a man on average earnings. That is the extra amount that someone on average earnings would be paying if we had maintained the tax regime that we inherited from the Labour Government.

Mr. Morgan

When the Minister began, he talked about the fiscal stance of the Chancellor of the Exchequer and described it as one of the utmost prudence. I took that to mean—I think that he said this—that taxes had not been cut. Will he explain his triumphalism that the Government have reduced taxes? It seems that there is an inconsistency. Does the right hon. Gentleman think that he should get away with having it both ways?

Mr. Lamont

There is no great mystery. Since 1979 we have reduced tax rates and cut the amount of tax that people pay as a proportion of their earnings. The economy has been growing and people have become more prosperous while that has been happening. As I have said, there is no mystery.

There are many important provisions in the Bill. There are provisions that are popular that the Opposition chose to ignore, and that is typical of them. The hon. Member for Dunfermline, East did not mention the far-reaching proposals in the Bill for independent taxation. He neither condemned nor praised them. He said nothing in their favour. The hon. Member for Newcastle upon Tyne, East has moved from one stance to another in his criticisms of independent taxation. First, we were told that independent taxation was something for rich women. Then we were told that it was something for rich families. Finally—the hon. Gentleman confirmed this tonight—we were told that it was for rich men. That gives the game away. It is clear that the Opposition do not believe in independent taxation. If they think that removing the aggregation of a woman's income with that of her husband is of advantage only to men, the spirit of feminism and emancipation that the hon. Gentleman described has hardly reached the bingo clubs and Labour clubs in his constituency that he kept telling us about in Committee.

The hon. Member for Newcastle upon Tyne, East told us nothing about what the Bill does to close loopholes and to lessen the perks that are enjoyed by higher-rate taxpayers. We have taken measures to ensure a fairer system for the taxation of company cars. The forestry loophole has been removed. The Opposition urged us to do that before the Budget, and now they choose not to refer to it. We are not blocking a few minor reliefs. The reliefs that have been abolished and the loopholes that have been closed amount to about £800 million, which is about a third of the cost of the reduction of the higher rates of which the Opposition are so critical.

The truth is that the Opposition talk about avoidance and they urge us to do something about it, but we have done more to block loopholes than they ever did in their period of office. Our determination to stamp on avoidance and evasion is also demonstrated by the fact that we now have 3,200 investigators involved in investigative work in the Inland Revenue, compared with 1,600 under the previous Labour Government—twice as many.

This is rightly described as a reforming Budget. The Finance Bill builds on the steps that have been taken in other Finance Bills. We implemented a number of measures on capital gains tax in earlier Finance Bills and Budgets. We introduced indexation to make it a fairer tax, and in this Finance Bill we have carried that forward and rebased capital gains to 1982, which has remedied a major injustice whereby people with long-standing capital gains which were due purely to inflation were being taxed heavily.

One would have thought that Opposition Members would openly welcome the fact that we have now aligned the rates of capital gains and income tax. But, again, we hear not a word from them. The hon. Member for Wrexham (Dr. Marek) kept saying that capital gains are of interest only to the super-rich. When I pointed out that at least one third of people who pay capital gains tax pay at the basic rate, he had no reply. Because of that, he should have welcomed the fact that we have introduced a lower rate of capital gains tax of 25p for basic rate payers and a higher rate of 40p for those who are better off and can well afford to pay.

The Finance Bill benefits all the people of Britain. Twenty-three million people will benefit from the 2p basic rate cut, as they have benefited from the 6p cut in previous Finance Bills and Budgets. Three quarters of a million people will be taken out of taxation, which is a sharp contrast to what happened when the Labour party was in government, when the number of taxpayers increased by about 3 million and when the married man's allowance fell by 20 per cent. in real terms.

What do the Opposition now say about thresholds and the basic rate of tax? The Leader of the Opposition tells us——

Mr. Michael Brown (Brigg and Cleethorpes)

Where is he?

Mr. Lamont

I am coming to where he is.

The Leader of the Opposition says that the 25p people have nothing to fear, apart from the fact that he wants to make them into 27p people. That is all that they have to fear from the Opposition.

My right hon. Friend the Chief Secretary reaffirmed the point that has been made again and again in these debates—that, although we have cut the top rate of tax for the top 5 per cent. of taxpayers, that has brought in increased revenue. What we may not have pointed out so frequently is that the tax paid by the lowest 10 per cent. of the taxpayers has fallen by 20 per cent., whereas the top 10 per cent. are paying 26 per cent. more in taxation and national insurance contributions compared with when we came o power.

We have heard again and again in these debates about the super-rich. The hon. Member for Wrexham has never stopped talking about them. On Second Reading he mentioned them 12 times. In his speech on clause 93, which lasted 15 minutes, we had a reference to the super-rich every 82 seconds. When we pressed him to define the super-rich, he told us that they were people earning £200,000 or more a year. I have news for him. Those earning £200,000 or more a year are a minuscule number of people. Even if we confiscated all their income over £100,000 and taxed the rest, and distributed that among the total population, it would be worth only 50p a week to each person. I am afraid that there is not much to be gained by squeezing the pips until they squeak, but there is a considerable amount to be lost if we discourage those people, if we drive them abroad, or if we stop them creating new businesses.

We must be clear about the higher rate taxpayers. Two thirds of those on higher rates earn less than £40,000 a year. Of course, £40,000 a year is a good salary. It is what the Leader of the Opposition earns, or perhaps a little more. [HON. MEMBERS: "Earns?"] It is a salary earned by managers, by top entertainers and by surgeons, but they are not the privileged elite. In many cases, those people have helped to create and build up businesses which create employment and increase the wealth of the country.

Opposition Members are still fighting the political battles of the past. They rant against the rich and the privileged, but a recent survey in a big business magazine showed that Britain is a meritocracy, where hard work and ability lead to success and reward. The same survey showed that more than two thirds of the 200 wealthiest people in Britain today are self-made men and women. The truth is not that we have too many rich people, but too few.

As my hon. Friends have said, it is a pity that the right hon. and super-rich Leader of the Opposition cannot be with us today. He is, of course, visiting the front-line states. I am sure that, while he is out there, he will be researching. If so, he will notice that the 39 per cent. top rate of income tax in Namibia, the 45 per cent. top rate in Zimbabwe and the 50 per cent. top rate in Botswana are all lower than the old rate that the Opposition are defending and committed to restoring. No doubt they will say that those are not the countries that they wish to compare us with.

All over the world, countries are cutting taxes and cutting the top rate—New Zealand, the United States, Canada, Australia and Germany. Worldwide there is a trend to cut the top rate, which shows that many countries agree with us that that helps to make economies more competitive. The attitude of the Opposition remains unchanged. It does not matter that we may raise less revenue or make ourselves less competitive; their attitude remains, "No tax cuts please, we're British."

Quite a few years ago, Lord Jay, before he was ennobled, remarked that as long as there is an England, there will always be progressive taxation. Even that has begun to be questioned, and some City analysts have been talking about repaying the national debt and abolishing income tax. That may be going just a little too far—[HON. MEMBERS: "Oh!"]—but the dramatic reductions in the Bill are a firm step in the right direction.

It has been said that all my hon. Friends regard all taxes as a distortion. My hon. Friends are quite right; taxes are a distortion. We should aim to have a system that raises the necessary money with the minimum of distortion and enables the economy to operate as effectively as possible.

Some Opposition Members recognise that the trend worldwide is to lower marginal rates of tax, but they complain that we are leading the trend, and that we have one of the lowest rates by international standards. That is certainly a contrast with when they were in power, when not only was our basic rate the highest in the world, but so was our top rate. What was the result? Misery, tears and a lamentable performance by the economy.

The criterion by which tax reforms and tax cuts should be judged is simply, as the hon. Member for Cardiff, West (Mr. Morgan) said, whether they improve the performance of the economy. Tax cuts are only one of several supply side reforms and measures that we have undertaken. If they add even 1 per cent. to our growth rate, that will release £4 billion to £5 billion of resources each year, and with that we can improve and build our public services.

One of the mistakes that the Labour Government made was to try to make up for a lack of economic growth by increasing taxation. The more slowly the economy grew, the more they increased taxes. The result was less growth, the stifling of initiative and the stagnation of the economy. We have produced that growth and the British people are beginning to get the benefits. The benefits are flowing through to all the people in this country.

We need only contrast what has happened to people on half average earnings with what happened when the Labour party was in power. Under Labour, a person on half average earnings saw his living standards decline by 1 per cent., whereas while we have been in power a person on half average earnings has seen his earnings go up by nearly 26 per cent. That is the difference between the pseudo-compassion of the Opposition and the practical effects of the tax cuts that we have introduced. The more tax rates have gone down, the more the incomes of those below or near the poverty line have gone up. The benefits of prosperity have been spreading to all the people of this country.

Mr. Battle

The Financial Secretary has referred to half the average wage, which I imagine works out at about £120 a week. Does he admit that very many people who do not earn that much money have lost as a result of this Budget and complications with the social security system?

Mr. Lamont

I certainly do not admit that. The truth is that earnings throughout the economy at all levels of income have been increasing sharply. Those on below average earnings have seen their living standards increase sharply in the last three or four years. What the hon. Gentleman said has no foundation whatsoever in fact.

My right hon. Friend has produced a radical budget. He has produced his own fiscal version of the glorious revolution.

This is a very different country from the one that had to be bailed out by the International Monetary Fund a decade ago. At that time, after decades of decline, we had available to us only a gloomy, uninspiring future for the rest of the century. Now, thanks to our growth rate, which is faster than that of any other European country—we have outpaced Germany in the last few years and Japan this year—Britain has re-emerged as one of the pace-making economies. For the first time in many years there is a new hope, a new optimism and a new confidence in the British economy. I believe that the measures in this Bill, like those in previous Budgets, will contribute to that growth and to that well-deserved confidence.

Question put, That the Bill be now read the Third time:

The House divided: Ayes 228, Noes 179.

Division No. 415]	[9.58 pm
AYES
Aitken, Jonathan	French, Douglas
Alexander, Richard	Gale, Roger
Alison, Rt Hon Michael	Gardiner, George
Allason, Rupert	Garel-Jones, Tristan
Amess, David	Gill, Christopher
Amos, Alan	Glyn, Dr Alan
Arbuthnot, James	Goodhart, Sir Philip
Arnold, Jacques (Gravesham)	Goodson-Wickes, Dr Charles
Arnold, Tom (Hazel Grove)	Gorst, John
Ashby, David	Gow, Ian
Atkins, Robert	Grant, Sir Anthony (CambsSW)
Atkinson, David	Greenway, Harry (Ealing N)
Baker, Nicholas (Dorset N)	Greenway, John (Ryedale)
Baldry, Tony	Gregory, Conal
Batiste, Spencer	Griffiths, Sir Eldon (Bury St E')
Bellingham, Henry	Griffiths, Peter (Portsmouth N)
Bendall, Vivian	Grist, Ian
Bennett, Nicholas (Pembroke)	Ground, Patrick
Biffen, Rt Hon John	Grylls, Michael
Biggs-Davison, Sir John	Hamilton, Neil (Tatton)
Boswell, Tim	Hannam, John
Bottomley, Peter	Hargreaves, Ken (Hyndburn)
Bottomley, Mrs Virginia	Harris, David
Bowden, A (Brighton K'pto'n)	Haselhurst, Alan
Bowden, Gerald (Dulwich)	Hawkins, Christopher
Bowis, John	Hayhoe, Rt Hon Sir Barney
Boyson, Rt Hon Dr Sir Rhodes	Hayward, Robert
Braine, Rt Hon Sir Bernard	Heathcoat-Amory, David
Brandon-Bravo, Martin	Heddle, John
Brazier, Julian	Hicks, Robert (Cornwall SE)
Bright, Graham	Higgins, Rt Hon Terence L.
Brooke, Rt Hon Peter	Hogg, Hon Douglas (Gr'th'm)
Brown, Michael (Brigg & Cl't's)	Holt, Richard
Browne, John (Winchester)	Hordern, Sir Peter
Bruce, Ian (Dorset South)	Howard, Michael
Buck, Sir Antony	Howarth, Alan (Strat'd-on-A)
Burt, Alistair	Howarth, G. (Cannock & B'wd)
Butcher, John	Hughes, Robert G. (Harrow W)
Butler, Chris	Hunt, David (Wirral W)
Butterfill, John	Hunter, Andrew
Carlisle, John, (Luton N)	Irvine, Michael
Carlisle, Kenneth (Lincoln)	Jack, Michael
Carttiss, Michael	Jackson, Robert
Cash, William	Janman, Tim
Channon, Rt Hon Paul	Jessel, Toby
Chapman, Sydney	Johnson Smith, Sir Geoffrey
Churchill, Mr	Jones, Gwilym (Cardiff N)
Clark, Hon Alan (Plym'th S'n)	Jones, Robert B (Herts W)
Clark, Dr Michael (Rochford)	Jopling, Rt Hon Michael
Clark, Sir W. (Croydon S)	Key, Robert
Clarke, Rt Hon K. (Rushcliffe)	Kilfedder, James
Conway, Derek	King, Roger (B'ham N'thfield)
Cope, Rt Hon John	King, Rt Hon Tom (Bridgwater)
Couchman, James	Kirkhope, Timothy
Cran, James	Knapman, Roger
Currie, Mrs Edwina	Knight, Greg (Derby North)
Curry, David	Knowles, Michael
Davies, Q. (Stamf'd & Spald'g)	Lamont, Rt Hon Norman
Davis, David (Boothferry)	Latham, Michael
Day, Stephen	Lawson, Rt Hon Nigel
Dickens, Geoffrey	Lester, Jim (Broxtowe)
Dorrell, Stephen	Lightbown, David
Dover, Den	Lilley, Peter
Dunn, Bob	Lord, Michael
Durant, Tony	McCrindle, Robert
Eggar, Tim	MacKay, Andrew (E Berkshire)
Emery, Sir Peter	Maclean, David
Evennett, David	McNair-Wilson, Sir Michael
Fallon, Michael	McNair-Wilson, P. (New Forest)
Favell, Tony	Major, Rt Hon John
Fookes, Miss Janet	Malins, Humfrey
Forman, Nigel	Mans, Keith
Forth, Eric	Maples, John
Fowler, Rt Hon Norman	Marshall, John (Hendon S)
Fox, Sir Marcus	Marshall, Michael (Arundel)
Franks, Cecil	Mawhinney, Dr Brian
Freeman, Roger	Maxwell-Hyslop, Robin

Mayhew, Rt Hon Sir Patrick	Sumberg, David
Meyer, Sir Anthony	Summerson, Hugo
Miller, Sir Hal	Taylor, Ian (Esher)
Miscampbell, Norman	Taylor, John M (Solihull)
Mitchell, Andrew (Gedling)	Taylor, Teddy (S'end E)
Mitchell, David (Hants NW)	Temple-Morris, Peter
Moate, Roger	Thompson, Patrick (Norwich N)
Monro, Sir Hector	Thorne, Neil
Montgomery, Sir Fergus	Thornton, Malcolm
Morrison, Sir Charles	Thurnham, Peter
Morrison, Rt Hon P (Chester)	Townend, John (Bridlington)
Moss, Malcolm	Tracey, Richard
Moynihan, Hon Colin	Tredinnick, David
Mudd, David	Trippier, David
Neubert, Michael	Twinn, Dr Ian
Newton, Rt Hon Tony	Vaughan, Sir Gerard
Nicholson, David (Taunton)	Walden, George
Onslow, Rt Hon Cranley	Waller, Gary
Oppenheim, Phillip	Ward, John
Porter, David (Waveney)	Wardle, Charles (Bexhill)
Renton, Tim	Watts, John
Rhodes James, Robert	Wells, Bowen
Riddick, Graham	Wheeler, John
Roe, Mrs Marion	Whitney, Ray
Rossi, Sir Hugh	Widdecombe, Ann
Ryder, Richard	Wiggin, Jerry
Sackville, Hon Tom	Wilkinson, John
Scott, Nicholas	Wilshire, David
Shepherd, Colin (Hereford)	Winterton, Mrs Ann
Sims, Roger	Winterton, Nicholas
Spicer, Michael (S Worcs)	Wood, Timothy
Stanbrook, Ivor	Woodcock, Mike
Steen, Anthony	Yeo, Tim
Stern, Michael	Young, Sir George (Acton)
Stevens, Lewis
Stewart, Allan (Eastwood)	Tellers for the Ayes:
Stewart, Andy (Sherwood)	Mr. Peter Lloyd and Mr. Mark Lennox-Boyd.
Stokes, Sir John
Stradling Thomas, Sir John

NOES
Abbott, Ms Diane	Cryer, Bob
Adams, Allen (Paisley N)	Cummings, John
Allen, Graham	Cunliffe, Lawrence
Archer, Rt Hon Peter	Dalyell, Tam
Armstrong, Hilary	Darling, Alistair
Barnes, Harry (Derbyshire NE)	Davies, Rt Hon Denzil (Llanelli)
Barron, Kevin	Davies, Ron (Caerphilly)
Battle, John	Davis, Terry (B'ham Hodge H'l)
Beckett, Margaret	Dixon, Don
Bell, Stuart	Dobson, Frank
Benn, Rt Hon Tony	Duffy, A. E. P.
Bennett, A. F. (D'nt'n & R'dish)	Dunnachie, Jimmy
Bermingham, Gerald	Dunwoody, Hon Mrs Gwyneth
Bidwell, Sydney	Eadie, Alexander
Boateng, Paul	Evans, John (St Helens N)
Boyes, Roland	Fatchett, Derek
Bradley, Keith	Field, Frank (Birkenhead)
Bray, Dr Jeremy	Fields, Terry (L'pool B G'n)
Brown, Gordon (D'mline E)	Flannery, Martin
Brown, Nicholas (Newcastle E)	Flynn, Paul
Buchan, Norman	Foot, Rt Hon Michael
Buckley, George J.	Foster, Derek
Caborn, Richard	Fraser, John
Callaghan, Jim	Fyfe, Maria
Campbell, Ron (Blyth Valley)	Galbraith, Sam
Campbell-Savours, D. N.	Garrett, John (Norwich South)
Canavan, Dennis	George, Bruce
Clarke, Tom (Monklands W)	Godman, Dr Norman A.
Clay, Bob	Golding, Mrs Llin
Clelland, David	Gould, Bryan
Clwyd, Mrs Ann	Graham, Thomas
Cohen, Harry	Grant, Bernie (Tottenham)
Coleman, Donald	Griffiths, Nigel (Edinburgh S)
Cook, Frank (Stockton N)	Griffiths, Win (Bridgend)
Cook, Robin (Livingston)	Grocott, Bruce
Corbett, Robin	Hardy, Peter
Corbyn, Jeremy	Harman, Ms Harriet
Cousins, Jim	Hattersley, Rt Hon Roy
Cox, Tom	Haynes, Frank

Healey, Rt Hon Denis	O'Brien, William
Heffer, Eric S.	O'Neill, Martin
Henderson, Doug	Orme, Rt Hon Stanley
Hinchliffe, David	Parry, Robert
Hogg, N. (C'nauld & Kilsyth)	Patchett, Terry
Holland, Stuart	Pike, Peter L.
Home Robertson, John	Powell, Ray (Ogmore)
Hood, Jimmy	Prescott, John
Howarth, George (Knowsley N)	Primarolo, Dawn
Howell, Rt Hon D. (S'heath)	Quin, Ms Joyce
Howells, Geraint	Radice, Giles
Hughes, John (Coventry NE)	Rees, Rt Hon Merlyn
Hughes, Roy (Newport E)	Reid, Dr John
Hughes, Sean (Knowsley S)	Richardson, Jo
Illsley, Eric	Robertson, George
Ingram, Adam	Robinson, Geoffrey
Janner, Greville	Rooker, Jeff
John, Brynmor	Ross, Ernie (Dundee W)
Jones, Barry (Alyn & Deeside)	Rowlands, Ted
Jones, Martyn (Clwyd S W)	Ruddock, Joan
Leighton, Ron	Salmond, Alex
Lestor, Joan (Eccles)	Sedgemore, Brian
Litherland, Robert	Sheldon, Rt Hon Robert
Lloyd, Tony (Stretford)	Shore, Rt Hon Peter
Lofthouse, Geoffrey	Short, Clare
Loyden, Eddie	Skinner, Dennis
McAllion, John	Smith, C. (Isl'ton & F'bury)
McAvoy, Thomas	Snape, Peter
Macdonald, Calum A.	Spearing, Nigel
McNamara, Kevin	Steinberg, Gerry
McTaggart, Bob	Stott, Roger
McWilliam, John	Strang, Gavin
Madden, Max	Taylor, Matthew (Truro)
Mahon, Mrs Alice	Thompson, Jack (Wansbeck)
Marek, Dr John	Turner, Dennis
Martin, Michael J. (Springburn)	Vaz, Keith
Martlew, Eric	Wall, Pat
Maxton, John	Walley, Joan
Meacher, Michael	Wardell, Gareth (Gower)
Meale, Alan	Wareing, Robert N.
Michael, Alun	Welsh, Michael (Doncaster N)
Michie, Bill (Sheffield Heeley)	Williams, Rt Hon Alan
Millan, Rt Hon Bruce	Williams, Alan W. (Carm'then)
Mitchell, Austin (G't Grimsby)	Wilson, Brian
Morgan, Rhodri	Winnick, David
Morley, Elliott	Wise, Mrs Audrey
Morris, Rt Hon J. (Aberavon)	Worthington, Tony
Mowlam, Marjorie	Wray, Jimmy
Mullin, Chris
Murphy, Paul	Tellers for the Noes:
Nellist, Dave	Mr. Allen McKay and Mr. Ken Eastham.
Oakes, Rt Hon Gordon

Question accordingly agreed to

Bill read the Third time, and passed.