Commons Sitting of 22 March 1993

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  NATIONAL HERITAGE

    Granada Television
    Mr. Sedgemore: To ask the Secretary of State for National Heritage what plans he has to meet the chairman of the Independent Television Commission to discuss the licence of Granada Television.
    The Secretary of State for National Heritage (Mr. Peter Brooke): None. That is a matter for the Independent Television Commission.
    Mr. Sedgemore: Can the Minister explain why Sir George Russell, the chairman of the Independent Television Commission seems determined to give in to Granada Television's slippery and disingenuous response to the meticulously researched document produced by my hon. Friend the Member for Cynon Valley (Mrs. Clwyd), which outlines breaches in its licence? Is he aware that Granada has expressed an interest in buying into Yorkshire Television? Will he halt all developments in that sphere, pending an inquiry into the reasons why Sir George Russell granted that company a licence when his staff presented him with a document questioning Yorkshire Television's viability?
    Mr. Brooke: In the context of the hon. Gentleman's extravagant language, the phrase "give in" is irrelevant, not least since the Independent Television Commission is fulfilling a quasi-judicial function. The second part of the hon. Gentleman's question is also a matter for the ITC.
    Mr. Sumberg: Instead of listening to those hon. Members who have no connection with the north-west of England, which is the area served by Granada Television——
    Mr. Sedgemore: I worked for the company.
    Mr. Sumberg: Will my right hon. Friend take it from me that I have not received one word of criticism about the quality of Granada Television from my constituents in Bury, South who, like me, will warmly welcome the fact that the ITC has roundly and completely rejected the unfounded criticism from the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) and other Opposition Members?
    Mr. Brooke: The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) has declared his interest in the matter in his own inimitable way. I am grateful for the endorsement that my hon. Friend gave in his question.
    Mrs. Clwyd: When very senior Granada personnel come to me and detail breaches of the company's licence, and when those same people are totally unconvinced by Granada's response, surely the ITC has a statutory duty to act rather than to accept wholesale misleading information? Why does the Secretary of State not admit that the Government and the ITC have made a complete mess of the licence applications, so that there are serious problems at Granada Television, Yorkshire Television and Tyne Tees Television? If there is a secret and explosive document—I know that there is, and that it relates to the financial viability of those companies—should it not be published so that we can see for ourselves whether the ITC has acted lawfully and with integrity? Or is there something to hide?
    Mr. Brooke: The hon. Lady referred to the ITC's statutory duty to act. She submitted a series of charges to the ITC, to which it responded and effectively disagreed with her. In that respect, the ITC has fulfilled its statutory duty.

    National Lottery
    Mr. Amess: To ask the Secretary of State for National Heritage what recent representations he has received about the site for the headquarters of the national lottery.
    The Parliamentary Under-Secretary of State for National Heritage (Mr. Robert Key): My right hon. Friend and I have received a number of representations about the siting of the headquarters for the proposed national lottery. Recent representations have been received on behalf of Penwith district council, Liverpool city council, Princess Dock Development Co. Ltd., Craven council, Clacton-on-Sea, Devizes and East Cheam.
    Mr. Amess: If my hon. Friend shares my desire for our national lottery to be the biggest, best and most exciting in the world, will he take my advice and have a word with the people responsible for the siting of its headquarters to encourage them to place it in Basildon—a town for a gamble and a town for winners?
    Mr. Key: My hon. Friend is absolutely right and he is, of course, such a winner. We shall see where the headquarters go. It will not be for Ministers to decide their location, although companies may wish to consider favourable schemes which may be on offer under the Government's assisted areas programme.

    Rugby Football
    Mr. Hain: To ask the Secretary of State for National Heritage when he next intends to meet the authorities of the rugby football unions to discuss public funding for that sport.
    Mr. Key: It is for the Sports Councils to decide how much, if any, financial support they wish to give to the rugby football unions. I have no immediate plans to meet the English Rugby Football Union.
    Mr. Hain: Will the Minister consider changing those plans in order to meet the rugby union authorities? When he does so, will he discuss not only funding, but lifting the ban on the Neath player, Stuart Evans, a former Welsh rugby international whose rugby league contract with St. Helens expired two years ago? Is the Minister aware that France and Australia interpret the rules more flexibly than our own authorities? Moreover, to end the hypocrisy of shamateurism and to avoid the likely humiliation of the rugby authorities, should Mr. Evans take his case to the European Court, will the Government press for changes in the rules so that rugby players can play rugby union and the oppressive and anachronistic bans may be ended?
    Mr. Key: I am grateful to the hon. Gentleman for giving me notice of his intention to raise this issue. It is, of course, for the rugby authorities to set and apply their own regulations and for players to decide which code they wish to play by and ensure that they are fully acquainted with those regulations. Only the courts can decide whether any breach of the law has occurred and it must be for the individual to decide whether to pursue the matter. The chairman of the Sports Council, Sir Peter Yarranton, has expressed his disappointment at this. He is a distinguished former English international and the immediate past president of the Rugby Football Union.
    Mr. Harry Greenway: Does my hon. Friend agree that national rugby football unions should be self-funded? With respect, Wales would be better able to fund itself if it played better rugby and won more matches. Does my hon. Friend also agree that those authorities have a function in helping school children into the game more widely through the clubs and should be funded to that end?
    Mr. Key: My hon. Friend is absolutely right about the importance of sport for young people, both rugby union and rugby league. That is why a number of programmes of the Sports Council and other bodies fund such schemes.
    Mr. Hinchliffe: Is the Minister aware of the contents of my early-day motion 1342, which has attracted 130 signatures from hon. Members of various parties, relating to the case of Mr. Steve Pilgrim, the Wasps rugby union player who was banned for a year by the rugby union for having an amateur trial with Leeds? He has not been signed by Leeds and now finds himself in a sporting no-man's-land. Is such an attitude appropriate for a sport which receives extensive public funding and in which players are already paid for playing rugby union, and rightly so? There are people in the Chamber now who have been paid for playing rugby union football.
    Mr. Key: The latter point is a matter for dispute. The Rugby Football Union and the other rugby organisations are responsible for their own rules, but I accept the general tone of the hon. Gentleman's remark and I, too, am disappointed about that particular case.

    Windsor Castle
    Mr. Mudie: To ask the Secretary of State for National Heritage when he expects the final decision on the form of restoration of Windsor castle to be made.
    Mr. Brooke: I hope to make a statement of progress on this shortly.
    Mr. Mudie: Does the Minister think it makes good sense to spend millions of pounds of public money on this scheme when the nation was told last week that it is so poor that pensioners' fuel bills must be taxed? Can the Minister defend that order of priorities?
    Mr. Brooke: As the hon. Gentleman knows, matters of public expenditure across the whole range are looked at individually. The commitment to Windsor castle goes back to an obligation undertaken by the state in 1831.
    Mr. Robert Banks: I hope that a decision to start the restoration work will be made as soon as possible. Might not the Queen decide on the form of that restoration as she has to live there?
    Mr. Brooke: I join my hon. Friend in hoping that we shall be able to make an early start. The decisions on restoration would be taken by Her Majesty the Queen on advice from the Government.
    Mrs. Clwyd: The Secretary of State has confirmed that the taxpayer will have to find between £30 million and £40 million towards the cost of restoration. Where is that money to come from? Will it really come from the hard-pressed national heritage budget? Is it to come from increases in value added tax which the poor and the old will be paying? How much money has come into the trust fund that the Secretary of State set up when taxpayers objected to the large blank cheque that he was signing on their behalf? Why did the Minister say to me in his letter of last week that
    "no representations have been made to the Royal Household about a contribution towards the costs"?
    If the taxpayers are having to fork out, why should not the Queen?
    Mr. Brooke: The immediate emergency expenditure on the castle, which runs to about £1·5 million in the current year, has been met from my departmental budget. I am discussing with colleagues how we would fund the subsequent restoration. Contrary to what the hon. Lady has said, the trust fund was not set up by the Government. It is run by independent trustees, to whom she should address her questions. As for the answer that I gave when the hon. Lady raised the issue with me on 11 March—when she appeared to be ignorant of the fact that a public inquiry had been set up—the reason why I gave her that answer was that it was true.
    Mr. Jacques Arnold: Will not the restoration of Windsor castle provide thousands of hours of employment for some of the best artisans in the world?
    Mr. Brooke: My hon. Friend is right in terms of the skills that will be required from craftsmen of every sort in the restoration of the castle.
    Mr. Maclennan: Does the Secretary of State realise that some of the greatest British architects have constructed important public buildings abroad, but have not been recognised in this country? In the context of the new opportunities for the display of the royal collection of paintings and other art works, will the Secretary of State give particular attention to the possibility of combining those challenges to provide an exciting new building at Windsor which would be representative of the best in Britain today?
    Mr. Brooke: I join the hon. Gentleman in saluting the achievements of British architects abroad, and I am delighted to say that those same British architects also design buildings in this country. The substance of his question forms part of the general debate on restoration, on which I hope to make an announcement shortly.

    West Coast Main Line
    Mrs. Jane Kennedy: To ask the Secretary of State for National Heritage what assessment he has made of the effect on the tourist industry in the north-west of the level of service on the west coast main line.
    Mr. Key: According to latest available figures, 13 per cent. of visitors to the north-west staying one night or more travelled by train. Improvements to the west coast main line will encourage greater use by everyone, including tourists.
    Mrs. Kennedy: I am grateful to the Minister for that answer, but what plans does he have for talks with his colleague the Secretary of State for Transport to ensure that such improvements actually take place so that day trippers and overseas visitors using the channel tunnel, other forms of transport and the west coast main line can visit exhibitions such as the Beatles exhibition and the Tate of the north in Liverpool?
    Mr. Key: The hon. Lady is right to say that it is important that the improvements take place. As my right hon. Friend the Secretary of State for Transport has announced, those improvements will take place as soon as resources allow.
    Mr. Hawkins: Does my hon. Friend agree that the announcement last week that the main channel tunnel terminus for routes to the north will be at St. Pancras will be of enormous benefit to tourism in the north-west, including my constituency and that of the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy)? That is because the links between the north-west main line into Euston and the line from St. Pancras already exist, as was confirmed to me at a meeting as recently as this morning by the senior manager in charge of InterCity services for the north-west.
    Mr. Key: I know of no one—apart, perhaps, from my hon. Friend the Member for Blackpool, North (Mr. Elletson)—who is as well informed about Blackpool as my hon. Friend. He has hit the nail on the head. Of course it is true that a night service will run from Paris and Brussels up the west coast main line to Glasgow. There will also be daytime services from Paris and Brussels to Manchester, and a service between Paris and Birmingham. These trains are due to start towards the end of 1995. I understand that British Rail intends to run a connecting service between Manchester and Waterloo, to begin when regular train services commence from London in mid-1994.

    Libraries
    Mr. Gerrard: To ask the Secretary of State for National Heritage what assessment his Department has made of the impact of the current year's revenue support grant on public library provision; and if he will make a statement.
    Mr. Key: I collect information annually from English library authorities about their expenditure plans for the coming financial year and their actual expenditure in the previous year. This year's planned spending total was higher than the previous year's outturn.
    Mr. Gerrard: Does the Minister accept that public library services are declining and that closures of libraries and reductions in opening hours are becoming commonplace under local authorities of all political persuasions? Is that not the inevitable result of the Government's financial pressure on local authorities to cut spending? What does the Minister intend to do to help local authorities to deliver efficient library services?
    Mr. Key: No, I do not agree with the hon. Gentleman. Total gross expenditure on public libraries in England rose by 17 per cent. in real terms over the past 10 years. I have looked carefully at actual and proposed cuts and there is no current evidence of a breach of statutory duty. Book issues were up 3 per cent. in the last year for which figures are available, issues of children's books were up by 8 per cent., and a staggering 489 million books were issued that year.
    Mrs. Angela Knight: Is my hon. Friend aware that some local authorities such as Derbyshire see libaries as a soft target and will propose to close them or to curtail opening hours rather than trying to control expenditure in other areas? Will he undertake to keep such matters under careful scrutiny so that constituents such as mine in Erewash get the services that they require and pay for?
    Mr. Key: Yes, and I am grateful to my hon. Friend, and to the Conservative county councillors on her council, for keeping me so well informed about the situation in Derbyshire. I have looked at it carefully and I am confident that there is no breach of statutory duty. I will not, therefore, be setting up a public inquiry, but I assure my hon. Friend that we are keeping the situation under careful review, especially in Derbyshire, and if there is any such evidence my chief library adviser will, of course, advise me accordingly.
    Mr. Skinner: If the Minister intends to keep library services in Derbyshire under review, why does he not also guarantee that Derbyshire county council—which has had a mandate from the people against the Tory party, including the hon. Member for Erewash (Mrs. Knight), since 1981—has returned to it the £40 million of cuts in Government grant? Then no library in Derbyshire will be affected and the community education system will prosper. Let us have less hypocrisy from the Dispatch Box and from Tory Members about what is happening in Derbyshire, given that the Conservative Government are responsible for all the cuts.
    Mr. Key: It is always a pleasure to be questioned by the hon. Member for Bolsover (Mr. Skinner), although I wish he would change the record once a year or so. I recall a similar exchange with him before. Standard spending assessments are set to take account of library services. Derbyshire, along with other authorities, has one problem: it contains a lot of reactionary people who seem to think that libraries should not change to match the changing requirements, aspirations and demands of their people.

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    When libraries do change, they flourish—as has happened in the past few years, with more books and more expenditure on public libraries.
    Mr. Peter Bottomley: May I refer my hon. Friend to the good interview on LBC this morning, in which the non-statutory service offered by Westminster city council—the Westminster music library—was discussed? Will he consider the possibility of a national music library which might take over some of the funding responsibilities from Westminster, which currently provides a service—scores, compositions and other printed music—for most of the country's amateur and semi-professional orchestras?
    Mr. Key: Not for the first time, my hon. Friend has come up with an interesting idea. I should like time to think about it.

    Coarse Fishing
    Mr. Eric Clarke: To ask the Secretary of State for National Heritage what support his Department gives to the sport of coarse fishing.
    Mr. Brooke: Most Government funding of sport is made through the Sports Council. In 1991, the Sports Council paid grant of £20,000 to the National Federation of Anglers, the governing body for course fishing. The grant paid so far for 1992 is £15,000, but final levels of grant for that year and this are likely to be decided in May.
    Mr. Clarke: The Secretary of State will be aware that his right hon. and learned Friend the Secretary of State for the Environment is setting up the Environment Protection Agency—[HON. MEMBERS: "Reading."] Yes, I am.
    Madam Speaker: Order. That is just the sort of confession for which I have been waiting. The hon. Gentleman knows that during Question Time hon. Members do not read.
    Mr. Clarke: Will the Secretary of State ask his right hon. and learned Friend to confer with the 4 million anglers—it is the most popular sport in Britain—about the work of the proposed agency so that we can ensure that it benefits both the environment and the anglers who enjoy that most popular sport?
    Mr. Brooke: The hon. Gentleman makes what appears to be a wholly unexceptionable request. I will certainly talk to my right hon. and learned Friend.
    Mr. John Marshall: Does my right hon. Friend not find it slightly ironic that the cheers in favour of angling and fishing come from those who, on every other occasion, are against any form of blood sport?
    Mr. Brooke: That particular contradiction has been remarked on by others. I am grateful to my hon. Friend for mentioning it again.

    Children's Play
    Mr. Hardy: To ask the Secretary of State for National Heritage what action he is taking to support or promote children's play and recreation other than in regard to direct and organised sporting activity; and what steps are being taken towards the fulfilment of the United Kingdom's obligations in respect of the United Nations convention on the rights of the child.
    Mr. Key: We recognise the importance of play to children's development and are fully committed to providing appropriate funding and other support for it. From April 1993, the Sports Council will take over the play unit's responsibilities for the national play information centre and playwork education and training along with seven of the unit's current staff. Our obligations under the United Nations convention on the rights of the child are also being met through the work that both the Arts Council and the Sports Council are doing to promote wider leisure opportunities for young people, and through the policies of the Departments of the Environment and of Employment.
    Mr. Hardy: In the light of that answer, and following the recent and not unhelpful meeting held with hon. Members from both sides of the House, may we take it that the Under-Secretary of State is confirming that the Sports Council fully recognises the importance of children's play and that no lesser dedication of resources will be provided than under the previous arrangements?
    Mr. Key: I am grateful to the hon. Gentleman, who rightly said that the all-party group had a constructive meeting. I assure him that the Sports Council takes its commitment seriously. It has already earmarked £220,000 as a base figure. It is also considering further funding for the four national centres for playwork education and the National Voluntary Council for Children's Play.
    I should point out that this year the Great Britain Sports Council will be replaced by the United Kingdom Sports Commission and the Sports Council for England. We shall consider with them how their policy areas should develop.
    Dame Elaine Kellett-Bowman: Does my hon. Friend agree that the right of a child to recreation is preceded by the right to life? Does he therefore regret the fact that 4 million children have been murdered under the Abortion Act 1967, introduced by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel)?
    Mr. Key: No.
    Mr. Pendry: How can the Under-Secretary of State be satisfied that adequate resources will be made available to local play providers by the Sports Council at a time when that body is undergoing a major restructuring exercise following the Atkins review? Surely this is not the time to put at risk the good work of the play unit by merging it with the Sports Council—an organisation, incidentally, with no history of involvement in children's play other than that of accounting officer.
    In the light of recent tragic events in Liverpool and elsewhere, does the hon. Gentleman agree that it is vital that young children are offered stimulating alternatives to wandering the streets aimlessly? Even at this late stage, will he think again about the particular exercise that he is undertaking, because the play unit is the only agency dedicated to children's recreational needs?
    Mr. Key: If that were true, I should be inclined to think again, but I can reassure the hon. Gentleman that the decision was reached after substantial consultation over many weeks. I recognise our responsibilities under article 31 of the United Nations convention on the rights of the child, on which the Children Act 1989 is based. The Government's commitment is underlined not just by the

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    public money spent by the Sports Council, but through the Department of Employment. Its out-of-school care grant, paid via the training and enterprise councils, will be £45 million over three years and will give rise to 50,000 child care places.

    National Lottery
    Mr. Kilfoyle: To ask the Secretary of State for National Heritage what estimate he has made of the likely proceeds from the proposed national lottery which will be available for distribution to the arts, sport, heritage, charities and the millennium fund.
    Mr. Key: That will depend on the total turnover of the lottery and the amounts devoted to prizes, expense; and taxation.
    Mr. Kilfoyle: What does the Minister say to the many people who have high expectations of the national lottery, and who now realise that the Chancellor will take nearly three times as much of the proceeds as charities—and, indeed, any other beneficiaries? What will he tell those people, who realise that when—as is inevitable—the Chancellor raises the rate of taxation on the lottery, more money will go to the Exchequer than to all the other beneficiaries combined?
    Mr. Key: The latter part of the hon. Gentleman's question is pure speculation. In answer to the earlier part, let me say first that it was always thought right for some taxation to apply, as it was always envisaged that some expenditure would be displaced from other goods and services bearing tax. Secondly, let me say that I am delighted that the level of tax has been set at only 12 per cent., although the hon. Gentleman and other Opposition Members have been telling us for some weeks in Committee that it would be between 20 and 30 per cent.
    Mr. Tracey: I trust that my hon. Friend, and my right hon. Friend the Chancellor, will note that once the lottery's proceeds are distributed, the Treasury will make a considerable amount from VAT on capital projects and the like.
    Are my hon. Friend's officials taking the earliest possible steps to appoint a director general and to produce the tender documents for promoters? We hope that those documents will be as simple as possible, thereby encouraging innovation.
    Mr. Key: We are making progress as rapidly as we can, but we can make little further progress until the House has agreed to the legislation. We hope very much that we shall be able to do so before too long: following Royal Assent, which we hope will take place by the summer, we shall be in a position to make the appointments to which my hon. Friend has referred.
    Mr. Corbett: Given what the National Council for Voluntary Organisations has called the Chancellor's "sheer greed" in taking 12p off the top of every £1 ticket, will not the five good causes have to share a maximum of between 25p and 26p? As was pointed out by my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle), that will leave the charities with 5p between them. Will the Minister join me in recognising that we made a mistake in Committee—that we should have nailed down a minimum
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    of 35 per cent. for good causes on the face of the Bill? Will he now undertake to table an amendment to that effect on Report?
    Mr. Key: No—for the very good reason that we debated that precise point at some length in Committee. I well recall explaining that putting a fixed figure on the amount to go to good causes would not necessarily be in the interests of those good causes, among whom the overall amount raised would then be distributed.
    Mr. Alan Howarth: I know that my hon. Friend wants to be helpful to charities. Will he give an undertaking to monitor any displacement of charitable giving that may result from the national lottery, and also to monitor the net impact of the lottery on charitable giving?
    Mr. Key: Yes, of course. That is precisely why we have laid down on the face of the Bill that the 20 per cent. to he received by each of the five categories of good cause should be reviewed by the House of Commons in the lifetime of each Parliament.
    Mr. Barry Jones: Will the Minister confirm that regional orchestras will receive money from the lottery's proceeds?
    Mr. Key: Fortunately, that will not be for Ministers to decide; it will be decided by the committees of the arts councils responsible. That is why I think that the establishment of a separate arts council for Wales will benefit Welsh orchestras.
    Mr. John Carlisle: If the proceeds of the national lottery are as generous as my hon. Friend and many other hon. Members hope, will my hon. Friend consider adjusting the ring fence that he has placed around it? It might then be possible for the money received to replace taxpayers' funding of the arts, sport and so forth. Public expenditure would be saved and sport would benefit, because, on that calculation, it would receive more than it receives now.
    Mr. Key: I think that my hon. Friend must have had lunch with my hon. Friend the Financial Secretary to the Treasury.
    Mr. Mackinlay: To ask the Secretary of State for National Heritage what examination his Department has made of the impact of the proposed national lottery on fund raising for non-league soccer clubs, rugby union and other sports clubs; and what representations he has had by or on behalf of such clubs.
    Mr. Brooke: We received a number of representations from sports clubs and have amended the Bill. We do not anticipate that the national lottery will have any demonstrable impact on the fund-raising activities of football or sports clubs. Participation in those activities is primarily motivated by an interest in or association with the organisation concerned.
    Mr. Mackinlay: Is the Secretary of State aware that thousands upon thousands of people enjoy and benefit from watching soccer at the level below the Football League—the Vauxhall conference, and the Diadora Isthmian, Beazer Homes and HFS Loans leagues? The clubs who play in those leagues, and other non-league clubs, are very much dependent on local lotteries and scratch cards. Will the right hon. Gentleman give an

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    assurance that those clubs will not be prejudiced in their fund raising by the impact of the lottery Bill and may continue to raise funds by a combination of scratch cards and their own lotteries, as well as benefiting from the spot-the-ball competitions that fund some of the clubs' activities?
    Mr. Brooke: The National Lottery Etc. Bill contains measures to increase the maximum proceeds in any one society or local authority lottery, to increase the maximum prize, and to amend existing registration requirements for lotteries. All those measures will make small lotteries more attractive. My hon. Friend the Minister and I listened to constructive criticism in Committee and have sought to make those changes more attractive.
    Mr. Alton: Will the Secretary of State introduce further amendments on Report? Is he not aware that many small football clubs, from Tranmere to Rochdale, and many small charities are concerned about the national lottery's effects on them? Does the right hon. Gentleman intend to use proceeds from the national lottery to finance Olympic projects in the Manchester bid? If so, is that not money which otherwise might have been used for sport and the arts?
    Mr. Brooke: My hon. Friend the Parliamentary Under-Secretary and I will look at observations that were made in Committee before the Bill reaches Report stage. When I watched Bolton Wanderers score a notable victory over Leyton Orient, Bolton Wanderers took the opportunity to make representations to me. I have not yet replied to them. In the context of the Olympic bid, it is important first to secure the nomination of Manchester in September.

    Libraries
    Ms Glenda Jackson: To ask the Secretary of State for National Heritage what assessment his Department has made of changes in public library opening hours.
    Mr. Key: I continue to assess the provision of public library services in England, including opening hours, by analysing statistics and by listening to users and providers of the service.
    Ms Jackson: Is the Minister aware that public libraries provide a great deal more than books, music and pictures for borrowing? They provide a safe, warm environment for many elderly people. As the Government have imposed value added tax on fuel, which will preclude the elderly and those on low incomes heating their own homes in future winters, will the Minister ensure that local authorities are encouraged to expand and extend public library opening hours, and are funded accordingly?
    Mr. Key: I should love to, but the hon. Lady ought to have a word with her own Labour council in Camden. It was Camden's misfortune to have to take a vote on whether its libraries remained open. It was a close-run thing. They remained open on the casting vote of the chairman, with the Conservatives in favour, but the Labour party voting against the libraries remaining open.
    Mr. Matthew Banks: Does my hon. Friend agree that flexibility is the most important factor in library opening
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    hours? Rather than having simply nine-to-five opening hours, libraries should open when it is sensible for them to open and when the public want them to be open.
    Mr. Key: My hon. Friend is absolutely right. That is as true of rural areas as of urban areas. The flexibility shown in rural areas by the use of mobile public libraries proves just how much library professionals are moving ahead of some who seek to govern them.

    Sports Commission and Sports Council
    Mr. Barnes: To ask the Secretary of State for National Heritage what consultations he has held with staff at the Sports Council concerning the creation of the United Kingdom Sports Commission and the Sports Council for England.
    Mr. Brooke: I have had no such discussions. The Sports Council is responsible for its own day-to-day management, including employee relations, and I understand that it is currently discussing the implications of the reorganisation with its staff.
    Mr. Barnes: When will the Sports Council be given the go-ahead to engage in the reorganisation that it proposed, which involves staff restructuring? The Secretary of State's answer was disgraceful. He should be involved in the discussions. Some people do not want to dither and dodge, as the Secretary of State's Department does, so the Sports Council should be allowed to go ahead with the reorganisation.
    Mr. Brooke: I received broad proposals regarding the functions and resources of the successor bodies towards the end of last year, and the detailed staffing proposals in support of them during January. My officials have been involved in detailed discussions with the Sports Council to ensure that the proposed package provides the best value for money. In the light of these discussions, I expect shortly to receive revised proposals from the Sports Council.

  ATTORNEY-GENERAL

    Police Officers (False Evidence)
    Mr. Peter Bottomley: To ask the Attorney-General if it is his practice to review other similar cases involving any police officer convicted of concocting or giving false evidence.
    The Attorney-General (Sir Nicholas Lyell): Whenever a police officer is convicted of such an offence, the Crown prosecution service reviews all pending prosecutions and appeals, of which it is aware, in which that officer is involved.
    Mr. Bottomley: The House will be glad to have heard my right hon. and learned Friend's answer. He will not know that one of my first cases 17 years ago was that of a young man who had been wrongly convicted on the false evidence of a detective constable. It was only by chance, five years later, when the detective constable had become a detective sergeant in a different police service, that we saw a newspaper report about his conviction, which led to the quashing of an unsafe conviction some time before. Will my right hon. and learned Friend consider consulting

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    the prosecuting authorities and the chief constables to find out whether it would be possible to re-examine concluded cases, sometimes going back over many years, in order to ascertain whether there have been miscarriages of justice which might be detected?
    The Attorney-General: It is not necessarily easy to trace back in every case to find out exactly which officer gave evidence. However, in any case where the Crown prosecution service has reason to believe that such an officer's evidence may have adversely affected the safety of a conviction, the Crown prosecution service will take steps to ensure proper disclosure to the defendant so that he may take such action, by way of appeal, albeit out of time, as he thinks fit.

    Convictions (Magistrates Courts)
    Mr. Ian Taylor: To ask the Attorney-General what proportion of cases pursued by the Crown prosecution service in the magistrates courts in 1991–92 resulted in a conviction.
    The Solicitor-General (Sir Derek Spencer): Of the 1,068,750 defendants tried in the magistrates courts during the year 1991–92, 1,040,997 were convicted or pleaded guilty, representing a conviction rate of 97·4 per cent.
    Mr. Taylor: Is my hon. and learned Friend aware of the increasing anxiety among police officers that attacks and assaults on them during the course of their duty are not being prosecuted with the necessary severity by the Crown prosecution service, which often downgrades the charges made, or even drops them altogether? Given that 239 officers in Surrey were assaulted in 1992 alone, is that not an outrage and should not people who assault police officers in the course of their duties automatically be locked up?
    The Solicitor-General: I hope that I can reassure my hon. Friend that things are not as gloomy as the picture that he has just painted. Whenever offences are reduced in gravity, it is always done consistent with the interests of justice. There is a wide range of penalties to deal with assaults and obstructing the police. My hon. Friend may be interested to know that, as compared with assaults on other victims, the use of custody as a penalty for police assaults is consistently higher—nearly twice as high for a section 20 assault, three times as high for a section 47 assault and five times as high for common assault.
    Mr. John Morris: In view of the appalling and worsening crime wave, what is the explanation for the apparent reduction in the number of cases coming before magistrates courts? Have any instructions been given that there should be greater use of cautioning and, if so, by whom? And is that connected with the Government's attempt to limit costs in the courts?
    The Solicitor-General: The Crown prosecution service is not responsible for the number of people charged or arrested. Last year, the discontinuance rate in the magistrates court was 13·3 per cent. and in the Crown court it was 7·8 per cent. Those rates were not gravely different from those of the preceding year. The purpose of the Crown prosecution service is to weed out weak cases. There is absolutely no point in the Crown prosecution
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    service conducting cases that are going to result in an acquittal. I assure the right hon. and learned Gentleman that discontinuance does not take place on ground of cost.

    Convictions (Fraud)
    Mr. Rowe: To ask the Attorney-General how many cases have been brought to trial by the Serious Fraud Office since its inception; and how many defendants have been convicted.
    The Solicitor-General: The Serious Fraud Office has brought 103 cases to trial, involving 221 defendants of whom 139 were convicted.
    Mr. Rowe: Is my hon. and learned Friend aware that that is some comfort? Is it not the case that, by concentrating so heavily on a small number of very well-publicised cases in which defendants have been acquitted, we are receiving a wholly distorted view of the important work of this office?
    The Solicitor-General: My hon. Friend is quite right. The SFO prosecutes cases that previously would not have been prosecuted because they were too complex and unmanageable. It is at the leading edge of criminal jurisprudence. A disproportionate amount of publicity is given to a few isolated acquittals. In the last year, 43 defendants were tried and 29 were convicted. That gives a conviction rate of 67 per cent.
    Ms Abbott: Is the Minister aware of public dissatisfaction with the work of the Serious Fraud Office, especially in the Guinness trial, when all manner of crooks and spivs were able to walk free? Why should there be one law for rich people who swindle millions of pounds of other people's money and another law for the poor?
    The Solicitor-General: The hon. Lady seems to have lost contact with reality. In the case that she quoted, a number of defendants were convicted. In fact, the argument that we hear about the powers of the Serious Fraud Office is that they should be extended to the fraud investigation group.
    Mr. John Marshall: Does my hon. and learned Friend accept that many believe that there are a few very lucky men in this country, and some people would like the Roskill report's recommendations on fraud trials to be brought into operation?
    The Solicitor-General: Most of the recommendations of the Roskill commission were brought into effect. One that was not brought into effect was the replacement of trial by jury with trial in some other way. That was a very serious step which the House decided not to take. Most people take the view that we should perfect existing means of trial before considering a trial other than by jury.

    Mr. Alan Moses QC
    Mr. Dalyell: To ask the Attorney-General on how many occasions Mr. Alan Moses QC has appeared as counsel to Her Majesty's Government.
    The Attorney-General: Alan Moses QC has appeared frequently for the Crown in civil and criminal proceedings. From 1985 until 1990, he was Standing Counsel for the Inland Revenue.
    Mr. Dalyell: Why did he say that he had read the relevant documents and did not consider them to be of any use to the defence for the foreseeable future? What explanation can there be, other than that so able and experienced a lawyer was trying, quite improperly, to protect Ministers, even though it meant that directors of Matrix Churchill could land up in prison? And, please, do not hide behind the skirts of Lord Justice Scott.
    The Attorney-General: Alan Moses is independent counsel of high standing and integrity. Instead of casting aspersions in his own way, the hon. Gentleman should await the outcome of the careful and independent inquiry being conducted by Lord Justice Scott.
    Sir Ivan Lawrence: Is not it the case that the defence counsel in the Matrix trial wrote to The Times and stated specifically that Mr. Alan Moses for the Crown had behaved perfectly properly in every way and had performed in accordance with decided cases? Is not it, therefore, an appalling slur on Mr. Moses that the hon. Member for Linlithgow (Mr. Dalyell) has totally refused to consult the defence counsel before making his allegation?
    The Attorney-General: My hon. and learned Friend draws attention to a letter which is in the public domain and which could well be consulted by the House generally. I suggest that it gives a more balanced view than that of earlier questioners.
    Mr. Dalyell: In view of the totally unsatisfactory reply, I should like to raise the matter on the Adjournment.

    Right to Silence
    Mr. Brazier: To ask the Attorney-General what submission his Department has made to the Royal Commission on criminal justice on changes to the right to silence; and if he will make a statement.
    The Attorney-General: I discussed this issue with the royal commission at a meeting at which it sought my views on a range of issues. My personal thoughts on the ability of the court to draw inferences from silence in appropriate cases were set out in my speech last October to the Howard League for Penal Reform, a copy of which is in the Library.
    Mr. Brazier: I thank my right hon. and learned Friend for that answer and I welcome his views, as far as they go, set out in that speech. Many people would like the Government to go further and to remove altogether the right to silence in cases in which people have been killed, such as cases in which children have been killed at home. The country looks to the Government and not to the liberal consciences of the Runciman commission to take the ultimate view on the matter.
    The Attorney-General: We should not anticipate the advice of the royal commission. I draw my hon. Friend's attention to the Murray case, a recent case in the House of Lords, which shows the proper balance to be considered when discussing the right to silence. It points to the fact that inferences can be drawn only in a case in which there is already a prima facie case and in circumstances in which it is proper, in the legal sense of that word, to do so.

  OVERSEAS DEVELOPMENT

    Russia
    Mr. Mandelson: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British and EC aid to Russia.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd): Since 1991, the United Kingdom has committed almost £400 million in bilateral help for Russia to support political and economic reform. We have also contributed one sixth of the EC's assistance programmes.
    Mr. Mandelson: As I recently visited Russia in the company of Lord Healey, will the Minister accept from me that the reports of Russia's economic crisis are certainly not exaggerated and that the crisis is considerably worsened by the political paralysis there? Does he agree with the view of the German Foreign Minister, Klaus Kinkel, that international aid needs to be increased radically if Russia's economic reforms are to have any chance of success? Will the Minister accept the view of the French Government that an emergency meeting of the G7 countries should take place to organise that effort?
    Mr. Lennox-Boyd: The Government strongly support President Yeltsin's economic and political reforms, which are going through an extremely difficult period. The G7 countries are urgently considering how best to demonstrate support for President Yeltsin, both politically and substantially, and that includes consideration of meetings at some stage in the early future.
    Mr. Garnier: What assistance, other than technical assistance, is this country giving to the Russians?
    Mr. Lennox-Boyd: Russia will, for example, receive the lion's share of our know-how fund, worth £100 million over the next six years, £13 million of which has been used in Russia so far with many projects now in the pipeline.
    Mr. Meacher: Will the Minister accept that whatever the needs of Russia are, the need of sub-Saharan Africa, which contains two thirds of the world's poorest 50 countries, is far greater? Why, then, does he propose a large real-terms increase in British aid to Russia and to eastern Europe at the expense of a large real-terms cut in British aid to Africa? Why does he also propose to triple the proportion of British aid that is channelled through the European Community over the next five years when EC aid policy does not concentrate on the poorest countries, but prioritises eastern Europe and when Commissioner Marin, the Spanish EC aid Commissioner, is now downgrading Africa in favour of Spanish-speaking Latin American countries?
    Mr. Lennox-Boyd: The hon. Gentleman should accept—as he never will—that the increase this year in aid generally to the poor world is 1 per cent. in real terms. Our contributions to European Community aid are determined by our share of European Community aid and are not for decision by the British Government in the first instance.

    Tools for Self Reliance
    Mr. Colvin: To ask the Secretary of State for Foreign and Commonwealth Affairs what assistance he will give Tools for Self Reliance in providing practical help to poorer countries.
    Mr. Lennox-Boyd: Tools for Self Reliance is welcome to apply to us for assistance.
    Mr. Colvin: Will my hon. Friend take this opportunity to congratulate Tools for Self Reliance, which has its headquarters in my constituency and runs some 165 centres for the collection and refurbishment of tools for export to third-world countries? As the Government's philosophy is that the intention of overseas aid should be to assist other countries in helping themselves, will my hon. Friend give favourable consideration to an application, if received, in respect of assistance for the refurbishment and export of tools to make tools, such as lathes and blacksmiths' equipment? If my hon. Friend has seen early-day motion 1050, which has all-party support, will he get the message across to other Departments of State—particularly the Ministry of Defence, which is unfortunately likely to have a large number of spare tools available in the near future?
    Mr. Lennox-Boyd: As I have suggested to my hon. Friend privately, I think that it would be a good idea if Tools for Self Reliance contacted the Overseas Development Administration and entered into discussion with it. Of course, British non-governmental organisations such as the one to which my hon. Friend refers have received strong Government support under the joint funding scheme, whose budget has increased rapidly over the past few years—indeed, it has more than doubled over the past four years. We do, indeed, help such projects, although we should clearly have to discuss what was proposed.
    Mr. Olner: Did the Minister see the exhibition in the Jubilee Room about tools for third-world countries? I agree absolutely that those countries need tools, but does the Minister agree that the reference made at that meeting to the young people of African countries gaining dignity through being able to work could apply equally to the young people of Birmingham, Nuneaton and the west midlands, or anywhere else in Britain, and that we should really be giving the young people of this country some dignity through work?
    Mr. Lennox-Boyđ: As regards Tools for Self Reliance and other similar organisations, the Overseas Development Administration gives significant help and certainly helps through grants in support of appropriate technology projects that help underdeveloped countries in Africa with tools. We certainly make a large contribution in that respect.

    Bosnian Orphans
    Mr. Thurnham: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received about the fate of Bosnian orphans; and if he will make a statement.
    Mr. Lennox-Boyd: We have received a number of representations and share the deep concern felt by many in this country about the fate of children who have been orphaned in the tragic conflict in Bosnia.
    Mr. Thurnham: Will my hon. Friend bear in mind the concerns of British couples who are prepared to adopt orphans abandoned by mothers who have been raped by Serbian soldiers? Will he confirm that up to 20,000 women were so violated?
    Mr. Lennox-Boyd: I cannot confirm the figures that my hon. Friend cites, but I can say that my hon. Friend the Under-Secretary of State for Health has taken a close interest in this particular tragic matter and has made it clear that, in appropriate cases, his Department will help with the adoption of children who have been conceived as a result of rape.
    Mr. Tony Banks: Does the Minister recall the suggestion of His Holiness the Pope that Bosnian Muslim women who had been raped should bear their children? Given that many of us found that offensive, what steps do the Government propose to take now to counsel those women who decide to take the Pope's advice?
    Mr. Lennox-Boyd: As the hon. Gentleman is aware, a report was carried out by Dame Anne Warburton into that dreadful area. The ODA has commissioned Marie Stopes International to examine the practical problems of managing and implementing the recommendations made by the Warburton mission in Bosnia.

    Somalia
    Mr. Fabricant: To ask the Secretary of State Foreign and Commonwealth Affairs if he will make a statement regarding the present level of British aid being sent to Somalia.
    Mr. Lennox-Boyd: Britain has pledged almost £43 million worth of emergency relief assistance for Somalia since January 1992, including its share of European Community aid.
    Mr. Fabricant: Is my hon. Friend aware that the United Nations has stated that British aid is the most effective in the western world? Is he further aware that Britain has peculiar and special expertise in the sourcing and finding of fresh water supplies in villages in Africa? What are we doing in Somalia?
    Mr. Lennox-Boyd: Britain is the third largest bilateral donor to the relief effort in Somalia: some £43 million has been pledged in the past 15 months. I would add that there is £5·5 million worth available immediately on the table for suitable non-governmental organisations and United Nations projects that may apply for it. The British Government have also given substantial money to the north of Somalia which includes, as my hon. Friend referred to it, rehabilitation of water supply projects.

Channel Tunnel Rail Link
3.30 pm
The Secretary of State for Transport (Mr. John MacGregor): With permission, I should like to make a statement about the proposed new railway line between the channel tunnel and London, and about the Ashford international passenger station.
I have today given the go-ahead for the Ashford international passenger station. I have given British Rail both a full approval and the funding it needs to carry out immediately all the track, signalling and platform works, totalling £30 million. In parallel, my Department and British Rail will explore urgently with the private sector ways of involving its expertise and capital in the construction of the station buildings. The Government are fully committed to having the station completed as soon as possible, so that Kent and other parts of the south-east can gain the full benefits from the channel tunnel.
Turning to the channel tunnel rail link, the House will recall that my predecessor announced in October 1991 the route corridor preferred by the Government, which approaches London from the east via Stratford and terminates at King's Cross; and he invited British Rail to refine the route. For this work, British Rail formed a subsidiary, Union Railways, which draws on the skills of both the public and private sectors. Its work has been thorough and professional.
Great effort has gone into achieving a route with proper environmental standards which largely follows existing transport corridors and at the same time reduces the costs substantially. As a result of this work, the line is now estimated to cost between £2 billion and £3 billion—considerably less than before, without any loss in the overall benefits, environmental or otherwise, of the route, and with some gain.
The Union Railways report offers a series of options on the precise route, and does not make recommendations between them. The Government have concluded that the route which should now be put to public consultation is as follows.
Between the channel tunnel and Detling, north of Maidstone, the route would largely follow the previously safeguarded route. However, at Ashford the route would run to the north of the town, with a tunnel under the M20 and then running parallel to the motorway. This route is environmentally superior to the former safeguarded route. It is also £86 million less expensive, and it would have less impact on existing and potential development within the town.
For the section of the route crossing the Medway valley, we prefer an option in the report which, from the east, would diverge from the M20 corridor, passing through a 4 km tunnel under Blue Bell hill, before crossing the Medway alongside the existing M2 bridge and following the corridor of the M2 and A2 on the surface. This is not the cheapest option, but it has substantial environmental advantages, at a modest additional cost.
South of Gravesend, there is provision for a connection to Waterloo. The main route would run along the Ebbsfleet valley then tunnel under the Thames, to run alongside the existing London, Tilbury and Southend railway from north of Purfleet to east of Barking. From there it would enter a tunnel to Stratford, where there remains an option for a station. This route overcomes a
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number of engineering and environmental difficulties associated with the more southerly route published in 1991.
West of Stratford, there are two options. One option is for a tunnel all the way to the proposed King's Cross low-level station. The alternative is for a tunnel from Stratford to a point on the north London line railway west of Dalston Kingsland station, then continuing alongside the north London line by reinstating the original four-track alignment within the existing railway boundaries, before finally swinging south over railway lands into St. Pancras station.
The tunnel route to King's Cross has significantly more impact on property settlement and noise levels than the route via the north London line, which is an important consideration from the environmental point of view. The St. Pancras option also appears to be less expensive than the King's Cross low-level proposal, and that is important in terms of practical feasibility, in relation both to public expenditure and private capital.
As my right hon. Friend the Chancellor of the Exchequer announced in his Budget speech, the Government's preference is for the St. Pancras option. We recognise that, before we come to the final view, futher work will be needed on the environmental, planning, regeneration, safety and engineering aspects of the proposal, and on exploring the options for developing the Thameslink services. I have asked Union Railways to carry this forward as a matter of urgency.
The new railway will bring great benefits. It will reduce journey times for international passengers, compared to what will be available in the early years following the opening of the channel tunnel, by at least 33 minutes, and by more in the commuter peaks, to 2 hours 27 minutes from London to Paris and 2 hours 7 minutes to Brussels.
The railway will transform commuting from many parts of Kent, with a large increase in capacity, enhanced reliability and dramatic reductions in journey times. Construction of the railway will create about 15,000 jobs. The railway will also contribute substantially to the regeneration of the east Thames corridor and more widely. The Union Railways report also sets out ideas for related rail projects which could stimulate further regeneration.
The Government consider that the benefits of this project are such that it should now go forward as a joint venture between the public and private sectors. The Government are prepared in principle to provide substantial public sector support in recognition of the domestic transport benefits from the new line.
The next stage is to consult on the proposals. I want the consultation to be thorough and well informed. It will be led by Union Railways, and I should like it to be completed by mid-October. Only then will we take the final decisions on the route, and I shall then safeguard it. In the meantime, I am releasing the safeguarding from the two sections of route which have been superseded by that which I have just announced. The Union Railways report and the independent review of Union Railways' work undertaken by my advisers Samuel Montagu and W. S. Atkins are available in the Vote Office.
In parallel with the public consultation, my Department, with Samuel Montagu and Union Railways, will be discussing with the private sector its participation in a joint venture. Our aim is to find a way of taking the project forward which offers the private sector a proper return on its investment and secures value for money to the

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taxpayer. Union Railways will be made into a separate, initially Government-owned, company once the relevant powers have been granted under the Railways Bill now before the House and we intend that in due course the project will be transferred to the private sector.
Following safeguarding, the project will proceed by hybrid Bill. Provided that we press ahead quickly, it should be possible for the railway to be completed by around the turn of the decade—[HON. MEMBERS: "Next century."] Equally, it should be completed by the end of the decade, which is only seven years away.
The time has come to end the uncertainty. Our decision to give the go-ahead to the new railway will enable us to secure the benefits which it will bring for international travellers, for Kent and Essex commuters, and for regeneration in the east Thames corridor. This will be a massive undertaking. The preferred route I have proposed today is environmentally sensitive, realistic and financially feasible as a joint venture.
Mr. John Prescott: It is almost five years since the decision was taken to build a dedicated channel tunnel high-speed rail route from London. The Secretary of State's announcement today confirms further delay, uncertainty and planning blight, with the completion of the line pushed into the next century—not to the end of the decade. The use of the line has been delayed until 10 years after the opening of the channel tunnel.
While Britain will enter the 21st century on the back of a 19th-century railway system, our French partners, who started at the same time, have built their modern system ready for the opening of the tunnel and 10 years ahead of Britain. Last week they announced a further 200-mile extension of their tunnel rail link to Strasbourg, at a price of £2 billion.
The delay can be fairly laid at the Government's door. It has been caused by their lack of strategic thinking and their ideological requirement that the rail link should be private finance-led, receive no public financial support, and be privately owned. That has maximised delay, planning blight and uncertainty, and damaged Britain's economic future in Europe.
The handling of the issue was typically illustrated by the way in which the Government botched even the delayed announcement of the route and the leak by the Meridian television company. They are a Government of blunder and blight. They lack vision, commitment and common sense. They will severely damage our economic processes in Europe and cause a decade of misery and uncertainty in large areas of Kent and London.
Will the Secretary of State confirm that the high-speed rail link to the channel tunnel cannot be financed by the private sector alone? His statement today seemed to suggest that Government money and guarantees will be required if proper environmental safeguards were to be met. Does the Secretary of State accept that the southern route was effectively cancelled by his predecessor Lord Parkinson in June 1989 because the Government were not prepared to find the £500 million capital grant guarantee required by the private sector? Does his statement today mean that there has been a change in the Government's policy to ensure that the priorities of least cost and maximum profit do not overrule the major environmental priorities, especially in the Kent and London area?
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Is it still the Government's policy that the environmental damage in Kent should be reduced by tunnelling, as in the London section? Will he reaffirm the assurance given in October 1991 by the previous Secretary of State for Transport, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind) that the southern route, which involved 25 km of tunnelling, would be replaced by the east London route, which involved 38 km of tunnelling, including tunnelling under the beautiful area of the Boxley valley? Will the Secretary of State confirm that the Union Railways route which he has just announced represents less than one third of the original tunnelling proposal, and that yet again the Government are reneging on one of their past commitments?
Will the Secretary of State consider a more generous compensation scheme, along the lines proposed by the French in their channel tunnel rail project, in view of the tremendous disruption along any proposed route in the Kent and London areas? Is it still the Government's view that choosing the eastern route was justified because the eastern corridor provided tremendous regeneration opportunities for north Kent and east London? When can we expect him, or, indeed, the Department of the Environment, to make a statement on that?
Can the Secretary of State tell us anything about the station strategy on the route, especially as he appears to have decided that St. Pancras should be the London terminus and has announced the Ashford centre? What studies have been done to justify the selection of St. Pancras? What compensation has been paid by British Rail to the developers of the King's Cross site? What are the consequences for Thameslink, crossrail and the Jubilee line, all of which are dependent on private finance and all of which have been considerably delayed?
Does the Secretary of State accept that the channel tunnel is of utmost importance to areas outside London and Kent, and especially parts of the north? Will the choice of St. Pancras over King's Cross delay passenger through journeys to the north in any way? What plans does the Secretary of State have to modernise the west coast main line?
Does the Secretary of State accept that other areas need a Euro-gauge standard route for freight? Will he agree that it is necessary to review the present freight transport route, which is based at Willesden and requires London rail freight traffic to travel across London rather than around it, forcing thousands of lorries to use roads from the north through Kent, rather than the rail alternative?
If the Government had adopted Labour's proposals for the route, which were published three years ago, and if they had accepted public and private financing, it would now have been well on the way to completion. Britain will once again pay a heavy price for the Government's sheer incompetence.
Mr. MacGregor: I noticed that the hon. Gentleman accused me of incompetence last week because I did not make the statement then, but that was typical of him. I shall explain that incompetence to the House. It was outrageous of the hon. Gentleman, because I wished to make a statement last Wednesday, following the Chancellor's announcement, but did not do so and agreed to make a statement today to accommodate the Opposition, through the usual channels.
Then what happened? The hon. Gentleman got hold of a leak on Thursday and provoked unjustified worries and

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fears among many people in Kent, through widespread coverage of the leak. It is typical of the hon. Gentleman to accuse me of incompetence when I was trying to accommodate the Opposition, and when he himself led to the problem.
I find it amusing to discover that one of the hon. Gentleman's main opening attacks was to accuse me of saying that the channel tunnel would be completed next century, rather than at the end of the decade. Does the hon. Gentleman not know that they are both the same? It was a rather pathetic attack.
I shall deal with as many of the hon. Gentleman's questions as possible, although it would require a speech to answer them all. Obviously, I wish to diminish the delay, uncertainty and planning blight; that is why, the moment that I became Secretary of State, I focused on the channel tunnel rail link, and why I am pleased to announce the decision today. I am anxious to minimise the uncertainty, which the statement does to a great extent, including de-safeguarding some of the routes. I am anxious to get rid of planning blight as quickly as possible, and that is why we have removed quite a number of areas from it through the announcement.
I am keen to get on with consultation—I hope that the hon. Gentleman does not think that I am avoiding it—so that we can come to a decision finally on the route and its safeguarding.
On the comparison with the French, the hon. Gentleman will know that the Waterloo terminal is nearly completed and that there will be full connections until the end of the decade. The problem is that, after the end of the decade, there will be congestion on those lines, which is why we are going ahead with the channel tunnel high-speed link now. The hon. Gentleman does not seem to recognise that it is easier to carry through a route more quickly in the north of France, which is flat and less congested, and which has fewer of the many difficult areas and issues that we have had to tackle on the whole route through Kent, which is one of the loveliest but most geologically difficult parts of the country, as well as one of the most congested. The hon. Gentleman does not understand the difference between the two.
The hon. Gentleman referred to no public financial support. He clearly was not listening, because I made it clear today—in a specific, clear and new announcement—that the Government will give public financial support. The hon. Gentleman describes that as changing policy, but it comes as a result of a thorough investigation of the whole issue. I should have thought that he would welcome the announcement today. In recognition of the many benefits to domestic passenger services, particularly in Kent but also in Essex, it is right to make that public contribution, and we have made that clear for the first time.
Next, the hon. Gentleman asked whether we were going for the least-cost option. In some cases we are not. I have made it clear that, where environmental benefits justify it, we have gone for a more expensive option. I should have thought that the hon. Gentleman would have given credit to Union Railways and to the many people who assisted the company to produce a solution—as a result of defining more clearly all the aspects of the original Ove Arup route—that is environmentally more beneficial and costs less. I
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should have thought that he would have given them some credit for doing so, but it is typical of the hon. Gentleman to justify everything by the amount of public money that he wishes to throw at it, and not to consider whether we are getting value for money.
I shall be unable to deal with all the points raised by the hon. Gentleman, but, on tunnelling, the options are set out in the Union Railways report. In all but one case, the environmental impact of going for tunnelling would be worse or no better than not going for tunnelling. Let me be clear about that. In the one case where it would be better, which is the long tunnel at the Medway, the additional cost would be between £150 million and £200 million. We did not think that that was justified. At least three quarters of the route, as now defined, will be in tunnel or will make use of or be alongside existing transport corridors. The report has been extremely skilfully worked out, and has provided environmental benefits and less cost.
The hon. Gentleman asked me whether the choice of the east route was justified. I have already made it clear that I fully supported the route that was decided by my predecessor. It is justified not least because of the regeneration effects along the east Thames corridor. My right hon. and learned Friend the Secretary of State for the Environment will make a statement about that shortly.
The hon. Gentleman asked whether studies had been made to justify the option of St. Pancras. Yes, they have. Once we had decided to go for the route from Stratford and east of London, a key element was the fact that it became possible to consider the St. Pancras option. It would have been difficult to do that from the southern route. I asked Union Railways and British Rail to look again at that option. They gave me a report last month, and I thought it right to come to the House quickly to say that it is the preferred option. I have asked Union Railways to do more work on it.
We can agree about the utmost importance of the channel tunnel high-speed link to areas outside London, particularly the north and Scotland. I can confirm to the hon. Gentleman that, if we go for the option of St. Pancras, it will have no detrimental effect on the speed with which we can get direct services through to the north and Scotland. I recognise the importance of that.
Several Hon. Members rose——
Madam Speaker: Order. I shall not hesitate to intervene if Members make statements or long comments. This is question time, so brisk questions and answers, please.
Sir Keith Speed: Is my right hon. Friend aware that I very much welcome his statement about Ashford international station? Will he give an undertaking that the work will start as quickly as possible, because time is now of the essence? My constituents do not share his optimism about the route itself. Will the consultation process be a real one, so that people in my area can argue for the original safeguarded route if they so wish?
Mr. MacGregor: I am grateful to my hon. Friend. I know how hard and strongly he has pressed for the Ashford international passenger station. I am therefore extremely glad to have been able to make a statement about it today. I know that he has worked closely with the chairman of planning and transportation of Kent county council, Mr. Bruce Lockhart, and I recognise the strength of their case in respect of that station and the benefits that

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it will bring to Kent commuters. We have taken those benefits into account. I hope that the work will proceed very quickly.
As to consultation, I can assure my hon. Friend that it will be possible for those who still prefer the existing route to make their case. I think that there are many advantages in the new route, because the environmental assessment is superior, fewer properties are affected, and, of course, it is less expensive. We concentrated as much on the property and environmental aspects as on the cost, and they led me to believe that that was the preferred route.
Mr. Nick Harvey: Is it not true that the United Kingdom has wasted the six years since the Channel Tunnel Act 1987 was enacted—in stark contrast, whatever the Minister may say, to the French? Have we not wasted taxpayers' money on the south London route and the King's Cross option? Is not this statement about cutting costs? Is the Minister's timetable credible if public consultation must be followed by a hybrid Bill and a five-year engineering project? Whatever The Sun may have said about the Budget, is the Minister sure that it is wise for the route to go through the editor's golf club?
Mr. MacGregor: On the hon. Gentleman's last point, it is inevitable that such a controversial and difficult issue will adversely affect some areas. I hope that it would be prefectly possible to move that clubhouse were it to be affected by the route.
The hon. Gentleman must recognise, as I have certainly recognised during my time as Secretary of State for Transport, that this is one of the most controversial and difficult projects to be undertaken. I entirely reject the hon. Gentleman's accusations about cheapness. Not only is the project massively expensive, but it affects very large numbers of people and businesses, and will have a big environmental impact. We could scarcely have chosen a part of the country that would present more difficulties, but we had no other choice. It was inevitable that it would take time to resolve such problems, and that the process would be controversial. It was important to get the best answer, which is what we have ultimately achieved.
On procedure, I think that the hybrid Bill is the quickest way to proceed with the legislation, and I hope that we shall have the hon. Gentleman's co-operation in getting it through as quickly as possible.
Dame Peggy Fenner: My constituents will be pleased that my right hon. Friend took to heart the Ove Arup route over the Medway. Has the European Community done its environmental assessment? Will we receive any money from the EC for the important Euro-link, which will serve the rest of the country and, in doing so, present great environmental difficulties for Kent?
Mr. MacGregor: I recognise the environmental affects, to which we paid particular attention. I stress to my hon. Friend—to whom I am grateful for her remarks—that great attention was paid to environmental aspects in the report of the Union Railways, which was assisted by 12 environmental consultancies. Very shortly—early next month—they will publish their environmental report as an appendix to the Union Railways report that I am placing in the Vote Office today. There will be an opportunity to conduct the full environmental impact assessment as we move beyond the consultation stage. I assure my hon.
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Friend that we shall give as much attention as possible to—and meet all our European commitments on—tackling the environmental assessments.
Mr. Ron Leighton: Will the Secretary of State assure us that there will be an international passenger station at Stratford? He will know that he has the full-hearted support of the London borough of Newham for the eastern route. Would it not be a betrayal of that support if there were to be no international station at Stratford?
Mr. MacGregor: When the hon. Gentleman looks at the Union Railways report he will see that it lists a number of options, both for international stations and domestic stations to serve commuter lines. We have decided that at this stage it would not be right for us to declare preferred stations. We shall listen carefully to the responses to the public consultation on stations and to those from possible promoters and developers before taking final decisions. Clearly, Stratford is one option.
Mr. Andrew Rowe: I do not think that I heard my right hon. Friend mention the word "freight". Is he aware how very keen Kent county council and all the people in Kent are for a severely diminution in the number of lorry movements through Kent? Will he assure us that Union Railways, which is to become a private company, is sufficiently objective in its proposals to give independent advice to the Government, or will the Government ensure that it takes charge of the consultation process?
Mr. MacGregor: Clearly, we shall be heavily involved in the consultation process. The Government will introduce the hybrid Bill, so they will clearly be in the lead. It was entirely right that Union Railways, with the aid of its consultants, should conduct the study which I asked it to carry out. One of the benefits of the high-speed rail link is that it will enable additional freight to use it. As I asked, the report covers the two loops in the line. The main benefit will come from the fact that the high-speed rail link will release existing railways so that they can take more freight traffic, and the potential will exist for much more freight to go by rail.
Mr. Andrew Mackinlay: As the only Opposition Member of Parliament for Kent or Essex, can I ask the Secretary of State whether he is aware that his announcement will be greeted with great anger and dismay among people in those counties? How on earth can people have confidence in the consultation that he proposes if, as he has said, it is led by Union Railways? Will not Union Railways be judge and advocate in its own court?
Were we not reassured by the Secretary of State's predecessor, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), that there had been widespread consultation when he made the historic announcement about the route at the Conservative party conference in October 1991? What has gone wrong since then? What confidence can anyone in Kent or Essex have in a Government choosing a route that suits them politically instead of maximising the opportunities offered by the channel tunnel in the best transport interests of the United Kingdom?
Mr. MacGregor: If the hon. Gentleman is the only Opposition Member from Kent or Essex to be affected by the route, I must tell him that he has not made a good fist

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of it today: he is wrong on every point. The fact is that I will ultimately take the decisions on the route, just as I have made the announcement about the preferred route today. Union Railways studied all the options, and on that basis we made the decision about the preferred route.
Kent commuters will benefit greatly from the reductions in times—some of them are dramatic. In parts of Kent suffering from high unemployment, there will also be benefits in the form of regeneration. My announcement of the international passenger station at Ashford ensures that Kent benefits from the link. In Essex and east London there can be no doubt that the route that we have chosen, which the hon. Gentleman seemed to criticise, will greatly help the regeneration of the east Thames corridor.
Sir John Stanley: Is my right hon. Friend aware that his announcement today is warmly welcomed by my constituents and by me, especially in view of his decision to introduce a tunnel under Blue Bell hill, which represents a substantial environmental improvement on the previous scheme? Can he give me an assurance, however, that there will be no return to a mid-Kent parkway station in the northern part of the parish of Aylesford, as previously proposed? Can he give me a further assurance that the gradient of the new line will be such as to permit the heaviest and longest international freight trains to travel on it?
Mr. MacGregor: Yes, the line will be able to take the heaviest and longest international freight trains, although long trains of more than 1,000 tonnes may sometimes need two locomotives—but that is not a great bar. I can give my right hon. Friend the assurance that he seeks about the station at Kit's Coty. I am also most grateful for my right hon. Friend's first remarks. It seemed to us important in taking the decision about the Medway valley that the original proposal would have involved substantial environmental disbenefits, which is why we have gone for these proposals.
Ms Joan Ruddock: Will the Secretary of State accept that the people of south London, in my constituency particularly, will welcome his announcement that the southerly route is dead and buried? They will be far less happy, however, with his subsequent statement that there will be an increase in freight traffic along south London lines. Will he publish the changes that he expects in freight traffic? Will he look at the environmental impact and then do something about it? Furthermore, will he tell us exactly when he will be able to announce what will happen to the Thameslink services, which are crucial to transport movements in south London, and which are needed to compensate for the difficulties in our road network?
Mr. MacGregor: I have noted what the hon. Lady says about the freight impact on south London. It is rather early to be able to conduct any proper study of that, but I take note of what she said. We are, after all, talking about events into the next decade.
As for Thameslink, today's announcement was about the channel tunnel high speed rail link. It will remain possible, in the study that I am asking Union Railways to do of the St. Pancras and King's Cross options, if so desired, to take forward Thameslink 2000—in its currently
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planned or in a revised form—but that will depend on decisions to be taken later involving all sorts of implications. Meanwhile, I am asking Union Railways to take that into account in its further work.
Mr. Bob Dunn: Will the Secretary of State confirm that one of the reasons why a statement was not made last Wednesday was that the hon. Member for Kingston upon Hull, East (Mr. Prescott) was busy filming for the popular television programme "Through the Keyhole"?
As for the link itself, can my right hon. Friend confirm that as the route moves through the Ebbsfleet valley between Northfleet and Swanscombe, there will be a distinct possibility of the construction of an international station there?
Secondly, part of the proposal involves the movement of some passenger trains from the new route to the Chatham line, via the disused Gravesend, West line. Will my right hon. Friend confirm the status of that line? Is it a new line? If so, will it qualify for environmental protection? If not, will it qualify for it anyway?
Mr. MacGregor: I am not sure of all the reasons for the Opposition not wanting me to make a statement on Wednesday, but I was endeavouring to be as helpful as I could—so it was an extraordinary way to behave to give as much publicity as possible to a leak, and hence a great deal of provocation the next day. Then, to accuse me of uncertainty and of not coming forward quickly enough just compounded the error.
On my hon. Friend's two points, yes, it would be possible for the location that he mentioned to be a station. I have already said that we have taken no decisions about stations and that we will wait for the responses. On the question of reinstating the Gravesend, West branch line to find a means of making a connection between the high-speed channel tunnel link and Waterloo, so that international trains could continue to use Waterloo if they were coming up that link—which has considerable advantage—I can tell my hon. Friend that it would be the disused line. I have no reason to believe that the environmental and other impacts cannot be dealt with successfully.
Mr. Stanley Orme: The Secretary of State has referred to the effects of the proposal on the north and the north-west of England. Can he develop that a little further? We are extremely concerned about the lack of investment in and the deterioration of the north-west line. If nothing is done and if there is no investment, it will not be able to match the sort of development to which the right hon. Gentleman referred.
Mr. MacGregor: That is a separate issue from today's statement. However, I can tell the right hon. Gentleman that without question, and from both the passenger and freight points of view, I am keen to ensure that the north of England and Scotland gain as much benefit as possible from the channel tunnel and from the high-speed link. Therefore, an important consideration in looking at the stations was to ensure that those areas were not disadvantaged in any way.
Mr. Roger Gale: My right hon. Friend will be aware that the commuters of north-east Kent will welcome his announcement today for the benefits that, as he has rightly pointed out, it will bring to them by

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alleviating the congestion in south London. Can he confirm that any investment in the fast link will not be allowed to detract from the immediate investment in the necessary improvements to the Kent coast line?
Mr. MacGregor: I am well aware of my hon. Friend's views on this matter. We have already said that that line is one possibility—I cannot say any more until I get BR's recommendations—for the £150 million leasing proposals announced in the autumn statement. However, I cannot be certain at this stage. I assure him that British Rail—and, in due course, Railtrack—will be very much aware of the pressures to which he referred.
My hon. Friend will recognise that commuters from Kent will benefit very substantially indeed from this investment. I shall give a couple of illustrations to make my point. The time from Ashford to central London will be reduced from 70 to 42 minutes, and from Gravesend from 50 to 20 minutes.
Mr. Chris Smith: Why is the Secretary of State perpetuating the uncertainty and blight that affects King's Cross by not ruling out, once and for all, the over-expensive, low-level station at King's Cross, and instead going for the St. Pancras option? Is it not time that BR was instructed to withdraw the King's Cross Railways Bill from Parliament?
On the question of the north London line, will the right hon. Gentleman give a guarantee that the strictest environmental standards will apply to the stretch of line from Dalston to St. Pancras as well as to the stretch of the line east of Dalston?
Mr. MacGregor: On the hon. Gentleman's second point, we will apply the same strict environmental standards to all parts of the line. On his first, I am anxious to get on and to reach a decision. I could not do so today, because further work must be done on a number of aspects mentioned in my statement before we can reach a final view.
Mr. Jacques Arnold: My right hon. Friend will be aware that the route that he announced today passes a densely populated area in Northfleet and Gravesend in my constituency, within half a mile of 5,000 of my constituents. Will he ensure that all possible engineering and environmental expertise is brought to bear in the consultation process, to ensure that our environment is properly protected?
Mr. MacGregor: Yes, I assure my hon. Friend that all that will be carefully examined. There is a proposal for a tunnel in Pepper hill in my hon. Friend's constituency, but whether it will be a tunnel or a bridge-cum-viaduct can be explored in the public consultation.
Mr. Brian Sedgemore: Is the Secretary of State aware that I hope to present a petition tomorrow from the people of Hackney, against the easterly route—which goes through the heart of the borough? Is the right hon. Gentleman's promise that the line from Strateford and through Hackney will be in a tunnel—real and unconditional—or is it a politician's promise, which could be broken as part of a future cost-cutting exercise?
Mr. MacGregor: No, it is clear from my statement today that in so far as the link affects the hon. Gentleman's constituency, it will be tunnelled. We made that
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commitment clear in today's statement. I hope that the hon. Gentleman will not find it necessary now to present his petition tomorrow.
Mr. Robert Adley: I welcome this major investment in our railways, and I am particularly glad that my right hon. Friend has chosen a route that I first recommended nearly five years ago in my Conservative Political Centre book, "Tunnel Vision". Is my right hon. Friend certain that he will not find himself challenged in any way under section 42 of the Channel Tunnel Act 1987? Will environmental expenditure on the railway, which all right hon. and hon. Members welcome, be no less fundable from public sources than environmental protection in the case of road schemes such as the Winchester bypass? Also, will my right hon. Friend seriously consider the upgrading and full electrification of the Tonbridge-Redhill-Reading route, which would help so much in moving freight traffic around London and to the north?
Mr. MacGregor: I assure my hon. Friend that we will meet our obligations under section 42 of the 1987 Act, and that we will apply the same environmental standards and assessments to the channel tunnel high-speed rail link as we do to the road programme. I have no further comment on my hon. Friend's final point.
Mr. Jeremy Corbyn: Does the Secretary of State recall that, on 14 October 1991, his predecessor, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), at col. 37 of Hansard, gave me an undertaking that the route from Stratford to King's Cross would be wholly in tunnel? Why is the Secretary of State now proposing an overland route as one option? What will be the effect on local north London line services and on the environment of people living alongside that line both east and west of the proposed station, given the great increase in traffic on the link to the western region as well?
Mr. MacGregor: The route to King's Cross would have to have been in tunnel, but we are now talking about a route to St. Pancras, because that seems to offer considerable advantages. Quite a large part of it will be tunnelled, but not all of it. I hope that the hon. Gentleman will carefully study today's report and the later report from Union Railways.
Mr. James Couchman: My right hon. Friend stressed the benefit to Kent commuters of the new line. My constituents will be impressed if there will definitely be a station on the new line in the Medway area. In any case, like my hon. Friend the Member for Thanet, North (Mr. Gale), those of my constituents who are commuters will be much less impressed if that takes money from the Kent coast line, which is long overdue for upgrading in terms of both the line and rolling stock.
Mr. MacGregor: I note my hon. Friend's comments, and I know that he has often pressed that case. I cannot add today to my earlier comments about stations. There will be opportunities, and clearly we are anxious to secure benefits for commuters of the huge new investment. That is a main reason why the Government are prepared to make a substantial public sector contribution to stations as well as for other purposes. As to exactly where the stations will be, it will be wise to wait until we have received the full response to the public consultation.
Mr. John Fraser: Does the Secretary of State appreciate that, until the end of the century, virtually all the channel tunnel passenger trains—and freight trains as well—will travel through my constituency, from Herne Hill to Brixton? Does he realise that, if his earlier answer is correct, even after the turn of the century a good many freight trains up to 1,000 yd long will be travelling along the route—throughout the night in most cases—hauled, initially, by diesel locomotives? Can the right hon. Gentleman confirm that people whose property adjoins existing railways that will be forced to suffer environmental damage will receive the same environmental protection as was announced this afternoon for those living on new rail routes?
Mr. MacGregor: The normal rules relating to environmental protection and compensation will apply, but we are working with local authorities on arrangements for the type of line that the hon. Gentleman has mentioned. I am sure that, if he is anxious to mitigate the problem caused by the amount of traffic from the channel tunnel that travels along the lines between now and the end of the century, he will give all his support to the Government's attempts to secure the Bill's passage.
Sir Roger Moate: Is my right hon. Friend aware that, although Kent Members and many others will fight for environmental improvements, today's statement and the decision that he has announced will receive a broad welcome, contrasting sharply with the whingeing, carping, negative and destructive attitude of the Labour party? Will he take every opportunity to remind the country that, from the moment that the channel tunnel is opened, it will be possible to catch a train from the new Waterloo terminal and to be in Paris within three hours? I hope that he will deny all the denigrating, knocking stuff that we have heard from Labour.
Will my right hon. Friend explain why he has chosen to use the hybrid Bill procedure rather than the new order-making procedure, which was available to him and which would have provided greater opportunities for public inquiries, including local public inquiries? Does he understand that it is desperately important for Kent's support to know where the new stations will be? That is what will make the railway viable in terms of attracting Kent commuter traffic.
Mr. MacGregor: I am grateful to my hon. Friend. He is entirely right about the attitude of the Opposition, who can hardly bring themselves even to welcome a massive investment in Britain's transport infrastructure that will do a great deal for many generations to come. He is also entirely right to make it clear that, when the tunnel opens, it will take just over three hours to travel from London to Paris, and even less to travel from London to Brussels. That is already a substantial benefit, and I think that many people who currently travel to Brussels by air will quickly see the attraction of going by train.
My hon. Friend made two other points. I recognise the force of his comment about stations; that is why I am anxious to provide a comparatively short but reasonable time for public consultation. I hope that six months will be adequate, and will allow us to reach a view on stations.
As for my hon. Friend's other point, I think it right to use the hybrid Bill procedure to deal with a project of such magnitude and scale, which is receiving Government
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backing. The procedure will still involve a substantial process of investigation as the Bill goes through both Houses.
Mr. Jim Cousins: Does the Secretary of State admit that hon. Members whose constituencies are served by the east coast main line in Yorkshire, the north-east and Scotland consider that the proposal for the preferred route to St. Pancras would be better called "Disunion Railways"? Although the point is never addressed in the document, it is clear that there will be no direct link from the east coast main line to the channel tunnel except by means of shunting through St. Pancras mainline station. Will the Secretary of State deal with that point? Why has it not been considered in any of the documents?
Mr. MacGregor: Because it does not amount to a row of beans. There will be a direct line, and there will be no shunting. The train will have to come into the station and then go out, but that happens on high-speed links all over Europe; there is nothing very significant about it. The train will also have to stop at London, so that crews can change and border control personnel can alight. I do not believe that the system will have any impact on the speed with which passengers from Scotland and the north of England can go straight through the channel tunnel.
Mr. David Shaw: Will my right hon. Friend confirm that maintaining section 42 of the Channel Tunnel Act 1987—which will be of great interest, and give great pleasure, to those who work in Dover's ferry industry in the years ahead—will involve no back-door subsidy through the commuter mechanism, which would contravene that section and the principles behind it? Will he also confirm that money will not be spent on the construction of the rail link until, at long last, my constituents who use the railways to get from Dover to London have some decent rolling stock on which to travel?
Mr. MacGregor: Yes, I can confirm my hon. Friend's first point: that any Government support will be used entirely to provide internal, domestic benefits for commuters and that international passengers and international services will not be affected by it. Therefore, we shall be meeting our obligations under section 42. As for my hon. Friend's second point, I cannot make a clear correlation between the two, but I hope that my hon. Friend will agree that it is right—because of the benefits to so many people in Kent as well as to the rest of the country—that we ought to proceed with the high-speed rail link as quickly as we reasonably can.
Ms Glenda Jackson: Further to the question asked by my hon. Friend the Member for Islington, North (Mr. Corbyn), can the Secretary of State tell the House why the promise that was given in 1991 by his predecessor has been broken—that the line which runs parallel with the north London line should be via tunnels, given that King's Cross and St. Pancras are virtually next door to each other? Once the trains have reached St. Pancras, will the north London line to the west of the station be used to join the west coast mainline, and will tunnelling be excluded there, too?
Mr. MacGregor: On the first part of the hon. Lady's question, from the studies that I have seen so far—clearly, this is something that I have asked Union Railways to look

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into in more detail—there will be considerable environmental benefits, on balance, from using the existing north London line. Noise mitigation and so on, would all be carried out when the two lines that are not being used at the moment come into use. As for the hon. Lady's second question, the east coast mainline services——
Mr. Prescott: We are talking about the west coast mainline services.
Mr. MacGregor: Yes, I know, but I want to make a point about the east coast mainline services. The east coast and the west coast mainline services are all important to the north and to Scotland. The east coast mainline services that currently use St. Pancras can be accommodated in a new part of the station, west of the existing King's Cross station. Most west coast mainline services go from Euston. One possibility there is the use of a travelator between St. Pancras and Euston to speed up the connections.
Sir Teddy Taylor: Is it not a bit insulting to the people of Southend-on-Sea to put part of this glamorous and costly new line alongside the London, Tilbury and Southend line, which, as my right hon. Friend is well aware, is one of the most shamefully neglected of all British Rail's services in terms of investment and performance? Can he provide me with a clear answer as to why he now says that a great deal of taxpayers' money will go towards these rail links when a clear, specific assurance was given on 5 June 1986, in column 1187, that these rail links would not cost the taxpayer one penny, and when we were led to believe that these assurances were legally binding and could not be changed?
Mr. MacGregor: On my hon. Friend's first point, I do not see that it is at all insulting. My hon. Friend knows—I share his view—that it is very important that the London, Tilbury and Southend line infrastructure should be improved. He will also know that very recently, as a result of the public expenditure settlement that I agreed last autumn, British Rail has been able to go ahead with the announcement of a £40 million investment in the signalling on the London, Tilbury and Southend line.
As for my hon. Friend's second point, I can give him an assurance, which I repeat, that there will be no taxpayers' subsidy for the international aspects of this line and that therefore we shall be meeting our obligations under section 42 of the Channel Tunnel Act.
Mr. Brian Wilson: Can I place it on record that the comments made by the hon. Member for Dartford (Mr. Dunn) in respect of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) were inaccurate, as I believe the hon. Member for Dartford now recognises? The question is why the Secetary of State could not have made a statement on this subject last Thursday instead of wasting his time in Scotland trying to enthuse people about privatisation, which nobody wants.
Does this statement not represent another example of one story before the election and a different one after it? Is it not true that after all this time there is to be yet another consultation period and yet another decade before there is a high-speed link, even between the channel tunnel and London? Can the Secretary of State confirm that, for purely cost reasons, less than one third of the distance which his predecessor earmarked for tunnelling will now
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be subject to tunnelling, which will be at the expense of the evironment? Can he also confirm that the distance earmarked for tunnelling will not include Boxley valley?
Does the Secretary of State agree that the real tragedy of the statement is that there is still no national vision for fast rail links north of London? Does he understand that it is not merely a domestic Kent issue—important though such considerations are—but that the rest of the country now awaits a strategy for fast direct links, as opposed to the dog's breakfast and fragmentation which privatisation offer?
Mr. MacGregor: On the hon. Gentleman's first point, I wanted to make the statement on Wednesday so that the House was informed as quickly as possible. On Thursday, I was fulfilling substantial engagements in Scotland with ScotRail, the Scottish pensioners—[Interruption.] The hon. Gentleman would have been the first to criticise me if I had not been able to discuss with editors the whole issue of privatisation in Scotland, with Strathclyde PTE and SPEED, an organisation which, as he will know, is concerned with freight movement from Scotland. I was carrying out that extensive programme. He would have been the first to criticise me and would have described it as an insult to the Scots if I had not fulfilled that engagement. I thought that it was extremely important to complete those serious and prolonged discussions with people in Scotland, which I found extremely useful. I also found considerable enthusiasm for privatisation among ScotRail managers.
On delays, Union Railways has produced an excellent, thorough report, and very quickly. I pay substantial tribute to Union Railways for the way in which it carried it out. Once the route was decided—I confirmed it very soon after I became Secretary of State—we asked Union Railways to carry out this work which was essential before we proceeded any further. I presume that the hon. Gentleman is not suggesting that we should ignore all public consultation and should not have the usual processes of getting parliamentary approval for the project. He will therefore recognise that what we have been doing in the past year is to reach the present stage very quickly, and I intend to continue as fast as we possibly can.
I can tell the hon. Gentleman, as I have already said, that there is a substantial amount of tunnelling. In only one case could there have been environmental advantages from additional tunnelling, which would have meant substantial additional expenditure of between £150 million and £200 million. We decided that the short tunnel route, which is not the cheapest option but which is more expensive than one possibility, was the right one to take.
This is a massive investment of £2·5 billion on track and infrastructure alone. People travelling to the rest of the country will benefit just as much as people from London and the south-east because journeys through the channel tunnel will be cut by 33 minutes. Exactly the same amount of time will be saved.
Several Hon. Members: On a point of order, Madam Speaker.
Madam Speaker: Order. I have not finished. Sir Edward Heath.
Sir Edward Heath: May I thank my right hon. Friend for the statement, for the grasp that he has shown of the intricacies of this long-running

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project and for his obvious determination in pushing it ahead? I assure him that the people of Old Bexley and Sidcup will welcome the statement because, although passionately pro-European, they have always preferred that the fast link should run outside their borders.
Nothing, historically, can alter the fact that when the channel tunnel was suggested, British Rail said that no link would be necessary, but in 1985 it said that a link would be necessary. It is now eight years since that statement was made and we are still only in the process of making progress, which, I am afraid, is all too characteristic of the way in which this country tries to move into the modern world.
Will my right hon. Friend kindly enlarge on his statement that section 42 of the Channel Tunnel Act 1987 will be observed but will not inhibit him? Section 42 was included deliberately to prevent British Rail or other public money from being used for the purposes of looking after the environment on this scheme. As he has emphasised, a great deal is required for the environment and he is sure that it will be covered. Is it to be dealt with by public money?
Mr. MacGregor: I am grateful to my right hon. Friend for his opening comments. It has been my intention to move ahead on the matter as fast as we can. I am sure that my right hon. Friend recognises that today's announcement is a very important step forward in the whole process, not least in making clear the Government's determination and in clearing up the blight issues which have affected many people. That is why I was anxious to make my announcement as quickly as possible.
On section 42, the public sector contribution will come through the benefits to domestic commuters and through the services that are provided there. The precise split between the two will have to be decided in due course. I have said that we shall now engage in discussions with the private sector to work out all the arrangements for the
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joint venture. That will happen in parallel with the public consultation. The important thing today is to get ahead with the public consultation so that we can finally settle the route.
Mr. Tam Dalyell: On a point of order, Madam Speaker. What does "Erskine May" have to say about "a row of beans" as a parliamentary expression? Would that not give the Secretary of State the opportunity to clarify exactly what he meant when he replied to my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins)? Those of us who are concerned about the northern link want the Secretary of State to clarify why it should take no more time than was previously promised.
Madam Speaker: The hon. Gentleman is attempting to continue the exchange. I must tell him that "time's up" means "time's up".
Mr. Tony Lloyd: On a point of order, Madam Speaker. I do not want to continue questions on the statement, but I must point out that the Secretary of State failed to mention the country outside London. As a result of pressures on time, only two speakers from north of London were called. What opportunities will those of us who represent those areas, for which the link is crucial, have to put points and to have them answered by the Secretary of State?
Madam Speaker: I recognise that the matter is crucial to hon. Members, including myself, who represent constituencies outside London. As the Secretary of State said, there is to be an intensive consultation process. I hope that hon. Members can have an input there. It is true that I was not able to call the number of hon. Members who represent constituencies outside London whom I wished to call. I am afraid that questions on statements must sometimes be curtailed. I have to draw a distinction between the statement and today's other important business, with which we shall now proceed.

Ministerial Patronage (Parliamentary Scrutiny)
4.31 pm
Dr. Tony Wright: I beg to move,
That leave be given to bring in a Bill to make provision for ministerial appointments to public bodies to be subject to a Parliamentary scrutiny and confirmation process through Select Committees.
The Bill is about patronage—the patronage powers of Ministers and of the Prime Minister to appoint people to public posts. My contention is that those powers are excessive, often inefficient and frequently abused. The Bill is designed to make the patronage powers of Ministers more accountable to Parliament and to parliamentary scrutiny.
The issue has a long history. From the 18th century onwards, Parliament has been fighting for its rights against Ministers who have deployed the armoury of patronage and prerogative powers to bribe and buy their way through the House. The subject invites a certain delicacy. Patronage has been described as second only to the act of love in conferring pleasure on all parties concerned. Twenty years ago, Lord Rothschild's central policy review staff studied the matter. Later, he said:
"I thought I detected some resistance on the part of the authorities to the Think Tank studying the subject…patronage is a very precious and delicate commodity."
It is surely time to stop being coy about the matter. There is widespread concern in the House and in the country about the matter—and rightly so. At general elections, people think that they are electing a Government. What they do not realise is that they are also releasing the floodgates of ministerial patronage, which will sweep over and dominate the daily government of their lives.
This is the appointive state—non-elected, non-accountable and full of people, chiefly men, whose main and sometimes only qualification is to be acceptable to the Ministers who appoint them. There are currently more than 40,000 public appointments in the gift of Ministers, with the Prime Minister himself standing at the apex of this pyramid of privilege.
I recently asked the Prime Minister in a written question to reveal how many public appointments he controls. Back came those immortal words:
"The information requested could be provided only at disproportionate cost."—[Official Report, 16 March 1993; Vol. 221, c. 34.]
I suggest that there is now a disproportionate cost to our democracy in leaving such patronage unchecked. The present Government did not invent patronage. The last Labour Government made liberal use of it. What the present Government have done is to give it a crudely partisan twist. Out went the great and the good; in came those who passed the "one of us" test. A survey by the BBC in 1985 revealed that a quarter of the chairmen of a selection of major public bodies were openly Conservative supporters. A similar survey by the Financial Times earlier this year concluded:
"if, there is a new elite running Britain's public services…it appears the best qualifications to join are to be a businessman with Conservative leanings."
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That is manifestly so in the new trustified health service, while it is widely understood in Wales that the most secure route to public appointment is to be an unsuccessful Conservative candidate.
There is a problem about democracy here; there is a problem about efficiency, too. To take two recent examples, it is not immediately apparent that efficient management has been the hallmark either of the just-surviving chairman of the BBC or of the recently departing chair of the West Midlands regional health authority, both of them political patronage appointments. Last year The Times noted:
"Mrs. Thatcher's approach to patronage was the simple rule: those who are not with me are against me."
The Times went on to observe:
"A more tolerant use of patronage could spread the art of Government beyond a partisan ruling elite, and raise the quality of institutional debate. To exclude talented administrators and wise old heads just because they are of the wrong political colour is to impoverish political life."
Hon. Members may have noted that I have avoided the dreaded word "quango". I have done so deliberately. There is nothing quasi-autonomous and certainly nothing non-governmental about the public bodies to which I refer. We need a new word. I suggest that we call them "patronage bodies"—perhaps "patbods" for short—so that everyone can understand what they are really about.
As patronage bodies become ever more important—as elective government is increasingly replaced by appointive government—so control, too, becomes more important. The quango cull of the early 1980s has been overtaken by the patbod growth that has followed it. The advisory committee on Hadrian's wall may have been swept away, but in have come the agencies, commissions, trusts, councils, authorities and corporations that now dominate public administration on every side.
Such bodies now account for more than a fifth of total public spending—20 per cent. more in real terms than in 1979. What distinguishes them all is the fact that they are the creatures of Ministers, and that they exist in a no-man's land of non-accountability inhabited not by the elected but by the selected.
As a recent report from the European Policy Forum—a voice not of the left but of the right—pointed out, all this represents a major transformation in our system of government. The question is whether Parliament will now take up where the 18th-century radicals left off and assert its rights in relation to the patronage state.
This is not a partisan issue. It turns on the age-old question whether there should properly be power without accountability. The Bill embodies the belief that there should not. The modest proposal contained in it is that significant ministerial appointments should be scrutinised and approved by Select Committees of this House. That would convert patronage bodies into public bodies. It would also represent an affirmation of the rights of this House in relation to the arbitrary powers claimed by the Executive.
Question put and agreed to.
Bill ordered to be brought in by Dr. Tony Wright, Mr. Malcolm Wicks, Mrs. Bridget Prentice, Mrs. Anne Campbell, Mr. Nick Raynsford, Mr. Cynog Dafis, Mr. Calum Macdonald, Ms Estelle Morris and Mr. John Garrett.

Ministerial Patronage (Parliamentary Scrutiny)
  MINISTERIAL PATRONAGE (PARLIAMENTARY SCRUTINY)
  Dr. Tony Wright accordingly presented a Bill to make provision for ministerial appointments to public bodies to be subject to a Parliamentary scrutiny and confirmation process through Select Committees: And the same was read the First time; and ordered to be read a Second time upon Friday 26 March, and to be printed. [Bill 166.]
Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [16 March].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

    (a) for zero-rating or exempting any supply, acquisition or importation;

    (b) for refunding any amount of tax;

    (c) for varying the rate of that tax otherwise than in relation to all supplies, acquisitions and importations; or

    (d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lamont.]

    Question again proposed.

    Budget Resolutions and Economic Situation
    [Relevant documents: European Community Document No. 4683/93, the Commission's Annual Economic Report for 1993, and the draft Decision adopting the Report.]
    Madam Speaker: I draw the attention of the House to the fact that I must impose a 10-minute limit on speeches between 7 pm and 9 pm.
    4.40 pm
    The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): The Budget sets in place one more step in our strategy for industry. When coupled with the autumn statement, it must be seen as a comprehensive response to our industrial needs. First, it provides a sound economic background against which our companies can more effectively enhance their competitiveness. Secondly, it backs our drive on the export markets. Thirdly, it addreses a range of specific measures that industry has raised with us. Fourthly, it recognises the vital role that small and medium-sized firms play in economic vitality.
    No Government have done more to create a favourable climate for enterprise and wealth creation. Interest rates have been cut by 9 per cent. As a consequence, industry's costs have been reduced by £11 billion a year. The Government's privatisation programme is perhaps one of the most radical changes in the United Kingdom's economic and industrial structure since 1945.
    In 1978–79, the nationalised industries received subsidies of some £2·2 billion in today's prices. In contrast, in 1990–91, the privatised companies paid £3 billion to the Exchequer. The privatised industries are achieving striking improvements in productivity. British Airways has increased its productivity by more than 20 per cent. The number of customers per employee in respect of British Gas has increased by about 19 per cent. Productivity at British Steel, which is now considered to be one of the world's most efficient steel producers, has increased

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    dramatically. It now takes only 4·8 man hours to produce a tonne of liquid steel, compared with 13·2 man hours in 1979–80.
    Those improvements in productivity have been passed on to consumers as lower prices and rising standards of service. Since privatisation, gas prices have fallen by 18 per cent. for domestic customers and by 40 per cent. for large industrial customers. Those industries are, in many cases, now acting as flagships for Britain in overseas markets.
    During the Prime Minister's visit to India last month, British Gas signed an agreement with the Gas Authority of India enabling both companies to take gas from offshore Bombay and send it through a new distribution network to more than 60,000 offices, factories and homes.
    In Argentina, British Gas has won a $300 million contract to replace the Buenos Aires distribution system. The company is working as far afield as Indonesia and Kazakhstan. It is developing the Uisker oil field in Tunisia and converting the German town of Spremberg to natural gas.
    Since privatisation, Rolls-Royce——
    Mr. David Winnick: The Secretary of State has mentioned gas and electricity and there is much confusion in people's minds outside this place. Will the Government fully compensate pensioners, and particularly those on very low incomes, in respect of the imposition of VAT? Is it not necessary for the Government to be quite clear, before the vote at 10 pm, precisely what is to be done, bearing in mind the tremendous hardship and misery that so many people on low incomes already face when they pay their heating bills during the winter months?
    Mr. Heseltine: Of course that is important and that is why the Chancellor of the Exchequer made the position clear in his Budget statement and why my right hon. Friend the Prime Minister built on what the Chancellor had said when he addressed the House last Thursday. I will return to that subject when I reach that part of my speech.
    As I was saying, since Rolls-Royce was privatised in 1987, its share of the world civil engine market has risen from 10 per cent. to no less than 22 per cent. Its aero-engine order book has more than doubled and currently stands at £6·7 billion. More than 70 per cent. of its output is exported. Its industrial and marine activities are also world wide. It recently won power supply contracts worth £67 million in India and the subsidiary, NEI Parsons, secured a £100 million contract for turbines in Singapore.
    Ten years ago, British cars were hardly seen on the streets of Tokyo. In 1991, Rover exported 10,000 vehicles to Japan. The company produced 395,000 vehicles in 1991, of which about 40 per cent. went overseas, the bulk to other members of the single market.
    As I said in the House last week, British Telecom is now one of the world's foremost telecommunications companies. Last year, it won a £350 million contract to install a network for the New South Wales Government.
    Our water companies are making formidable strides in overseas markets. Thames Water is expected to sign a contract for £450 million for a water supply scheme in Izmit in Turkey to build, operate for 15 years and then transfer the scheme to the Turkish Government.
    Mr. Andrew Mackinlay: What about the unemployed in Dock road, Tilbury? What about real people?
    Mr. Heseltine: I heard the hon. Gentleman say, "What about real people?" Does the hon. Gentleman believe that real people do not work for those real companies? What sort of real people does the hon. Gentleman have in mind if people who export for Britain and design and manufacture for Britain are not considered by the Labour party to be real people? I suppose that, in the language of the Labour party, the real people are those who disrupt industrial relations, try to undermine Britain and talk the nation down: the real people of the left; yesterday's real people.
    Mr. Dennis Skinner: Will the right hon. Gentleman give way?
    Mr. Heseltine: Here is one of them. One of yesterday's real people stands before us.
    Mr. Skinner: As a matter of fact, I am making inquiries about today's real people. The Secretary of State knows as well as I do that the mining industry could do with participating in the exports to which he referred. After a 15 to 20 per cent. reduction in the value of the pound, we could be exporting coal and today's real miners could be taking part in that.
    Will the Secretary of State tell us today that the 20 million tonnes of coal imported into Britain will be massively reduced and that he will launch an export drive for coal? If we are exporting all those things to all those parts of the world, why has there been a announcement today of an increase in the balance of payments monthly deficit of £1·3 billion?
    Mr. Heseltine: I can help the hon. Gentleman. Yes, we can export coal the day that we produce it at a price which the export market will absorb. If the hon. Gentleman had put his mind years ago to advising his constituents about the productivity gains that we are beginning to see in the mining industry, we might not have these imports of foreign coal. The price that we have paid for the views expressed by the hon. Member for Bolsover (Mr. Skinner) and his right hon. and hon. Friends and their failure to bring home the realities of a competitive marketplace to the miners of this country is now being visited on those very people.
    Thames Water, as I said, expects to sign a contract for £450 million. Anglian Water has won a stake in a winning consortium for a Buenos Aires water privatisation project. North West Water, in conjunction with an Australian engineering firm, has signed a contract for 100 million Australian dollars to improve water quality in Melbourne.
    That is a remarkable transformation. Not only are those privatised companies no longer loss making, in tax terms, but they are paying large sums of money to the Exchequer. They are now winning for Britain in a way in which, for the past 30 or 40 years, we denied them the opportunity even to try to.
    I am not sure whether the hon. Member for Dunfermline, East (Mr. Brown) is in his place at the moment.
    Mr. Rhodri Morgan: I am grateful to the right hon. Gentleman for giving way before he goes off on one of those manic, last deckchair attendant on the Titanic

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    performances. Does he not realise that the reason why the water companies are able to make flash investments in places such as Turkey and New South Wales has nothing to do with the technology which they have to offer? It has everything to do with the guaranteed and ludicrously high prices which they are allowed to charge by the over-generous terms on which they were privatised by the Government in 1989. As a result of having that guaranteed income, the companies can spend overseas the capital which they have accumulated from the ordinary water and sewerage users in the United Kingdom. It is capital which we, the taxpayers, have provided. It is nothing to do with the skills of the companies.
    Mr. Heseltine: Here we have the revisited Labour party. This is the Labour party which does not want to see real people involved in making real products. We now have a new concept: if a privatised British company goes out and wins in the marketplace of the world, somehow it is doing so because it is taking on loss-making contracts. That is what the hon. Member for Cardiff, West (Mr. Morgan) said. British companies are not winning on their merits. They are winning contracts because, somehow or other, they are being artificially supported in the domestic marketplace.
    What sort of message does the hon. Gentleman think that he is sending to countries that are considering taking British tenders? The message has come from the British Labour party that it is a giant fix—that these are not competitive tenders but have all been sorted out on the back of the domestic market by the British Government.
    I hope that all those people out there who are selling for Britain are listening to this debate and to the support that they are getting from the Labour party in the House. Labour Members of the revitalised Labour party say that they are backing Britain. They are backing Britain everywhere except when it comes to winning contracts in the overseas marketplace. If the hon. Member for Dunfermline, East (Mr. Brown) were here today——
    Mr. George Foulkes: Get on with it!
    Mr. Heseltine: The hon. Gentleman should not worry: I shall get on with it. The hon. Member for Dunfermline, East said:
    "The central questions are how we invest in people for the future, how we invest in industry and how we invest in the social and economic fabric of our country to ensure that we will have not only rising production in industry but rising standards of living."—[Official Report, 17 March 1993; Vol. 221, c. 296.]
    That was the great sort of interrogation to which the Chancellor and the Chief Secretary were subjected by the hon. Gentleman.
    What is happening to improve the living standards? What are the facts? As a result of the changes which I have been talking about, real spending on the national health service in England has increased by 60 per cent. since 1979. There are 19,000 more doctors and dentists and almost 38,000 more nurses and midwives, and 45 per cent. more acute in-patients and day cases are treated each year.
    Dame Elaine Kellett-Bowman: Real doctors, real nurses, real patients.
    Mr. Heseltine: My hon. Friend is right: this is another example of real people doing real things because a Tory Government have made it possible.
    The investment programme in the privatised water industry is heading for an additional £30 billion by the end of the century. There has been record public expenditure on roads and the urban programme has been transformed. The essence of the matter is that, while Labour Members continue to talk about these problems, the Tory Government continue to do something about them. There has been much comment about the Chancellor's commitment to extend VAT to fuel bills. That applies with a rate of 8 per cent. in the year starting 1994 and moves to the full rate in April 1995. The Chancellor made his position clear in his Budget speech. On Thursday, the Prime Minister told the House that there would be extra help for less well-off pensioners and other people on low incomes. They will get the extra help from next April before the higher fuel bills come in. That help will be additional to the future increases in pensions and other benefits which will take place automatically. Cold weather payments will also be adjusted to reflect increases in fuel costs.
    I was intrigued to read in The Observer that the Chancellor and I were engaged in a furious row on the subject. Apparently, I was furious that I had not been consulted. Perhaps I may say a word about the matter. I was consulted in an orderly way. I made no protest, for the simplest of all reasons—I shared the Chancellor's judgment that it was necessary to raise taxes in the Budget.
    Of course any tax increases are likely to be difficult, but, frankly, I am not prepared to cop out of the difficult tax decisions on the most contemptible of arguments—that I agree with what the Chancellor is doing in principle, but I disagree with some specific examples of the difficult decisions which he must take. That is the sort of stuff of which Opposition arguments are made. That is the sort of argument which the Labour party relishes. Indeed, it is the sort of argument which keeps Labour Members pinned to the Opposition Benches.
    Why did not The Observer take the trouble to check the facts about this great row between me and the Chancellor? It cannot be because it did not know exactly how to get hold of me. That cannot be the case, because I received a telephone call from The Observer on Saturday wanting to take my photograph. The House will be delighted that I turned down that extremely generous offer. If the picture editor of The Observer knows how to find me, is it too much to think that the serried ranks of industrial and political correspondents somehow cannot manage the same trick—or were they frightened that, if they put to me the straight question, they would get the truth and the truth would deny them any sort of headline at all?
    I can see that this will be the revisiting of the inglorious past of the hon. Member for Livingston (Mr. Cook). This afternoon he will be in his element. If ever there was a story tailor-made for the hon. Gentleman, this is that story. There are millions of pensioners to frighten and spectres of ill-health and hardship to conjure up. The hon. Gentleman knows the arguments backwards, because, over the years, he has invented most of the arguments backwards. He is the seasoned practitioner on whom all those people out there will wish to make a judgment.
    In The Times of 14 December 1987, the hon. Gentleman described the Government's intentions as to

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    "leave the NHS as a ghetto service for those who are too poor to afford anything better".
    In The Times of 1 February 1989, he said of GP budget holders:
    "For the first time, GPs will have an incentive to turn away patients with a high price tag, the elderly, the disabled and the chronically sick."
    In The Independent of 5 October 1990, he spoke of
    "an NHS in which pensioners queue up for their operations in an end-of-season sale".
    What happened? All the trusts are still in the public sector, and 1 million more patients are being treated than when the hon. Gentleman was making his statements.. The hon. Gentleman is a man with a record. He has been through it all before. He should be judged by how true it all turned out to be.
    I took a little time off last Wednesday to listen to the hon. Member for Dunfermline, East, and I am glad to welcome him to our deliberations today. Some of us had the privilege to watch him. He was at his most ferocious. Psychologically, the red flag was up—I see that it is round his neck today. Red blood was flowing all over the carpets as he ended his speech with these fighting words:
    "There is no one left for this Government to betray; they have no credibility in this country. The electorate will never trust them again. If Britain is to have a new start, it will need a new Government—and that will be a Labour Government."—[Official Report, 17 March 1993; Vol. 221, c. 298.]
    Trust a Labour Government! In September 1964, the Leader of the Opposition, Mr. Wilson, said:
    "Over the period of a Parliament I believe that we can carry out our programme without any general increase in taxation."
    When that Government left office, they were collecting £2 for every £1 collected when their promise was made. In the same election campaign, the late George Brown—[Interruption.] Oh yes. Opposition Members may laugh now. I know that it is a long time ago, but it is a long time since we had a Labour Government. The reason why it is a long time is because the Labour party said these preposterous things and was found out.
    The late George Brown said:
    "For new mortgages we have something in mind of the order of 3 per cent."
    By the time that Government left office, mortgage rates were 8·5 per cent. By the late 1960s we had the then Prime Minister, Lord Wilson, proclaiming on 17 April 1969:
    "The Industrial Relations Bill is an essential Bill, essential to full employment and essential too for the Government's continuation in office."
    On 18 June 1969, the Bill was withdrawn from the legislative programme.
    For those who are interested in the flights of fancy of the hon. Member for Dunfermline, East about trusting a Labour Government, what about all the bravura claim in October 1964:
    "Labour will abolish poverty in Britain"?
    Six years later, the Child Poverty Action Group had sadly to conclude:
    "in many ways the plight of poor families is now worse than when the Labour Government took office."
    Worse it was, worse and always it will be. Trusting the Labour party is not a matter of investing in risk. It is a matter of investing in certainty. All out. All up. All over.
    The hon. Member for Bolsover asked a question about coal. I recognise, as will the House, that there has been much speculation in recent days about the coal contracts. Some progress has been made in respect of the base contracts. Work has continued now through several weekends. I hope that I am about to be able to report on
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    the position. I hope that I may be able to do that in the not-too-distant future. However, as I have said many times, I have no powers to make people sign contracts. In the meantime, I have agreed that British Coal can extend the redundancy terms until the end of December this year.
    Increases in productivity are often accompanied by falls in employment. We have had to face that problem in the coal industry over many years. But we are familiar with the general trend throughout manufacturing industry. Indeed, manufacturing employment peaked as far back as 1966. That phenomenon is not confined to the United Kingdom. Some decline in employment in manufacturing is evident in most industrial countries.
    Increased competition and continuing technical progress mean that many firms will reduce employment to stay competitive. That does not mean that those firms are in difficulties. Far from it. The vehicle industry in the United Kingdom is producing 300,000 more vehicles a year than 10 years ago, but it employs 100,000 fewer people. The paper, printing and publishing industries increased their output by more than a quarter between 1980 and 1991, but employment fell by 12 per cent.
    In many industries, successful firms are cutting jobs as they invest for the future to stay ahead of the competition. New firms and new businesses were the key to employment growth in the 1980s and they are undoubtedly the area of the economy to which we must look for new jobs in the future. We have been more successful in job creation than other European Community countries. The work force in employment grew by almost 1·5 million over the last economic cycle, between 1979 and 1990, so it is of critical importance that we recognise that every degree of support that we can give to new companies is most relevant to creating new jobs and new opportunities in our economy.
    The next matter of dramatic importance in what we seek to achieve and must achieve is support for our export companies. Our companies know that there is no such thing as a secure market. Overseas firms face the same pressure to win as we do. We are pushing forward with fresh initiatives to help exporters.
    Last November the Minister for Trade announced an export strategy to maximise our strengths and minimise our weaknesses. I have invited British companies to second to my Department 100 men and women to help us in the promotion of our exports. I am extremely gratified by the response that I am achieving. I believe that we shall have 100 such people by the summer of this year. That will give us experts with first-hand knowledge of overseas markets who will aim to identify and promote opportunities to help our companies to fulfil their potential.
    Mr. John Townend: I am sure that my right hon. Friend agrees that our exporters are doing a fantastic job, but is not the United Kingdom's problem the fact that we import too much? Do we not have a cultural problem? A large part of the British buying public still believes that it is smarter or better to buy foreign, even when British goods are competitive and of the right quality.
    I give my right hon. Friend an example from my constituency. I represent more pigs than people. We produce the finest pigmeat in the world. British charter bacon is of top quality and is internationally competitive. Yet 50 per cent. of the bacon bought by housewives is from Holland or Denmark. Is not that a national disgrace?
    Mr. Heseltine: I understand my hon. Friend's anxiety. That is why I was delighted to notice the seminar which my right hon. Friends the Prime Minister and the Minister of Agriculture, Fisheries and Food, with leaders in both the retail and producing sectors of the food industry, held recently to address some of those difficult issues. As my hon. Friend says, that part of our economy is particularly important because it represents one of the largest deficits in our balance of trade.
    The Budget of my right hon. Friend the Chancellor of the Exchequer will help business build on the achievements of the 1980s. It will promote the economic recovery by providing concrete benefits for business and a stable framework for business decisions. His Budget has successfully combined three aims, at least two of which were widely said to be incompatible before he rose last Tuesday and showed how it could be done. His Budget has avoided damaging the inevitably fragile early stages of recovery; it has achieved a substantial improvement in the public finances into the medium term; and it has done all this while keeping inflation within clearly defined limits. All three aims, and especially the continued control of inflation, are of vital importance to business.
    We now hear less than we did two or three years ago about short-termism as a feature of our industrial and commercial life. To a large extent, this is because we have got inflation down, yet I do not doubt for one moment that deep-seated short-term attitudes are prevalent in our affairs; or that this is one important strand in understanding why we as a nation have performed less well than many of our competitors.
    Such attitudes have led us to invest less than we might in technology and advanced means of production. They have encouraged growth in companies by acquisition and financial engineering, rather than through organic development and building on products and markets. They have led us to place far too great an emphasis on comparisons of near-term financial results in judging our companies, instead of considering the strength of management and its underlying strategy.
    Those attitudes are all of a piece. They reflect much that is cultural, and they can be changed only slowly. But they have one great mechanism of reinforcement—inflation. Inflation is an evil which narrows the focus of attention into the short term. Inflation must be kept low in the years to come if our performance is to be improved. The Budget measures will reduce burdens on business by £1 billion in the year ahead. They will assist small and medium enterprises to do what they do best—create the wealth on which the rest of the country depends.
    Ms Liz Lynne: On that specific point, can the President of the Board of Trade say why the Chancellor did not introduce a statutory requirement to pay interest on late payment of debt? That would have helped small businesses considerably.
    Mr. Heseltine: We have no doctrinal view on that measure, but there are many doubts about whether it would have the effect that the hon. Lady suggests. We have discussed the matter. My noble Friend Lady Denton has exercised significant influence on late payment of debts. There has been a substantial improvement in the rate of payment. Not the least reason for that is that the Government have paid their bills in a timely way and
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    encouraged large companies to do the same. My noble Friend has made it clear that she will take up specific cases if they are drawn to her attention.
    Mr. Robert Sheldon: I wish it were true that Government Departments had been settling their bills promptly. The Public Accounts Committee took evidence from the Property Services Agency, which was only paying when it received payment, and I shall shortly be criticising that strongly.
    Mr. Heseltine: I fully acknowledge the high position of responsibility that the right hon. Gentleman has in our affairs. If he has examples that my Department should explore, I assure him that we shall do so, as that is an important matter. We have tried to do what we can to speed up payments, but we are aware that a statutory process might not improve matters in the way that people think, and have therefore hesitated to move in that direction.
    For the second year running, no business will face a real increase in its rates bill. The package of value added tax measures introduced by the Chancellor will also be welcomed by every small firm. Finance for small businesses—a subject of great concern—will also be given a boost by the changes in premiums and loan size limits, under the small firms loan guarantee scheme. I have no doubt that my right hon. Friend the Chancellor has thrown a challenge to the banks. The Government have taken an initiative and it is now up to the banks to judge business plans and to make their loans in a way that will help businesses to grow.
    The changes to capital gains tax will encourage reinvestment by not penalising those who use their profits to start another business.
    I have referred to the need to help exporters. We are making available an additional £1·3 billion of cover for key markets. Together with the changes in the autumn statement that will mean that annual cover for United Kingdom exporters in priority markets will have increased by more than 75 per cent. in just four years. Premium rates have also been cut and are now more than 25 per cent. lower than in 1991–92. Those reductions will bring the average level of premiums charged in the United Kingdom down to around the average charged by the United Kingdom's competitors.
    The Chancellor announced a special scheme in the Budget to help persuade foreign-owned companies to choose the United Kingdom as a location for international headquarters companies. The present advance corporation tax rules are an obstacle to their doing so. The new rules, which will be implemented next year, will remove that obstacle, which should attract new business to the United Kingdom, and bolster London's role as Europe's premier financial centre.
    I know that oil companies have always recognised the responsiveness and stability that our North sea tax regime offers. However, the petroleum revenue tax regime was introduced in 1975, with the last substantial amendment in 1983. In keeping the tax system under review, it was important to keep in mind the fact that the North sea was maturing as an oil province—new fields tend to be smaller, and older fields are gradually declining. The Chancellor has now reduced petroleum revenue tax from 75 to 50 per cent. for existing fields from 1 July 1993, and abolished the

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    tax for future fields given development consent on or after 16 March. The Chancellor's proposals move the North sea from a high-tax to a low-tax regime.
    Conditions for recovery are in place. The United Kingdom has the lowest inflation rate for 25 years; the lowest interest rates since 1977; and the lowest base rates in the European Community. Interest rates have fallen by nine percentage points since autumn 1990, knocking £11 billion a year off industry's costs.
    We have a fiercely competitive exchange rate; a set of Budget measures to boost confidence and stimulate growth; and confidence is rising. The Confederation of British Industry, the chambers of commerce and the Institute of Directors show rising confidence in their surveys. Retail sales are at record levels; car sales are up sharply; manufacturing investment in the fourth quarter of 1992 was up by 5·5 per cent. on the start of the year; the increase in average earnings is the lowest for 25 years and we expect a further decline in the coming months.
    Rapid productivity growth means that United Kingdom manufacturing unit wage costs are lower than those in Germany or Japan, on recent OECD estimates, and they have fallen during the past 12 months. However, further pay restraint is vital to maximise the competitive advantages of sterling depreciation. This month's fall in unemployment is welcome, but too much should not be read into one month's figures, as the fall might not be immediately sustained and it may be some time before the underlying trend takes a downward turn. Unemployment is likely to be one of the last indicators to respond to any recovery in the economy.
    Exports and productivity are at record levels and Britain is moving ahead. British business now has clear advantages in competing in the rest of the world.
    Mr. Anthony Steen: While I agree with all that my right hon. Friend is saying, does he agree that the rules and regulations affecting small firms prevent them from competing with other countries on that famous level playing field? Something needs to be done to reduce the number of rules and regulations affecting small firms. Can he tell the House what the deregulation unit is doing about future and existing regulations, which are preventing the recovery that small firms so badly need?
    Mr. Heseltine: As my hon. Friend knows, we have started to review proposed regulations and those already on the statute book and are applying the review to domestic and European Community regulations. We have been fortunate in securing the services of Lord Sainsbury and those of various other chairmen and significant figures from the private sector, who have helped us to establish seven task forces, to consider the 7,000 existing regulations, which obviously create the climate in which industry has to operate. I shall report to the House as progress takes place.
    Mr. Peter Hain rose——
    Mr. Heseltine: I shall not give way.
    I assure the House that in all those ways the Government will play their full part to help the private sector in difficult circumstances.
    As I told the House in a recent debate, we live in a competitive world. As we export such a high proportion of our output, it is impossible to believe that we can operate as an island economy. We are broadly comparable with
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    many economies in the world. During the past year industrial production has fallen by 2 per cent. in Italy, by 2·5 per cent. in France, by 6·5 per cent. in Germany and by 7 per cent. in Japan, but in this country industrial production has risen in that period.
    Japanese gross domestic product fell by 0·75 per cent. in the second half of 1992, output fell in France and Italy and there were three successive quarters of decline in Germany. Since 1981—the trough of the last recession—United Kingdom manufacturing output has risen by more than a fifth, manufacturing investment is up by nearly two fifths and manufacturing productivity by two thirds. Our export volumes are at an all-time high and by the end of 1990 there were about 400,000 more businesses operating in this country than in 1979.
    The underlying strength of our manufacturing base can also be seen from our ability to attract inward investment. In 1991, we attracted one third of all inward investment into the European Community.
    So, as we have said many times, despite the severity and length of the recession, Britain is in a strong position to take advantage of prevailing domestic and world economic circumstances. That can be done only by making this country's economy competitive, which can be achieved only by the relentless grind on costs and the pursuit of improved quality.
    The Opposition are incapable of understanding those arguments, and view the British economy as an island apart from international pressures and the international marketplace. They keep peddling their view of an industrial strategy, which is simple and based on clear but irrelevant ideas: higher taxes to finance higher public expenditure; bigger training budgets; pushing up education standards; helping workers with statutory rights; and embracing the social chapter. They have pursued all those ideas in France, where their income taxes are higher and their education system renowned. They have extensive public ownership and have turned the social chapter into a Domesday book. What has happened under one of Europe's most substantial socialist Governments? The people living under it are sick to death of what is happening.
    The French election result, if replicated in this country, would take a scythe to the parliamentary Labour party. It would be down to a rump of about 10 people; the impregnable Labour strongholds might be all that would be left if we had a Labour socialist Government. What would that Government look like? Perhaps the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) would be Foreign Secretary; the hon. Member for Rhondda (Mr. Rogers) would be Chancellor of the Exchequer; the hon. Member for Liverpool, Riverside (Mr. Parry) would be Home Secretary; and presumably there would be an early return to the Front Bench for the right hon. Member for Islwyn (Mr. Kinnock) as Secretary of State for Wales. We could count on the fact that the hon. Member for Bolsover would be there clambering on to any convenient barricade, searching for a starring role in "Les Miserables". What a brilliant piece of casting that would be, but it would be casting in the world of make-believe. The Budget contains real policies for the real world; I commend it to the House.
    5.19 pm
    Mr. Robin Cook: For the second time in a fortnight, the President of the Board of Trade has used a speech on the economy to make a statement on his energy review. For the second time, the statement that he made about that review consisted of things that he cannot do to save coal pits. The nation is tired of hearing what he cannot do to help the miners; what we are still waiting to hear, after six months, is what he will do to help them.
    Every time the right hon. Gentleman rules out another solution to the problem, as he did today, he confirms what we have always warned about: that the immense flaw in the structure of that review is that the man in charge of finding a solution that avoids closing the 31 pits is the same man who thought it was the right course in the first place. I must warn the right hon. Gentleman that he is coming dangerously close to admitting that he has wasted six months in coming to the conclusion that he was right all along and everybody else was wrong.
    If the President of the Board of Trade wishes to be remembered as the man who closed down Britain's coal Industry, the Chancellor will be remembered for his 1993 Budget. It was quite the most dramatic Budget since 1988, when Lord Lawson eyed up a overheated economy and poured petrol over it, creating a rip-roaring runaway boom which burnt itself out and left his successors sitting among the ashes—except for the President of the Board of Trade: he does not notice them.
    As I listened to right hon. Gentleman's speech, as he fumbled among the ashes of the Government's industrial and economic performance, I heard him describe them as a bonfire of success. I started to convince myself that the trade gap must be a statistical error, that job losses from companies and manufacturing industry are a sign of their success. I must say that I was saved from giving in to the right hon. Gentleman once his speech finally orbited out of touch with ground control and reality and he blamed my hon. Friend the Member for Dunfermline, East (Mr. Brown) for the 1964 Labour manifesto.
    I admire my hon. Friend and I have known him for 25 years—he was precocious even then, as a student—but I must admit to the right hon. Gentleman that, having known my hon. Friend that long, I know that he did not write the 1964 Labour manifesto. I predict that, 30 years from now, my hon. Friend will be sitting below the Gangway dignifying the Labour Bench and recalling to the House how the 1993 Budget swept him into the Treasury and Labour into office.
    What makes this Budget dramatic is the admission of the damage the Government have done to the economy. No plea of guilty has been entered, and nobody has even said sorry, in three days of debate. No request has been made for 14 years of other offences to be taken into consideration.
    But the admission was there in the lengthy speech of the Chancellor, which revealed the embarrassing and painful decisions forced on him by the severity of our economic recession. It is there in the thick Red Book that charts the bleak economic problems of the future. It was there in the admission of the damage that proved the curtain raiser to the Budget—the report specially commissioned by the President of the Board of Trade, which was leaked to The Sunday Times the Sunday before the Budget.
    That report, from the competitiveness unit of the DTI, said that our industrial base is fundamentally weak, that
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    our trade deficit will last for decades and that, instead of putting in place the conditions for recovery to which the right hon. Gentleman has referred, the Government have put in place low investment and low skills in industry.
    Many Opposition Members share the distress that the right hon. Gentleman must have felt at people employed by the Government talking Britain down in that way. For that reason, last week, I asked the right hon. Gentleman to publish that report in full, or at least put a chained copy in the Library. He said that he could not publish it because "the report clearly reveals the devastating inheritance of 1979".—[Official Report, 17 March 1993; Vol. 221, c. 282.] That is why he could not publish it. He does not want to embarrass us; he wants to spare our feelings. I must say that that is not a sensitivity I had associated with the right hon. Gentleman before.
    We know what the inheritance of 1979 was. It was manufacturing investment at 3·9 per cent., of GDP, a level the Government have never once returned to in 14 years in office. The legacy of 1979 was a surplus of £2·5 billion in manufacturing trade compared with a deficit of £7·5 billion last year. The legacy of 1979 was an unemployment rate of 1·1 million, which the Government have turned into an unemployment level of 3 million—and never in one month, in 14 years, have they got unemployment back to the figure with which they started. That is the inheritance of 1979.
    The reason that the President of the Board of Trade is afraid to publish that report and shrinks from doing so is that it spells out the legacy of 1990, which they inherited from themselves. It confirms that, after 14 unbroken years in office, they have achieved industrial production with the lowest growth rate in Europe except for Greece, a manufacturing investment level lower than when they started in 1979, and a proportion of the work force with skills at half the level of other countries. That is the background aganinst which this Budget must be judged.
    Dr. Keith Hampson: The hon. Gentleman is always very selective with his memory. Does he not remember that, in 1978, the previous Labour Government, against a backdrop of doubling unemployment and the collapse of manufacturing industry, commissioned the Finniston inquiry, which highlighted all our long-term failings to compete with our continental partners in the manufacturing and engineering industries?
    Mr. Cook: My breath is taken away from me when I hear a Conservative Member complain that the previous Labour Government doubled unemployment. When they left office, the unemployment rate stood at 1·1 million and was coming down; the Government have twice taken it up to 3 million.
    If the hon. Gentleman wishes to accuse me of selective use of statistics, it is particularly interesting that, in his selective use of them, he did not choose to express concern about the 68 per cent. rise in unemployment in his own constituency since the Prime Minister took office. If he is worried about rising unemployment, why does he not do his constituents the justice of expressing some concern on behalf of the 3,000 constituents who are now unemployed?
    Dr. Hampson: That is the wrong Leeds constituency, mate.
    Mr. Cook: With respect to the hon. Gentleman, in the event that we have the wrong figure, I assure him that I will give him the correct figure very shortly.

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    We have dealt with the inheritance of 1979 and 1990. What this Budget must be judged against is the background of 14 years in which the Government have run down industry. Judged against that background, the Budget fails to meet the test of what is needed by industry. Industrialists have already returned their verdict. Neil Johnson, the director general of the Engineering Employers Federation, said:
    This Budget does nothing to bring about the massive switch to investment which is essential for lasting recovery."
    The representatives of the Machine Tool Technologies Association have said:
    "This Budget fell short of directly encouraging UK companies to invest."
    We do not need to look outside the Government for those who tell us that the Government's policies in the Budget are failing industry. We can see the verdict returned in the Red Book. We only have to look at the contents of the Red Book to see the extent to which the Budget does not stimulate industry. My hon. Friends should handle the Red Book with caution, as it has never yet got it right. It has always erred on the side of unsupported cheerfulness and presented a best case scenario. Whatever the Government say in the Red Book, experience always turns out to be worse than the promises, which are bad enough.
    If the President of the Board of Trade wishes to tackle me about talking Britain down, he should note that it was not me who made the forecasts—they were deposited by the Economic Secretary. If the President fears another fit of moral indignation coming over him about people talking Britain down, he should take out his feelings on the Economic Secretary instead of me
    Before I turn to the financial statement and the Red Book I shall correct the hon. Member for Leeds, North-West (Dr. Hampson). He was wrong—the increase in unemployment in his constituency since November 1990 is 68 per cent., and unemployment currently stands at 3,264. I now fully understand why the hon. Gentleman did not refer to unemployment in his constituency—he does not even know the unemployment figures for his constituency.
    Dr. Hampson rose——
    Mr. Cook: No, I shall not give way to the hon. Gentleman, as it was perfectly clear that I was referring to the increase in unemployment since November 1990. If the hon. Gentleman does not know the increase in unemployment in his constituency since November 1990, I suggest that he does us all a favour, returns to the jobcentres in his constituency tonight and gives us an extra chance to beat the Government.
    Dr. Hampson: On a point of order, Mr. Deputy Speaker. For the record of the House, the hon. Gentleman chose a particularly——
    Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. What is the point of order for the Chair?
    Dr. Hampson: For the Official Report to be accurate, I should say that the hon. Gentleman chose a particularly good year, when unemployment was low.
    Mr. Deputy Speaker: The hon. Gentleman knows full well that that is not a point of order for the Chair.
    Mr. Cook: I chose the month in which the present Prime Minister took office, which was not a particularly good month for Britain, but that was the base that was inherited.
    Dr. Hampson rose——
    Mr. Cook: I am sorry to disappoint the hon. Gentleman, but we cannot have a private conversation; I must return to the debate.
    The Red Book shows that, in 1993 business investment is expected to fall for the fourth successive year. Ours is the only country in Europe in which business investment will have fallen for four consecutive years. Other countries worry about recession when the rate of growth in investment is not as fast as usual. The Government are so desperate that they claim a recovery when the rate of decline in investment is not as fast as usual.
    According to the Red Book, the consequence of the decline in business investment means that, in 1994, manufacturing output will be growing more slowly than in the rest of the economy. Since 1990, manufacturing output has collapsed faster than the rest of the economy. Now that the Government are claiming recovery, the growth in manufacturing output is expected to be slower than the rest of the economy. So much for the Prime Minister's passionate belief in expanding the manufacturing sector. According to the Red Book, the manufacturing sector will continue to decline as a proportion of gross domestic product.
    Any lingering hope that the Budget is a Budget for industry or that the Government believe that their Budget will stimulate industry vanishes when one turns to the Red Book predictions for the balance of payments. We already have a ballooning trade deficit of more than £1 million for every hour. The Red Book admits that that deficit will swell by half as much again. What is damning about the failure of the Budget to expand industry is that all that increase occurs in the manufacturing deficit. In 1993, the deficit in manufactured trade is expected to be as big as the deficit for the past two years added together—that is the measure of the Government's 14 years of failure.
    I notice that no Conservative Member is rising to ask about the Labour Government's record on manufacturing trade, and I know why. It is because they know that, in every year under the last Labour Government, there was a surplus in manufacturing industry. That is the inheritance that the Conservatives have squandered.
    Unlike the President of the Board of Trade, I do not believe in for ever talking down our inheritance. Britain has much to be proud of in its past. It should be proud of its inventions and the technology that it has given the world.
    In the two centuries since the industrial revolution, Britain has repeatedly led the way. It led the way in railway technology. We had a surplus in the trade of railway vehicles until 1979, when it stood at £260 million. Under this Government, for the first time, we have a deficit in the trade, of railway vehicles of £57 million. The pneumatic tyre was invented in Britain by John Dunlop, and we had a surplus in the trade in tyres until 1979, when it was £90 million. We now have a deficit of £38 million. The vacuum cleaner was invented in Britain and we had a surplus in the trade in vacuums until 1979, which has now, under the Government, been turned into a deficit.

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    I go some way to agreeing with the President and say that we should stop talking down Britain's proud past. We should start pinning the blame on the people who have pulled Britain down and turned our trade success into trade failure.
    A fortnight ago, when the President was accusing me of talking down Britain, he produced as evidence of the recovery and the good things about Britain, which he said that I did not mention, the 400,000 small businesses that had started up and said:
    "It is from the small and medium-sized company sector of the economy that jobs come".
    The right hon. Gentleman was so proud of that figure that he repeated it again at Question Time last week.
    The President is right to say that small and medium-sized enterprises are a vital source of innovation. He was also right in that, last year, 445,000 small businesses opened bank accounts for the first time. What the President did not tell the House was that, in the same year, 570,000 small businesses closed their bank accounts for the last time, and 125,000 more small businesses folded than started last year.
    The right hon. Gentleman invited the House to congratulate the Government on their record in a year in which the number of small businesses that folded rose by 4 per cent. Is that the best that he can do in trying to talk up the Government's record—to admit that it is from the small and medium-sized company sector of the economy that jobs are disappearing?
    Last Tuesday, Budget day, a bumper 110 of those small and medium-sized enterprises were advertised as going into liquidation, 19 of them in the manufacturing or engineering industry. They included MET Plastics in London, which were toolmakers and moulders. When asked why, the company said:
    "Bad debts and the length of the recession".
    HEE Equipment in Leeds made engineering machines, and when it was asked why it had folded, it said that it was because of bad debts. It was forced to make 100 people redundant. Hi-Spec Engineering in Nottingham made powered platforms and said that it had closed due to
    "The economic recession which resulted in an extended period of losses."
    Action Work Force of Batley provided personnel to factories, and at one time employed 150 people in Batley. It failed because business in the factories "dried up".
    When we rang up the companies, not one of them slammed down the phone accusing us of talking Britain down. Oddly enough, not one of those companies blamed the closures on the legacy of 1979 or mentioned how encouraged they were by the evidence of recovery around them. The President spent much time spotting that recovery. I understand that he is a noted bird fancier——
    Mr. John Smith: Bird watcher.
    Mr. Cook: I am grateful to my right hon. and learned Friend—bird watching is not one of my sports. I understand that powerful binoculars are standard equipment in that sport. I warn the President that he should put aside those binoculars when he scans the economic indicators for signs of recovery that are not visible to the naked eye.
    If the President wants to talk about recovery, I shall tell him what the Opposition understand by the word
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    "recovery" and what they accept as its definition. Recovery will be achieved when unemployment falls to the 1·1 million figure that the Government inherited from us in 1979. When they obtain that figure, they can start to talk about improving the economy.
    There is something much worse than talking Britain down—cheating. That is the next feature by which this Budget will be remembered—as an admission that the Government failed, and as an admission that they cheated.
    The right hon. Member of Shropshire, North (Mr. Biffen) was the first Conservative to speak after the Budget speech. I have a great deal of regard for him; in the past, he and I have occasionally found ourselves on the same side of an argument. But on this occasion I was stunned to hear him say:
    "I am happy to stand here, shamelessly, as a taxing Tory."—[Official Report, Tuesday 16 March 1993; Vol. 221, c. 202.]
    "Shameless" is probably the correct word in that sentence, because I have looked at the right hon. Gentleman's election address for Shropshire, North. He did not stand there then as a shamelessly taxing Tory—quite the reverse. What he told the good people of Shropshire, North was:
    "There is a strong need to be modest about election promises. They all have to be paid for with your money. As ever, I shall bear that strongly in mind."
    What the right hon. Gentleman said in his constituency was the very opposite of coming here as a taxing Tory. I travelled up and down the country throughout the last general election, and I did not find a single taxing Tory anywhere in Britain at the time. The Tories fought the last election on the single proposition that they would cut taxes and Labour would put up taxes.
    No one expressed this election strategy more succinctly than the President. In Corby on 21 March 1992, he said:
    "This election in the first week is about tax. In the second week it is about tax. And in the third week it is about tax. And if Labour were to win this election the next five years would be nothing but tax."
    This from a man who sits in a Cabinet that has presented us with the biggest tax increase of any Budget in history. The party that promised year-on-year tax cuts has become a Government delivering year-on-year tax rises.
    Mr. John Townend: I note the hon. Gentleman's opposition to tax increases. He will know that I am not in favour of high taxes, but does he accept that we have a major problem with the Budget deficit? It can be dealt with, but spending will have to be cut, or taxes will have to go up—or a combination of these. What spending reductions does the hon. Gentleman want in place of the Government's tax increases?
    Mr. Cook: What the Chancellor said at the general election was that he could foresee no circumstances in which he would have to extend VAT—but the hon. Gentleman may be ahead of the Chancellor. He may have been smarter and more far-seeing than the Chancellor. He may even have been more honest with his electors, so I invite him to point out to us the passage in his election address that mentioned that there was a severe problem with the public sector deficit and that it would be necessary to increase taxes when the Tories returned to office after the election. If he can do that, we will treat his intervention seriously——
    Mr. Townend rose——
    Mr. Cook: I look forward to hearing the passage in question.
    Mr. Townend: I did make it quite clear in my election address that I believed in sound Government finance. [Laughter.]
    Mr. Cook: I am sure that the good people of the hon. Gentleman's constituency read that on the assumption that they did not need to expect a swingeing tax increase from him—not even those numbered among the increase of 83 per cent. in unemployment in his constituency since the Prime Minister took office.
    I seem to remember a poster from the election depicting a bombshell with, slapped on the side, the figure £35 billion. That was what the Government said Labour would put up taxes by. It was always a lie. The tax increases proposed by Labour at the last election added up to one tenth of that sum—but the posters were distributed around the constituencies.
    If they went back to their committee rooms, perhaps Tory Members could find these posters lying around under chairs in back rooms. They might consider putting them up all around their constituencies again. All they need now slapped on the side of the bomb is the figure £28 billion, because that is the amount that the Government will take in extra tax if this Parliament runs another four years, even if the Chancellor never comes back and raises another penny in tax or extends the scope of VAT again or increases national insurance contibutions. That is the cost of Conservatism—£28 billion, or, as the Government prefer to express it, £1,000 for every household in the country.
    This is such a blatant deceit that even The Sun is embarrassed. No one was more diligent about repeating the Tories' tax propaganda at the election; no one was more naive about swallowing their threats of what Labour would do than was the editor of The Sun. And, bless his trusting heart, Kelvin MacKenzie feels cheated now. Last week he offered his honest, forthright advice to the Treasury: go away and
    "lie down in a darkened room."
    This was a Budget of failure and a Budget of cheats, but there is a third and final dimension that needs to be filled in if it is to be seen in the round. It is a budget of unjust men—unjust because they made the mistakes and they now expect everyone else to pay for them, not themselves. None of them will pay: everyone else will. They are unjust, too, because the tax increases that they have chosen will hit the poor hardest—such as the 500,000 people now being asked to pay more in national insurance even though they are too poor to be liable for income tax. These are the people who never saw any of the tax cuts of 1988. What right do the Government have to ask them to pay more when they all pay less in tax as a result of Budgets that they drafted?
    If the Government had more courage, they would ask those with more income to make an extra sacrifice, but no such sacrifice is asked of them in the Budget. However, an extra sacrifice demanded of pensioners paying their fuel bills. They are the ones being asked to make the real sacrifices to put the nation's finances to rights. The President has a special responsibility in this matter; he is the Secretary of State for energy. I read in The Observer that he was furious at the attempt to put VAT on fuel, and I thought that entirely plausible, as he has a very large house to heat.
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    We learned today, however, that the right hon. Gentleman was not furious. In fact, he is furious at the suggestion that he was furious. So he agreed to it. The Government's energy spokesman agreed to slap 15 per cent. on energy bills. I hope that we have heard for the last time ever the right hon. Gentleman say that he cannot save the coal pits because that might put up electricity prices. British Coal has been bringing down the price of coal while the Government have been putting up the price of electricity.
    There was plenty of time for this consultation. We know this because of the Chancellor's indiscretion on the "Jimmy Young Show". He explained to Jimmy Young that the origins of the new tax go back to last summer, to the Rio convention on global warming:
    "The moment the convention was signed I was sitting at home thinking, 'What are we going to have to do?'"
    [Laughter.] I am not kidding. Of course, it was a bogus claim. VAT is not being applied to fuel because the Chancellor has gone green. It is being applied because the Government's books have gone into the red.
    How can we believe that the Government are serious about curbing greenhouse gases after the vindictive way in which they have run down public transport, and made savage cuts in the home insulation programme? How can we believe that the Chancellor is serious about energy conservation, given the housekeeping bills from his Department in the last financial year, during which the Treasury's bill rose by 14 per cent.? Not much energy conservation there. The fuel bill at the Inland Revenue rose by 21 per cent., and at the Customs and Excise—the department that will apply the VAT to pensioners' bills—last year's fuel bill rose by 68 per cent. And these are the people who are going to ask pensioners to turn down their heating.
    I do not know whether the President was furious, but I can tell him that the nation is furious, because this measure will hit the poor hardest. Every study has shown that those at the bottom of the income ladder spend four times as much on fuel as a proportion of their income as do those at the top. For those at the bottom, their fuel bill is the biggest that they will get, and the Chancellor has just increased it by one sixth.
    The President was gracious enough to remind the House that I was once a health spokesman. It is a marked feature of the British mortality statistics that they are the highest in Europe in winter. Our figures are worse than those of Sweden, Norway or Switzerland, but not because we have colder winters—indeed, their winters are colder than ours. We lose more old people in winter than any other country in Europe, because we pay the worst state pensions anywhere in Europe. We leave more pensioners asking themselves whether to pay for their eating or their heating.
    We ask again the question that the Chancellor must answer before we vote at 10 o'clock: will pensioners and people on low incomes be fully compensated for the increases in their bills—not have them taken into account, but fully compensated?
    The right hon. Gentleman will not get away with saying that the increases will be reflected in the payments to those on income support and means-tested benefits. There are 1·3 million pensioners living on incomes just as low as income support, but not getting a penny of it. Some of them, perhaps because of a mistaken sense of pride, will not ask for a means test. There are another 1 million

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    pensioners living within 10 per cent. of the level of income support who will never qualify for a penny of it. Will they be compensated? We ask that because that is what they ask us.
    At the weekend, I received a letter from a constituent on invalidity benefit, who therefore does not qualify for income support. He said:
    "I am aghast and worried over the new proposed VAT on domestic fuels. At the moment I only put on my immersion heater for one and a half hours in the morning to heat the water and I have the gas heating on for an hour and a half in the morning and the same at lunchtime and in the evening. If I am too cold, I just make a hot water bottle and retire to bed since I must work within the limits of what I can afford to pay for my fuel bills."
    Do Ministers have any idea what it is like for those who have to work within the limits of what they can afford to pay for fuel? Do they have any idea of the hardship that those people will now face, with the choice of going to bed even earlier or doing without another necessity?
    Tonight, the House will have the opportunity to express its verdict on that proposal. We will vote against resolution No. 21 in order to record our contempt for a Budget of failures, of cheats and of injustices. We will do it to express our derision for the Treasury Bench of limpets clinging on to office after they have broken every promise that got them on to it. We will do it most of all to stop them making the poorest in society pay for their mistakes and their broken promises. It should not be the poor who pay: they should pay, and we will make it our job to ensure that they do.
    5.52 pm
    Sir Edward Heath: A large part of the debate on the Budget has been concerned with undertakings which have not been fulfilled. Election addresses have been cited. Indeed, I read in one newspaper that Labour party headquarters is busy the whole day going through every election address by a Conservative candidate to find suitable quotations. I therefore want to get that matter out of the way immediately. I said in my election address:
    "I opposed the Community Charge from the beginning because I believed it to be unfair, ill-planned, costly to administer and above all philosophically wrong and politically damaging. I was proved right. John Major, when he became Prime Minister, pledged himself to abolish it and has done so."
    I then went on to deal with the fast rail link. I did not look to the future of taxes, in whatever form. That exempts me from an embarrassing position.
    I believe that it is wrong for parties at a general election to give undertakings about taxation—either its rate or its nature. When I fought elections in the 1950s and the 1960s, that was not done. No Government or Chancellor's record justifies their being able to say with conviction that they can foresee the economic future for the following five years. It has never been proved that they can do so. All that declarations about rates of taxation can do is to mislead the electorate and lead to further embarrassments for Government, which then weakens our economic position internationally. I want a return to olden times. In fact, the practice was first broken in the 1959 election by Hugh Gaitskell, who promised to reduce taxes by 6d,
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    which so shocked the electorate that he lost the election. I hope that we now have a period during which we do not give such undertakings.
    When changes to indirect taxation are made by a Chancellor—changes which my right hon. Friend has justified—we know that that is bound to affect many people on social security benefits and those just above the limit for those benefits. The right thing for a Government to do is, at the same time as the charges are introduced, to say that they recognise the problem and that those people will be fully compensated for those increases. That is what Rab Butler did in the 1952 Budget, and it is what happened with Iain Macleod in 1970 and with Tony Barber in 1971. It shows that we understand the position of the millions of people who are affected by such changes. It gives them confidence that the Government of the day understand them and their problems, and it gives society as a whole confidence that we care about these matters and that we will take action to deal with them.
    My third point relates to my party in particular because of the targets that it has set for direct taxation. They are not achievable targets. I hope that my right hon. Friend the Chancellor will not say that, at some future time, we will reach the target of 20 per cent. and that the 40 per cent. rate will be reduced. There is no economic or moral justification for saying it. Although high taxes reduce efficiency and destroy a great deal of enterprise, we reach a point in the level of taxation where that is no longer the case. That is evident from the level of taxes paid by other countries with very successful economies, such as Germany and Japan, whose tax levels are higher than ours and higher than our targets.
    When told bluntly what is required from them, the British people will respond. It is not necessary to try to smooth the path. I accept that the path in front of us is very difficult, and I have every sympathy with my right hon. Friend the Chancellor and the Government in the problems that they face. The economic position, with high unemployment and the destruction of so much of our industrial base, means that it will take many years to deal with the problems. There can be no easy, quick solution. If that is brought home to the British people, they will support the necessary steps—one of which is that the wealthier people should be prepared to pay a higher rate of tax. I believe that they would respond to a demand that they do so.
    One thing that we desperately need in this country is a better superstructure. It is right to say that we have been spending more on that, but it does not meet the demands that our superstructure now makes.
    Sir Peter Hordern: I think that my right hon. Friend means infrastructure.
    Sir Edward Heath: Yes, I mean infrastructure. So many countries in Europe, North America and the far east have infrastructures infinitely superior to Britain's.
    We have only to look at London and the development needed there. There is no effective overall body to deal with that. Ours is the only major capital city in the world which does not have one. The former central body, the Greater London council, was abolished out of spite because of a handful of miserable Labour councils. Now we do not have that authority. To cite one specific example, when one drives out of London on the M4, as I frequently do, one must use a double-lane highway. In

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    recent years, high buildings have been erected right alongside that road, so that if ever we have a Government who recognise that the M4, which was built 40 years ago, is totally inadequate for modern requirements, various new buildings will have to be pulled down to enable the construction of a new highway. That shows no sense of responsibility towards the demands of a very modern society. That is another case which desires urgent action. After all, improving the infrastructure provides jobs for many people.
    As to the contraction of our industrial base over the past 12 years, we lost part of it at the beginning of the 1980s because we were so determined to push up the rate of sterling. Firms in my own constituency which has been established for 100 or 150 years went out of business. They never came back and they never will. That is happening in the present situation, with a further loss of our industrial base. My right hon. Friend the President of the Board of Trade rightly said that we must encourage industry, and he is doing so. Many of the measures in the Budget are extremely useful and make a great deal of sense. I am glad that they are being adopted by my right hon. Friends the Chancellor and the President of the Board of Trade.
    In the mid-1980s, small firms went into business with a rush, and we know from the figures that they are in immense difficulty now. The kind of people who start small firms now have learnt the lesson of the 1980s and will not take the same risks. They will not allow themselves to get into that position. They also see how this country's banks behave when small firms get into difficulty. There is no relationship between the banks and industry in this country as there is in Germany and France, and that is what is lacking.
    That apart, the major banks have enormous problems as a consequence of unwise investments, debts, loans and property purchases over the past decade. One must keep one's tongue in one's cheek when talking about London being the greatest financial centre in Europe or in the world; people outside know what is happening and can see the problems which have arisen in our banking system in the last 10 years.
    My right hon. Friend the President of the Board of Trade mentioned Rolls-Royce. I will add to his remarks, especially as I know the attitude of so many of my hon. Friends on the Benches behind me. We took over Rolls-Royce in 1970 because it was bankrupt and its directors were trading against company law. We took over the company to save it from being prosecuted for tens of millions or hundreds of millions of pounds, but we were careful to do so in terms of a private company so that it could be privatised. That was exactly our plan.
    That was not done without an attempt to persuade the private sector to look after Rolls-Royce. When a leading accountant reported to me that the company was not only heavily in debt but under contract to the Americans to produce an engine, would not make the delivery date, and would therefore be liable to a penalty of £400 million—a large amount of money in those days—I invited the chairmen of the four banks concerned to meet me in the Cabinet room. I explained the situation and said, "I hope that you feel that you can support industry in this country." All four flatly refused to help in any way at all. One chairman whose bank had offered a loan of £25 million, of which only £21 million had been taken up, promptly dashed back to his office and cancelled the
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    remaining £4 million.
    If we had not taken the action we did, all the military planes with Rolls-Royce engines would have been unable to obtain spares and would have gone out of action. The same would have been true of all civil aircraft with Rolls-Royce engines. It would have been grossly irresponsible for any British Government to fail to stand
    That company could have been privatised much earlier, but the management badly miscalculated what would happen to the dollar in the early 1980s, so privatisation had to be postponed. The company was subsequently privatised, and it is now successful, but it would not have remained in existence if the Government had failed to take action. There are instances when a Government is justified in taking action; I hope that my right hon. Friend the President of the Board of Trade will always bear that in mind.
    My right hon. Friend also mentioned delegations to various countries in support of British industry. I would take it a stage further. British Industry requires much more support from the Foreign and Commonwealth Office and from our embassies and consulates abroad. I do not in any way blame the Foreign Office—the three years that I spent there as Lord Privy Seal were among the happiest of my life. For a decade, the Foreign Office has been maligned and accused of every possible crime—of always selling out to the foreigner—and its staff has been drastically reduced. It needs its confidence restored and to be provided with an adequate level of staff. That means money from the Treasury. It is not good enough for the Treasury to say, "Where shall we slash? We'll make it the Foreign Office."
    The Japanese, for example, have a full consulate in every major city in the People's Republic of China. Britain has only one—in Shanghai—in addition to our embassy in Peking. The British consulate in Shanghai has a staff of seven—the consul-general, deputy, and press officer, and four assistants. Two of the four assistants are the wives of other consulate members. The Japanese have 410 in Shanghai. I am not urging that level, but we must face the challenge from other countries looking after their industries.
    Foreign policy should be directed at British interests, industry and finance. We are losing masses of trade in the middle east. That is true also of Iran, because of our relationships over that wretched book. If one writes a book and it offends, one can be protected in one's own country. I thought that the author in question was wealthy enough to protect himself, but we provide public protection—very well, but I see no reason why we should ruin our relationship with Iran, which can be a very profitable market.
    We are responsible for the United Nations resolution on trade with Iraq. Unfortunately, it affects companies which traded before Saddam Hussein invaded Kuwait and war broke out. Those companies cannot obtain payment for trade before the war. That cannot be justified. Other countries have already made arrangements with Iraq for the time when sanctions are removed. They will get all the business, because of our foreign policy. The same applies to Libya, where there is massive trade to be done. We are not touching it, because we are standing by the Americans.
    All that may sound like heresy to some people, but we must look after our interests through our foreign policy. If I am mistaken in any of my remarks, I am perfectly ready to stand corrected, but the fact remains that foreign policy

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    must take into account our trading and industrial interests. Much as one welcomes a delegation led by a Minister, it honestly does not have a big effect.
    The problem goes much deeper than anything that I have mentioned or that I have heard mentioned. I refer to the nature of our society in this country. That has been a problem for many years. Industry is still not recognised as a prime factor in our society. Do all the best and brightest in our universities say, "I must get into industry"? No; they want to get into the City, if they can—into some bank, preferably a private bank—or into public relations. The last thing they want is to work in industry. Nor am I certain that industry would welcome them; I am afraid that it does not always do so. Why is that? It is because comparatively few are management-trained at the top. Few have been to a top business school.
    I recall only too well my visit to INSEAD at Versailles to present prizes. I asked the British contingent which firms they were going back to; only one person was returning to this country, and he was with one of the oil companies. He said, "The company paid for me to come here, and I feel that I am under an obligation to go back. I do not mind, because the company told me that if I was successful I would receive an increase in pay." When I asked the others where they were going, they replied, "There is no point in going back: they do not want us, and they are not prepared to pay us." They said that they would go and work for American, French or German firms.
    That is the nature of our society. Despite all the changes of recent years—so many that we cannot even keep up to date with them—we have no satisfactory education system; we have not the major educational, scientific and technical system that the Germans have had since the last quarter of the last century. Moreover, we are not trying to secure such a system; we are not concentrating on that at all. Management feel that it would be rather a bore to employ people who have experienced a form of education that those currently at the top have never had, because there is just a chance that such people will know more than they do.
    I emphasise that all the measures in the Budget are desirable, apart from one about which I am not quite sure—the measure relating to self-assessment for tax purposes. A number of my constituents come to me and say, "Look at what the Inland Revenue has said about our accountants' report—can you arrange for some action to be taken?" Heaven knows how many cases there will be in the event of self-assessment, but I will let that pass. I am concerned with the nature of our society; that is what we must aim to change if we are to make up the loss of our industrial base and secure a top management who can return us to a reasonable position in the world economy.
    6.12 pm
    Mr. Robert Sheldon: In his powerful speech, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) made a plea for manufacturing industry, with which I shall deal at some length. He made another important point, however: he said that there were greater priorities than a 20 per cent. tax rate, and asked for
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    a larger contribution from those who pay the highest rate. A sad aspect of the debate is that we are unlikely to hear many echoes of that request; that is a great shame.
    In the past two years, the Thatcherite adventure has ended. Those 11 long years of folly started with the belief that the philosopher's stone of monetarism had been discovered, and reached the high point of hallucination—the hallucination that we were in the midst of an economic miracle. In fact, as we know, we were living on fool's gold. That is why we squandered £120 billion of North sea oil money, and £40 billion or more of privatisation receipts. Instead of using those enormous and wholly exceptional moneys to recreate our industry and restructure our essential services, we spent them on importing foreign luxuries, thereby ruining our own manufacturers.
    Personally, I can never forgive the Government for reducing the number of firms in my constituency by 30 per cent.—manufacturing firms, in the main; firms that provided the goods and services that we see in every country. The closing of some of those firms lowered what had been higher-than-average levels of employment and pay in the constituency.
    That period has now come to an end—notably in the Budget—with a suddenness that surprised only those who believed the Thatcherite nonsense that they so readily proclaimed. It was never a free lunch, and now the bill must be paid. The measure of that bill—in just this one year—is a £17·5 billion balance of payments deficit, and a £50 billion public sector borrowing requirement.
    How then do the Government intend to restore our finances, both internal and external? That is the critical question. There are no further increases in North sea oil to provide the necessary income; what the North sea is producing we are already spending. There will be few further receipts from privatisation: the barrel has been fairly well scraped. Indeed, whereas in the past the Government could rely on £5 billion a year—and spent it—they will suffer a fall in privatisation receipts from now on.
    The position is worsening all the time, which is one reason why the Government are so adamant in opposing the social chapter. They depend on a Britain with cheap labour and weak trade unions, attracting investment on the basis that it is a part of the European Community with certain unique advantages which they wish to advertise. The existence of cheap and docile labour is the Government's solution to the economic problems that they have inflicted on us. The social chapter runs directly counter to that vision; they will therefore fight fiercely to prevent its enactment. That is their solution to the Thatcher years.
    The Chancellor has repeatedly said how much assistance he is giving manufacturing industry, and the President of the Board of Trade said today that the Budget was one more step in the strategy for industry. I wish that I had observed any such steps. Undoubtedly, the right hon. Gentleman has been a great disappointment. There were those who strongly disagreed with much of his politics, but, when he said that he would intervene in industry at various times of the day, we thought that he would at least make some sort of effort: we expected something from a person of such energy and drive.
    The Budget has given some assistance here and there, but it provides little for manufacturing industry. The £900 million for advance corporation tax relief, the £400 million

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    for petroleum revenue tax abolition and a few other concessions may help some firms, but they do not matter much to the one industry that really counts in the long term—manufacturing industry.
    Let me say in passing that I welcome the easing of certain VAT penalties. The Inland Revenue operates on the basis of an understanding of the real world, whereas VAT is the direct descendant of excise duties that resulted from the fact that, over the centuries, the establishment of a harsh regime was the only way in which to protect revenue. The system of VAT collection did not allow sufficiently for an understanding approach to genuine error.
    I often feel that the greatest help that Government can give small businesses is to avoid adding to their burdens. Many small businesses would forgo any Government assistance if they could only be left alone. I know that, in this hard world, that cannot happen; but any help given by Government must be set alongside such a natural aspiration. Governments always require certain information to ensure that financial assistance is properly accountable; I understand that.
    In a small firm, however, frequently only one person can provide such information—the person who is engaged in running the business, and who is diverted from the essential operation of the company. That person is even more diverted when there are substantial penalties for not carrying out the tasks required by Government. I therefore welcome the easing of the VAT penalties.
    Let me turn to the next Budget that this Chancellor will present. The Chancellor has told the country that he does not wish to harm recovery by introducing large tax increases now; in the main, such increases will come later. Last week's Budget, however, is the first shoe to drop; while waiting for the second, people will be reluctant to spend. They know that the second shoe will soon follow, and their expectations will take account of that. The Government have shown us an unusual vista—the prospect not of jam tomorrow, but of vinegar for some years to come. This was a Government, however, who believed at one time in "rational expectations". Nigel Lawson believed that, by controlling the money supply, employers and trade unions would see that sterling M3 was coming down and would reduce pay claims on the basis of such "rational expectations".
    Of course, employers and trade unions did no such thing. It is amusing—though sad—to recount the folly of those times. Rational expectations, however, can work only if people actually believe that things are going to happen. If they truly believe that taxation will affect them in the way that the Government have stated, spending will be curtailed, not just next year and the year after but this year as well. The only way that that will not happen is if people do not believe the Government. There may be something in that view. The Government have already back-tracked on compensation for VAT on fuel for certain groups of people. Who knows what further U-turns might lie ahead? This is, after all, a very weak Government. Many policy changes are possible.
    There is a further factor that may change the income/expenditure picture to be painted by the Chancellor of the Exchequer in the autumn: that, while expenditure has to be fixed two or three years ahead, because of the planning required, revenue can be determined within a few weeks of the announcement. One does not have to make revenue plans anything like as far
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    ahead as one has to make expenditure plans. We can be pretty sure how much the Government expect to spend in 1994 and 1995, but how much they will raise in revenue is still an open question. The Chancellor of the Exchequer's statement, although said to be definite, is still only an opening shot.
    I particularly regretted, as did my hon. Friend the Member for Livingston (Mr. Cook) in his outstanding speech, the increase in VAT on fuel and power. In 1976, when we held the presidency of the Community, I negotiated the maintenance of our zero rating. That was always under attack by our Community partners, It was defensible, on the basis that it was the most important way of limiting the regressiveness of the tax. Without zero rating, VAT becomes a tax on the least well-off in our society. That remains true today. Those above income support levels, particularly the elderly, already find their gas and electricity bills a special burden. They spent most of their time indoors and have special needs for cooking and heating. They will be very unfairly hit by this tax.
    For those who believe in a progressive system of taxation, the excessive reduction in the high rates of tax, the emasculation of capital transfer tax and now the abolition of VAT zero rating on fuel means, in effect, a transfer from a progressive system of taxation to a regressive system. Whatever other policy decisions my hon. Friends will decide upon, the return to more progressive systems of taxation must be an essential part of them.
    What I found most depressing in the speech of the Chancellor of the Exchequer was the absence of any real help, which I believe that the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) wishes to see, for manufacturing industry. The many limited measures set out to assist here were not satisfying. They seemed to he designed to placate the sufferers rather than to provide real solutions to real problems. The real problems are investment in our manufacturing industry and the restoration of the broader base, which has been allowed to shrink.
    Manufacturing industry alone can provide the goods and the exports that produce the wealth which enable more people to be employed in the service industries. I accept that we cannot assume that there will be a large increase in the number of jobs in manufacturing industry. As manufacturing becomes more efficient and finds more methods of automation—an idea that was prevalent 20 years ago—it is bound to shrink in size. However, manufacturing industry will produce more, and the selling of those goods will provide the wealth to enable us to have the service industries, the infrastructure developments and the various requirements that we expect of our social services.
    In the midst of all these problems, we have heard that low inflation and low direct taxation are the priorities, but if we are to have a priority among priorities, it must be our manufacturing industry. That is the fount of our prosperity. If we achieve success there, the balance of payments will improve and more money will be available for infrastructure development and the public services that I mentioned.
    Prosperity cannot come from trying to spend our way out of recession. That will lead to yet more imports. The weekly assessment of any rise in retail expenditure is looked upon as a sign that recovery is coming. Those with longer memories of our recent economic experience will

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    remember that such expenditure does not solve our problems. It is not consumption that will lead us out of recession. There was a case, of some sort, for that argument when we produced most of the goods that found their way into our shops. Today, so many of the goods we made we now import. Therefore, a rise in consumption is more likely to lead to greater imports and to a worsening of our trade deficit.
    The only long-term way out of recession is by investment, particularly in the production process, and by a level of the pound that stimulates exports and weakens our partiality to import. I still believe that there is room for the pound to go down, if we are serious about acting upon imports and encouraging exports.
    We need to limit the tendency to import, and that means a competitive pound. The voices of the City and the Bank of England, which would dearly like to emulate the power and independence of the Bundesbank, must be resisted. The lack of political influence of our manufacturing industry has always been one of the serious weaknesses of our economy. In any conflict between the needs of industry and the voice of the City, there is only one winner. As Winston Churchill said:
    "Finance should be less proud and industry more content."
    It is an unequal contest. It arises from our centre of finance being a mile or so down the road and the centre of gravity of our industry being a hundred or more miles up the M1, the M6 and the M4.
    Industry and the country require a competitive pound. If that means allowing the pound to decline still further, that will need to be accepted. We should not be in a hurry to return to the exchange rate mechanism, although I should prefer not only a competitive but a stable pound. There are great inefficiencies in foreign trade when the price of the goods purchased and sold cannot be precisely known. It is not sufficient that the forward foreign exchange currency market provides ample opportunities for hedging. The fact is that international trade is conducted on a basis more akin to the home market, with orders being delayed, deferred and cancelled with frequency.
    Few overseas orders nowadays are on a letter of credit basis, where the date of delivery is tightly specified. In those conditions, such forward currency precautions used to be a controlled way of limiting currency risks. In the present currency see-saw, the foreign exchange losses can be greater than the profit on a transaction. Therefore, it is far better to have a stable exchange rate that can be adjusted from time to time. In the past few weeks, we have seen variations of up to 5 per cent. in the pound's value against major currencies. Adjustments made as required need not be more, would happen infrequently and would result in the fine pricing of contracts, with advantage to international trade.
    What I had hoped to see was a Budget for industry. In 1991, we had a Budget that was supposed to be good for business. In 1992, we had a Budget that was supposed to be good for recovery. This year, we had a Budget for sustained recovery. What we needed was a Budget for industry. We did not get one. Therefore, the basic Problems that face our country are no nearer solution.
    6.28 pm
    Sir Terence Higgins: I suppose that this is positively my last appearance in a spring Budget debate. One of the pleasures over the years in these debates has been to follow the right hon. Member for Ashton-under-Lyne (Mr. Sheldon).
    I intend to say a few words about the Government's proposals to change the time of the debate from the spring to the late autumn. It raises a number of difficult questions. The Government have published a White Paper on the issue. It referred to a number of Treasury Select Committee reports that were prepared under my chairmanship but, strangely, not a report, also under my chairmanship, that was prepared by the Select Committee on Procedure (Finance).
    Trying to deal with public expenditure and taxation provisions at the same time will place a heavy burden on Treasury Ministers. Therefore, I commend to the Chancellor and his Treasury colleagues the Select Committee's suggestion that there is a strong case in future for dividing measures on taxation into three parts.
    The first would be a Bill dealing essentially with economic management and, therefore, primarily with changes in tax rates. The second would be a taxes management Bill which could be introduced at any time during the year. The third, if a new tax were introduced, would be the procedure that we adopted when we introduced value added tax—a Green Paper, draft clauses and so on. Unless such changes are made, the burden on the Treasury and on the House of dealing simultaneously with public expenditure and taxation will be a real problem.
    Following on from that, there is a danger that the House's opportunities to debate such matters will be significantly diminished. Until recently, we held debates on the autumn statement, on the public expenditure White Paper and on the Budget. If we debate the Budget only in the autumn, the opportunities for serious debate in the House, related to a specific proposal announced by the Treasury, will be reduced to one. We should not contemplate that, because it is important that the House should have the opportunity to debate these vital matters during the year.
    I deal now with what has become the political, if not the economic, centre of my right hon. Friend the Chancellor's proposals—the proposals to levy VAT on domestic fuel and power at a rate of 8 per cent. from next April and of 17·5 per cent. from the following April. It is rather curious that, although the date of the Budget is to change from spring to late autumn, the proposals for changing the rate of VAT will still come into effect in April. It is rather like the smile on the Cheshire cat's face remaining after the Cheshire cat has disappeared.
    When Iain Macleod and I, together with Professor Wheatcroft and Arthur Cockfield, devised the VAT system that we now have, we spent a great deal of time examining the experience of the countries of the Common Market, as it then was. We came to two clear conclusions. The first was that there should be only a single rate of positive VAT. The second was that there should be relief by way of zero rating for those at the bottom of the income scale. In that sense, the tax that we devised was superior to others in the Common Market.
    At the same time, of course, we abolished the selective employment tax and the multi-rate purchase tax. The

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    change from the SET and a purchase tax to VAT was not regressive because of zero rating. We got rid of a system of variable rates, or multi-rates, which had meant that the pattern of consumer expenditure was being distorted. Those two essential Conservative principles were important changes and meant that we introduced a better tax than those that we found in the European Community.
    Having said that, I clearly view with considerable misgivings my right hon. Friend's proposal for imposing a positive rate of VAT on fuel and power consumed domestically. I believe strongly that it is a mistake to change the structure of taxation for short-term or tactical revenue-raising reasons, which is what we arc in danger of doing now, or, to put it more accurately, next year.
    The change is not likely to be reversible. The right hon. Member for Ashton-under-Lyne intervened on my right hon. Friend the Chief Secretary on the second day of our Budget debate. The Chief Secretary replied:
    "The proper argument against Community intervention in our zero rates is the right of the House to determine our taxation rates. It is the right of my right hon. Friend the Chancellor…to decide what they should be."—[Official Report, 17 March 1993; Vol. 221, c. 302.]
    However, we know what enormous pressure there has been on this country to harmonise our system of taxation and bring it in line with that elsewhere in the Community. If we abandon zero rates on fuel and power, it will not be possible to reinstate them at a later date.
    Another worrying aspect is that the more one erodes the scope of zero rating, the greater the pressure from the European Community will become to remove it altogether, not only from fuel and power and newspapers but from food and other essential items. I am reminded of a remark made by my permanent secretary when we introduced VAT. The question of harmonisation arose, and he said, "If the Italians collect it, we'll harmonise it." There was something in that. We are increasingly under pressure to harmonise our VAT rate with a European form of that tax, which is less satisfactory than that which we originally devised. Therefore, the current proposal is an unfortunate development.
    I am rather worried about the proposal to increase VAT on fuel and power to 17·5 per cent. in stages and the imposition of an 8 per cent. tax next year. That raises the issue of multiple rates which I have always believed that we, as Conservatives, did not favour. Once people have paid their direct tax, we should not use the tax system to distort the pattern of consumer expenditure.
    I now come to the difficult question——
    Dame Elaine Kellett-Bowman: My hon. Friend says that we should not use the tax system to distort consumer expenditure. What about the differentiation between leaded and unleaded petrol, which is an environmental factor? One could say that the imposition of VAT on domestic fuel and power is also an environmental tax because it has followed on from the Earth summit and we must reduce fuel consumption.
    Sir Terence Higgins: I was about to deal with that point, and I hope to be able to satisfy my hon. Friend in that respect.
    I am bound to say that there has been a certain amount of confusion about the controversial question of compensation and precisely what the Government have in mind. I hope that my right hon. Friend the Chancellor will manage to clear it up when he winds up the debate this
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    evening. There has been much talk, especially from members of the Opposition Front Bench, about compensation in full for the imposition of VAT on fuel and power. I saw the shadow Chancellor on "Question Time" the other night, saying that the Chancellor would be increasing the cost of fuel by 17·5 per cent. That is, of course, an economically illiterate view. It would be valid only if the elasticity of demand for fuel and power were zero. It is always the case that when an indirect tax is imposed, even at the final stage, a certain amount of the tax is absorbed by the person supplying the goods or services. Therefore, the idea of full compensation——
    Mr. Ken Purchase: Not in the case of a monopoly.
    Sir Terence Higgins: Whether or not there is a monopoly. The idea of full compensation is, to say the least, difficult to define. In political terms, however much one compensates for the change, people will continue to say that it has not been enough. By way of an example, I cite the fact that we were unable to remove VAT from charities. When we introduced VAT originally, we introduced at the same time a number of proposals to give increased benefits to charities by way of covenants, and so on.
    On two, if not three, subsequent occasions, further concessions have been made to charities to compensate for the fact that we have not managed to exclude them completely from the scope of VAT. I have not the slightest doubt that the total of those concessions is vastly in excess of the burden of VAT on charities, but charities will continue to say that they need to be compensated. I fear that the same will happen in this case: if we impose VAT on fuel and power, however much we compensate people, the political reality will be that we shall still be blamed. Overall, I have considerable doubts.
    My hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) said that the tax was helpful for green issues and she referred to the Rio summit. We had a one-line Whip on the second day of the Budget debate and, curiously enough, I was invited to hear a speech at the Royal Geographical Society that evening given by Mr. Robert Swan, who is the United Nations roving ambassador on the environment. Rather more exceptionally, he is the only person to have gone on foot to both the north and south poles. He was desperately concerned about the effects on the ozone layer of global warming. I was impressed by his arguments which he put forward with immense expertise and passion.
    The other side to the coin, therefore, is that there is a strong argument on environmental grounds for imposing a tax on fuel and power. However, I am bound to say that the impact is estimated to be 1·5 million tonnes, which is only a small part of the likely decrease that will be needed between now and the deadline of the end of the century, by which time there should have been a reduction of about 10 million tonnes. A big change will be required.
    The vital point this year was that the Chancellor should do nothing to damage the present fragile recovery. I am glad that, by and large, the changes he has proposed for this year are broadly neutral. The Budget is not entirely neutral because there will be some increase in taxation. None the less, the Budget will not seriously damage the recovery that we all wish to see.

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    I have more serious doubts about the idea of saying that, as we must take account of the future deficit, we must legislate now for what happens next year and the year after, to reassure the City. Our record on forecasts is not so good that we can say that we shall legislate now for what happens in two years' time. I believe that one thing is sure. We do not know how much of our present fiscal deficit is structural and how much of it is cyclical. That is clearly recognised in the Red Book, which makes that point.
    We must remember that it was not long ago that we were in budget surplus. That might lead us to suggest that most of the deficit is cyclical. In any event, we need to wait for the recovery to go rather further before we can decide how much is structural and how much is cyclical. to anticipate what will happen and to say that we propose to legislate now for what will happen next year and the year after puts too great a weight on our expectations of what is likely to happen to the fiscal deficit.
    We must, of course, take account of the views of the financial markets which are worried about the size of the public sector borrowing requirement. My guess is that the Chancellor and the Treasury have overestimated the likely size of the fiscal deficit next year or the year after. I suspect that the deficit will not be as great as they suppose. That being so, there was a case for waiting until we saw rather more clearly how the economy was developing before proposing increases in taxation such as are suggested in the Budget. We can debate those matters during the proceedings on the Finance Bill and it is important that we should begin to approach the question analytically.
    My fundamental feeling is that it is right that the Chancellor has taken no action that will affect the recovery this year. With the successive cuts in interest rates and the significant depreciation in sterling, recovery is likely to come faster than we expect. One point that can always be made about the economy is that one always underestimates turning points, whether from up to down or from down to up. The underestimate of the importance of the turning point has increased over all the cycles. That being so, I believe that we shall see recovery, probably faster than we believe likely, and with a faster decline in the deficit than is supposed. I have considerable doubts, therefore, about anticipating what is likely to happen next year and the year after.
    6.44 pm
    Mr. Archy Kirkwood: It is always a pleasure to follow the right hon. Member for Worthing (Sir T. Higgins). I was interested in two points. He said that the Chancellor had done nothing to damage the prospects for recovery, which was one of the stated aims of the Budget. Why, then, did the Chancellor find it necessary to announce in advance—for the first time, in my experience in the House—imposts of taxation in future years? It would have been perfectly reasonable for him to say that he reserved the right to increase taxes "as and when". That would have been an unexceptional position. By making the announcement in advance, he may have damaged the process of recovery. People are not daft—they can see next year coming and they may begin to take evasive action, especially in relation to the increased costs
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    for fuel and domestic heating. I do not believe that the Chancellor can say that he has done nothing to damage the interests of and the prospects for recovery.
    The right hon. Member for Worthing is an eminent figure and his voice is listened to carefully by the Government—as it should be—but he did not carry the House with him when he tried to justify the increases in value added tax on heating and on domestic fuel. He said that such matters were difficult and that there would always be political blame. By taking that line, the right hon. Gentleman is encouraging his right hon. Friend the Chancellor to consider other matters in relation to VAT.
    The Government's stated position is that by the end of this Parliament they want to have a 20p rate of income tax. The only conceivable way in which they can do that, against the dire financial position in the past and in the future, is by increasing VAT, not only on newspapers and on sewerage, but on food, on new-build costs, on magazines and on children's clothes. That would be unconscienable. I hope, therefore, that the right hon. Member for Worthing will be careful about how he argues the justification for the changes made.
    This has been an interesting debate, apart from the purple passages in which the President of the Board of Trade went native, as he always does. The hon. Member for Livingston (Mr. Cook) made a powerful speech which was witty and well argued. The one point that he established beyond all peradventure was that the Budget is regressive. The House should be concerned about that.
    The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) also made a powerful speech. I agree that we need urgently to assist exporters. We need to try to get a more industrial, scientific and technological ethic into our education process. I agree that, most importantly, the precedent for not making promises about taxation in political manifestos at elections should be considered carefully and that we should try to eschew such promises in future. Such promises serve no useful purpose. It does nobody any good to try to get political parties to anticipate financial and economic positions that they cannot foresee, and it does the political process no good to try to do so.
    The Chancellor would have had slightly more credibility if he had admitted candidly that although he would not increase income tax, he would increase taxes on income. That is a reasonable action to take when facing deficits which are getting out of control. However, as the hon. Member for Livingston said, the Chancellor did not have to do that through regressive means or to make the poor pay most.
    When the Chancellor set out his strategy, he said that he wanted to take no risks with recovery. He rightly said, too, that he had to cope with a burgeoning budget deficit. The economic difficulites that he faces are immense. The tax base has been eroded, and there is a long-term pattern of increase in public expenditure. Given that that is the case, certain things need to be done as a matter of urgency. As regards the balance of trade, the country is running an unsustainable deficit—and, what is worse, has been doing so during a recession. We cannot possibly expect to get away with an ever-deteriorating trade balance. In short, the economy is in a mess.
    The right hon. Member for Worthing wondered whether the problem was cyclical rather than structural. I think that the evidence is against him, although I accept that it may be too early to say. In my view, the damage and

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    the difficulties are structural rather than cyclical. As I said, history may prove me wrong. In any case, it is important to get the answer to that question right.
    It is the height of irony that the principal stimulus that the Chancellor said would be the engine of recovery should have originated from a policy that the Government strove, until last autumn, to avoid—namely, devaluation and interest rate reductions. No one has yet asked what is happening to the exchange rate mechanism in all this. Is that question in Ministers' minds? I should be interested to know what will happen in the near future.
    The growth forecasts in the Red Book are an awful lot more realistic than they have been in the past. I am staggered, however, to find that the forecasts for export volumes for 1994 are shown at 10 per cent. I am even more staggered to discover that the forecasts for import volumes for 1994 are shown at 9 per cent. Those are extraordinary figures. Frankly, I do not believe that it is possible to achieve such export and import figures in the period to which we are referring. Much of the Budget strategy is based on export-led growth. If the 10 per cent. growth in export volume is not achieved by 1994, all the Government's calculations may prove to have been built on sand. I do not think that the exchange rate is competitive enough to sustain export growth at the levels to which the Red Book refers. I certainly do not think that the European markets that we face at present are buoyant enough to enable us to achieve such targets. The level of market-led growth is therefore highly doubtful.
    What of the increase in national insurance contributions? I was interested to discover that the Chancellor had chosen that device. The longer I serve in this place, the more convinced I become that national insurance contributions should be abolished. As I said earlier, the way in which the Chancellor has chosen to introduce revenue-raising tax measures is extremely regressive, but it is both particularly bad and silly to have chosen national insurance contributions as a vehicle.
    National insurance contributions are anachronistic and anomalous and there is a strong case for sweeping them away and replacing them with a unified tax system. That would simplify matters and save a lot in administrative costs. We could then move, over a period, to an integrated system of tax and benefit—a partial basic income scheme of the kind that people have been discussing for some years. It would take time and effort, but it would be worth considering carefully the possibility of moving in that direction.
    Let me say something about Budget secrecy. The right hon. Member for Worthing has played a valuable role in persuading the Government to make progressive changes in the way in which the Budget is introduced. The departmental White Papers are better than they used to be and although a unified Budget in November and December may cause problems for the Treasury, because it will involve revenue and expenditure being dealt with at the same time, the changes have been well worth while. But we are still left with this ludicrous Budget purdah, which causes all sorts of difficulties. The Government experienced some of them this year.
    Other Government Departments need to know what is in the Chancellor's mind. The President of the Board of Trade had the confession dragged out of him that he was told about the proposed change in VAT on domestic fuel. If that is true, that is fine, but how much better it would be if all the Departments—the Department of Trade and
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    Industry and the Department of Social Security, for example—were notified. The campaign to increase council house sales that the Department of the Environment is pursuing may have been significantly affected by the mortgage interest tax relief change in the Budget. Departments are interrelated as regards such matters.
    How much better it would be to abolish Budget purdah and secrecy and have a draft Budget, or at least a White Paper outlining the options under consideration by the Chancellor, in the lead-up to the Budget. That would make for a better informed public debate and we should be able to sort out numerous difficulties. Lord Lawson experienced tremendous difficulties when he made changes in mortgage interest tax relief for people who were not married but living together. Such difficulties could be avoided if there were more openness.
    Much of the technical dross which took up two hours of the Chancellor's Budget statement could also be avoided. The technical stuff could be dealt with outside the ambit of the Chancellor's strategic statement. We must address that problem as a matter of urgency. People from outside this country think that the way in which we conduct the Budget—with Ministers going into purdah, saying nothing to anyone and having to report to the Chancellor all meetings with financial journalists—is daft and makes no sense in a modern democracy.
    What impact will the Budget have on the poor? The other day I heard the Under-Secretary of State for Social Security say that the increase in the 20p income tax band would help the poor. She was talking about increases in heating costs. The change does nothing of the sort. The only way in which we can get increased help to the poor—always supposing that that was what the Chancellor was seeking to do—is to increase personal allowances. The Chancellor did not do that; he froze them, which made the impact of the fiscal changes on the poor worse.
    I wonder whether the Secretary of State for Social Security knew about the changes in VAT on heating and fuel. If he did, he should have ensured that the Government's plans for compensation were well thought out in advance so as to avoid the confusion which followed the Budget statement. If he knew, but took no steps to clarify matters from day one, he bears a heavy burden of responsibility because he has caused great concern throughout the country. I still do not understand what the Government have in mind. Newspaper journalists cannot be blamed for engaging in speculation and stories which get more exaggerated every time they go along the rumour chain. It is unconscionable to inflict such concern on people who stand to be deeply affected by such changes.
    The Treasury had better look at the consequences outlined in the Scottish Economic Bulletin of February 1993. The Institute of Fiscal Studies conducted a study on the distributional aspects of environmental taxation. It ran a model, putting the 17·5 per cent. increase into fuel and petrol costs and running a test across England and Wales on the one hand and Scotland on the other. The conclusion is absolutely clear:
    "Using a tax rate of 17·5 per cent., the additional tax payments amount to some 2 per cent. of total expenditure amongst households in the poorest 20 per cent. of the income distribution, but only around 0·6 per cent. for households in the richest 20 per cent."
    That is what we have been saying for the past several days: the measure will have a much more marked impact on the poor. The Institute of Fiscal Studies is a perfectly

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    respectable and professional body of researchers. In February 1993, it showed that because of household types and access to different kinds of energy—particularly the lack of gas—there would be a widely disproportionate effect in Scotland. That is the kind of information that the Government should consider before gaily taking decisions to increase energy costs.
    Mr. Nicholas Winterton: The hon. Gentleman is referring to the difference between Scotland and England. Has he considered the difference between urban areas and rural areas? Most rural areas have little, if any, public transport. They are also more exposed to the elements. Households in such areas therefore require more heating.
    Mr. Kirkwood: That is absolutely right and that point has been made very clear. I commend the IFS report to the Treasury Front Bench as it would repay careful study.
    I have probably been speaking for too long, but I want to make a final point. The Government were elected in 1979. If someone had told me then that I was going to be in Government until 1996, with a working parliamentary majority, access to windfall resources from £100,000 million worth of North sea oil and gas and windfall revenue from £60,000 million of privatisation proceeds, but that I would end up with a public sector deficit of £30 billion, high unemployment and public expenditure running at 44 per cent. of gross national product, I would have considered that to be an absolutely appalling record. The Government forfeit any right to claim that they have a scintilla of economic competence.
    If the question is, "Have the Government got a grip on the economic situation in this country?" the answer must certainly be no.
    Several Hon. Members rose——
    Mr. Deputy Speaker (Mr. Michael Morris): Order. Before I call the right hon. Member for Horsham (Sir P. Hordern), I remind right hon. and hon. Members that Madam Speaker has imposed the 10-minute rule from 7pm to 9pm.
    7.1 pm
    Sir Peter Hordern: I hope that my hon. Friend the Financial Secretary will forgive me if I do not mention the favourable parts of the Budget, on which I would otherwise have dwelt extensively. In particular, I applaud the measures to help small businesses. They were admirable and very well thought out.
    I expect that the Budget will be judged—as it should be—by its overall effect on the economy. This is the first Budget that I can recall in which reducing the deficit has been postponed deliberately. I understand that the Government certainly do not want to trample on the recovery which is now under way. At the same time, as has been said, the Government must satisfy the City that enough is being done within the medium-term financial strategy to ensure that the deficit is dealt with.
    However, I believe that that is a peculiar judgment. It is also strange that the seven wise economists have been given a special section in the Red Book. Those Gentlemen are no doubt very eminent and they are certainly very well paid. However, it is Quite extraordinary to include their
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    opinions in the Government's Red Book to give the impression that they have official backing. That gives far too much importance to those sophisticators and necromancers.
    I recognised the same names among the 365 economists who wrote to The Times in 1982 describing the Government's policy as disasterous. There then followed the most sustained period of economic growth since the war.
    The public sector borrowing requirement for 1993–94, at £50 billion, is simply too large to finance without considerable difficulty. I remind my hon. Friend the Financial Secretary of a great change that has occurred in just one year. Last year, the Red Book forecast that the PSBR would be £6 billion in 1996–97. After the proposed tax increases of £10 billion, the deficit is still expected to be £35 billion in 1996–97. That makes a total increase of £45 billion. That shows that extraordinary swings are possible in such forecasts.
    The debt interest amounts to £19·4 billion next year, which is an increase of £2 billion over the year before. I calculate that if we delay the rising of those taxes, there will be an extra £400 million a year in debt interest. We will not improve matters by issuing IOUs in promises of future high taxation. Of course I understand the reason behind this: it is dangerous to trample on the recovery. However, surely the promise of higher taxation is likely to have an inhibiting effect on spending. Therefore, we might just as well get on with it, if not by the full £17 billion in the first year, certainly in the first two years.
    I know that there is much criticism about VAT on fuel and power. We have become accustomed to thinking that increases in VAT will feed straight through into price increases. I do not believe that that will be the case. In Sussex, Seeboard did not increase its prices last year, allowing for the rebate. I believe that there is every prospect that it will reduce its prices this year. That makes the coal review so important.
    So long as the nuclear levy is phased out, the extra VAT may be fully absorbed or nearly absorbed within the increase in the cost of living during the next two years or so. I do not know what that will do to carbon emissions and our Rio target, but I doubt whether the increase in the RPI will be as much as some people believe. We must not neglect the capacity of the privatised electricity distributors to absorb costs.
    It would have been better if we had got on with it. As it is, £50 billion is a huge sum to finance. Incidentally, I see that we are not going to finance it through full funding—that is, by selling gilts to the non-bank public. Instead, we are to allow the banks to buy gilts which will form their lending base.
    In other words—and perhaps in a more complicated way than in the past—we will resort to printing money for the balance of the funds that we will not be able to raise by selling gilts to the non-banking public. The potential for inflation is there. The argument is that as soon as inflation shows signs of taking off, interests rates will rise once more. I wonder whether we will be quite so precise in making that judgment as one would hope. That is why I believe that the very large borrowing requirement leaves too much to chance for my peace of mind.
    We will have to keep a close watch on inflationary signals and I hope that action will be taken at the right time. It would have been better not to have such a high PSBR in the first place.

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    I understand that we will deal with public spending in the next Budget and spending review. However, we must consider the matter carefully. My right hon. Friend the Chief Secretary to the Treasury is carrying out a careful survey of Government Departments. However, I do not believe that that is enough. Choices will have to be made between Departments and we will have to look at the long-term trends.
    Defence is an obvious candidate; in that respect, I am talking about equipment and not personnel. If we consider equipment that was authorised over the past 10 years and the original estimates and compare that with the outturn and then note what would have been available at the time and ask what our forces would have preferred, taking into account overseas defence sales, we discover a surprising result.
    We must also consider the cost of research and development on defence and the enormous sums involved. We must consider that in the context of an independent think tank to perform much the same function as the Rand Corporation in the United States. I served on the Public Accounts Committee with the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for many years and I do not believe that it is good enough to expect the Ministry of Defence to make the estimates for us. The amount of money that we have spent on defence equipment, much of which has been absolutely wasted, is a standing disgrace. My hon. Friend the Financial Secretary should consider the matter very carefully.
    The same sort of problem will arise with social security. By the year 2021, one in five of the population will be over 65, compared with one in 10 in 1951. There will be fewer young people to pay. There were only 11·5 million people under 16 in 1988 compared with 14·3 million in 1971. There will be a major problem to tackle in providing for social services in the future.
    We must look to the future to see how social services will be provided. We must examine whether social services will need to be provided entirely through the state or whether they could be as they were of old—provided by the friendly societies or in some other way. We need to examine carefully the whole national insurance system and the national insurance fund to see what might be done. There is a great deal of scope.
    I commend my right hon. Friend the Chancellor for the Budget in all sorts of ways, especially in bringing spending and revenue together. I hope that it will concentrate the mind wonderfully.
    7.10 pm
    Mr. Ken Purchase: Value added tax on domestic fuels has been the main talking point in my constituency since the Budget was announced. Indeed, older people can talk of little else. Their fear is already clear: they will not be turning on the heating in the way in which they should simply to protect their welfare in future years. That must be wrong. It was damnable that the Government did not have a plan to ameliorate the effects of that imposition of VAT on those at the margin of poverty. It is an absolute disgrace.
    I shall refer to what was in the Chancellor's speech as a veiled but rather gratuitous insult suggesting that, first, his advanced corporation tax proposals were complex and, secondly, they would, as if by definition, be understood by only a few.
    Mr. Alex Salmond: Is the hon. Gentleman one of them?
    Mr. Purchase: I do not know; the hon. Gentleman will find out in a moment. He should not second-guess what I have to say.
    If it seems to many that the Chancellor—by his lack of common sense, he has got into more scrapes than most—can understand advanced corporation tax, by similar definition it should be possible for the rest of us at least to get a grip of the subject.
    Advanced corporation tax was introduced by the Tory Government in 1972–73. Amazingly, it worked well during the 1970s, when companies were making profits and could claim back their tax credits through the mainstream corporation tax. However, since the advent of Conservative anti-manufacturing policies and the determination to reward those who make money through shareholding rather than those who earn it through real work, advanced corporation tax has become a real problem for large and small companies.
    The tax system is simple rather than complex. It takes tax which is due at source from those receiving dividends, and is then set off as a credit against mainstream corporation tax. That is done on the assessable profits of the dividend-paying company. The arrangement allows for the Exchequer to gather tax earlier than would otherwise be the case, and sets the final tax bills against that credit.
    All that is okay while companies are profitable and able to use the tax credit which they have earned. However, recently companies have been obliged to pay dividends even though they have not made profits. In essence, that has meant that, first, an unprofitable company is producing a tax credit which it cannot reclaim in the relevant period for which it was paid and thus creating a surplus of tax; and, secondly—this is my theme—payment of the dividend has tended to reduce the net worth of such companies by bringing forward retained profits, which are properly intended for investment, to pay shareholders.
    On the tax credit and the subsequent surplus advanced corporation tax, the scale of the surplus is estimated at £5 billion. That is a tax mountain equivalent to the infamous EC beef mountain. I do not know whether all the beef will ever be eaten. My hon. Friend the Member for Wolverhampton, South-East (Mr. Turner) could make a go of it, but we shall have to wait to see whether that works out.
    I can say something about the tax mountain. Although companies are allowed to roll forward their credits against future profits, many thousands of firms will never benefit, for the simple reason that the Government have driven them out of business, especially those in manufacturing in the west midlands. Our wealth-creating base has been crucified by, first, the obsession with money supply and, secondly, phenonmenal real interest rates. Although interest rates are falling, they are still some distance from the historic norms of 1 and 2 per cent.
    I recall many companies in the west midlands falling under the Thatcher/Howe axe of the early 1980s. I especially remember a typical local firm in Wolverhampton which specified and ordered special machinery—machinery at the cutting edge of technology. The development period was about two years. The plant had scarcely been fully commissioned and brought into profitable use when the monetarist experiment closed down the opportunities in manufacturing for which the

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    special machinery had been planned and designed. The plant was unable to find new markets in time to meet the bank's demand for interest payments. A fine company of good managers and highly skilled workers was finished, and its surplus advanced corporation tax was lost for ever.
    Earlier, I said that many companies are forced into making dividend payments even when the current year's profits are non-existent. Such payments eat into the value of a company but are demanded by the short-term considerations of shareholders who have become accustomed to dividends which bear no relation to work or effort, especially in the privatisation programme. The privatisation programme deliberately undervalued share prices and then rewarded those buyers who became sellers—and they were able to make a killing on the way.
    In addition, the outrageous levels of interest which were offered to lenders and passed on as loans to borrowers by banks became more profitable and a safer haven for spare cash than the longer-term investments needed by manufacturing industry. Nevertheless, industry had to compete, which meant paying dividends at a time when none should have been available and at rates comparable to those available elsewhere from banks and building societies. In that way, companies were forced to damage themselves to keep the level of traded share values sufficient to attract investors.
    The changes to advanced corporation tax which have been trumpeted by the Chancellor should not be seen as unproblematic, except perhaps by the relatively few profitable companies and those which have large overseas earnings. Because the changes could be disadvantageous to pension funds in some circumstances, managers may well be tempted to be cautious and buy gilts rather than take a positive view about the long-term equity and earnings of manufacturers who desperately need a continuing share of investment.
    All in all, that aspect of the Budget does not provide a boost for industry. Indeed, the Chancellor claims that the measure will take £900 million in extra revenue from 1995–96 and that the benefit to companies will be restricted merely to reducing the rate at which advanced corporation tax surplus accumulates. Rather than being a boost for industry, the proposal serves to illustrate the appalling mess which has resulted from the Government's damning lack of interest in or knowledge of our country's wealth and welfare-creating manufacturing sector.
    7.17 pm
    Mr. Nigel Forman: Because of the constraints on time imposed by the Speaker, I shall not follow the hon. Member for Wolverhampton, North-East (Mr. Purchase) or some of his hon. Friends in the way in which I would have wished in my remarks. I should like to preface my comments by saying that the appropriate test to apply to the Budget is what I would describe as the Barry Riley test. Those who read The Financial Times on Saturdays will know Barry Riley's column. On Saturday 13 March before the Budget, Barry Riley said, among other things:
    "So the government's responsibility is not to engineer some kind of economic miracle, but rather to establish a stable financial framework and to attempt to reconcile people to the real world "
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    In a world of modest expectations—to which, alas, we have had to become accustomed recently due to the depth of the recession—that admonition from Mr. Riley is especially appropriate. By that test, the Chancellor will be seen to have succeeded—but, most clearly, in some months' time.
    The dual curse of all Budgets and debates on Budgets is that commentators and Members of the House tend to rush to judgment, which is usually a mistake. Almost everyone expects too much of a Budget which in this case may tighten the fiscal stance by somewhere between £500 million and £2 billion, depending on how one assesses the real effect, in an economy of more than £600 billion. I remind the House that our economy represents no more than perhaps 3 or 4 percentage points of world gross domestic product. If one puts all these figures together, it is clear that one should have modest expectations for the national Budget of a country of Britain's size and weight in the world.
    The Budget measures can be considered in greater and more appropriate detail in later debates on the Finance Bill. I wish to make a few comments on some of the key Budget judgments of my right hon. Friend the Chancellor and to examine his overall approach to economic policy. I intend to make my points as quickly as I can for reasons of brevity.
    First, my right hon. Friend chose absolutely the right objectives for his Budget at this stage of the economic cycle. He described his objectives in the following words:
    "first, to support the recovery in the year ahead; and secondly, to set out a clear medium-term strategy for bringing the borrowing requirement back towards balance."—[Official Report, 16 March 1993; Vol. 221, c. 169.]
    Secondly, my right hon. Friend was right to remind the House in his Budget statement of the profound impact of global developments on our national economic well-being. That is a truism, but one which is not sufficiently taken into account. For example, our export markets are principally—although not exclusively—in the rest of the European Community, as Opposition Members will know. Those countries are all going into recession after us, so just when we need them to pull us out on an export-led basis they will not be there in the strength that we would wish.
    Mr. Salmond: Will the hon. Gentleman give way?
    Mr. Foreman: I am afraid that I cannot give way in view of the time available.
    Equally, there is the super-competitive threat from the Pacific rim countries. That does not exactly assist us other than by sharpening the spur of competition, which is a good thing, of course.
    Thirdly, unemployment is obviously the most critical factor in both the symptoms and causes of our economic difficulties. It is responsible in itself, either directly or indirectly, for a large part of both the cyclical deficit and, increasingly, the structural deficit. Indeed, one could argue on that point like mediaeval schoolmen and not get far. It is all deficit, whatever one calls it. Therefore, my right hon. Friend the Chancellor was right to say that a deep-seated problem needs more fundamental solutions. That is what he said about the medium-term deficit. I shall say a few words later about the fundamental solutions.
    Fourthly, in the short run, my right hon. Friend the Chancellor was also right not to tighten his fiscal stance too much. Here I agree with my right hon. Friend the

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    Member for Worthing (Sir T. Higgins) and I disagree with my right hon. Friend the Member for Horsham (Sir. P. Hordern). If my right hon. Friend the Chancellor had tightened his fiscal stance too much by taking what would have been largely symbolic action to increase taxes now, that could have had serious behavioural consequences which would have damaged confidence. Confidence is fragile at the moment, and such action would have prejudiced the recovery that we all want to encourage.
    It is arguable that any Chancellor should act decisively for one year only at a given time. I agree with my right hon. Friend the Member for Worthing on that. A Chancellor should not imperil or mortgage the future by putting key decision-makers on the financial equivalent of death row—in other words, awaiting future fiscal execution. There is a great deal to be said for the old annuality approach of the Treasury, particularly on the revenue side of the accounts. My right hon. Friend the Chancellor's judgment for this year is right, but I hope that he will feel free to loosen policy still further if that proves necessary. He should do so preferably on the monetary side if the behavioural consequences of the Budget produce a half-hearted recovery. I very much hope that they will not, but we must guard against the possibility.
    The growth in the economy in the next few years predicted in the Red Book, coupled with the underlying growth in productivity, which goes ahead almost regardless of recessions because it is a function of technology, and so on, will probably not be enough to reduce unemployment or significantly lift economic confidence for at least the next three years. That needs to be considered. With that sombre prospect, my right hon. Friend was right to say:
    "Our strategy for sustained growth rests on three principles: first, that growth comes from the private sector, not from Whitehall; secondly, that a continuing commitment to low inflation is vital if competitiveness is to be maintained; and thirdly, that the only way to increase the country's long-term growth rate is by improving the supply side performance of the economy."—[Official Report, 16 March 1993; Vol. 221, c. 172.]
    I agree with that.
    The process of recovery is also critically dependent on events with a capital E outside the United Kingdom and largely outside my right hon. Friend's influence, let alone his control. Therefore, any British Government must concentrate on doing the positive things which are in their control. That is why I welcome so much the support for improved quantity and quality in our education and training system, and I was pleased to be involved with the recently planned boost for further education, which will do important things of benefit to Britain's competitiveness. That makes some of the comments of my right hon. Friend the Member for Old Bexley and Sidcup (Sir Edward Heath) on that point slightly dated.
    Looking to the future, my right hon. Friend the Chancellor may have been right to say:
    "interest rates at their current level are consistent with the achievement of the Government's inflation objectives."—[Official Report, 16 March 1993; Vol. 221, c. 173.]
    That may well be true, but the dilemma is that we shall probably need a sustained period of even lower interest rates to give us a real chance of achieving our objectives for economic growth. It is the old conflict between the growth interest and the anti-inflation interest.
    My right hon. Friend was right to warn of the medium-term threat of excessive public borrowing, especially when it starts as a cyclical deficit and could
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    easily degenerate into a structural deficit unless we safeguard against it. As my right hon. Friend the Member for Horsham said, it is significant that next year the debt interest is likely to amount to almost 3 per cent. of GDP. That is pushing up towards the limit set in the Maastricht guidelines.
    Both the personal and corporate sectors are rapidly restoring their balance sheets and will soon move into surplus rather than deficit. That would imply a further period of debt deflation. It is appropriate that the public sector should have a countervailing deficit until the effects of the private sector purgative have worn off and confidence and growth have reappeared. In other words, timing is everything. We cannot afford to allow the deficit to continue into the medium term. That is why it was essential that my right hon. Friend the Chancellor took the measures that he did. Equally, however, he was right to be cautious in the forthcoming financial year.
    I welcome my right hon. Friend's determination to take a radical look at what the public sector does, and how. Indeed, he intends to examine the very boundaries and definitions of the public and private sectors respectively. That is likely to yield much bigger savings and make a much larger contribution to eliminating the public sector deficit than even the hardest fought public expenditure survey round.
    I illustrate the argument with some examples. Should we continue for ever with a universal state pension and different pension ages for men and women? Probably not. Should we make a sustained attack on the tax expenditures and structural reliefs which now cost the Exchequer at least £90 billion—or £30 billion, according to the narrow definition? Those are some of the long-term questions that we need to consider. I commend the Budget for addressing them.
    7.28 pm
    Mr. Andrew Mackinlay: After the general election, unhappily I found that I represented not just Thurrock but a large proportion of south-east England. Apart from my hon. Friend the Member for Oxford, East (Mr. Smith) and my hon. Friend the Member for Southampton, Itchen (Mr. Denham), who are on the geographical edge of the south-east region, I am the only Opposition Member in the south-east outside Greater London. That gives me a special responsibility to speak for millions of people who are suffering the full brunt of the Government's policies and feel betrayed.
    More than half a million people are unemployed in the south-east region outside Greater London. The rate of male unemployment is 12 to 13 per cent. and I believe that it is rising. That area can legitimately be described as Thatcher's country, as the people who live in the south-east gave the Conservative party its successive parliamentary majorities and they now feel particularly betrayed by the Budget.
    People in the south-east can remember the 1979 poster, "Britain under Labour isn't working", which showed a queue of allegedly unemployed people. If that poster were replicated today, there is not a billboard in the land that could accommodate the length of the queue—I should love us to try to construct one. In 1979 there were 1·1 million unemployed people. Now it is 4 million. Half a million in

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    the south-east, outside Greater London, are unemployed, and languishing in the dole queue. Many of them have no hope of retrieving their quality and standard of life.
    One year ago, many of those people fell for the lie that the cost of a Labour Government would be £1,250 per annum for each family. They heard the Prime Minister say, "Vote Conservative on Thursday and the recovery continues on Friday." Now these people, many of whom are unemployed, and have lost their businesses during the past year, are wondering which Friday the Prime Minister was referring to. Has it been? Is it yet to come? Is it Good Friday? They have been betrayed and they know that the cost of electing a Conservative Government one year ago has been much more than £1,250. Many of them are on short-time working and many have lost their jobs or their businesses. It is time that the Conservative Government were indicted for cheating at the polls and for betraying the people of the United Kingdom.
    During the debate, Conservative Members have boasted, with a great deal of relief, about the slight drop in unemployment last week; but that is not the pattern in south-east England. Unemployment has increased in the counties of Essex, West and East Sussex and Berkshire and in many constituencies and travel-to-work areas including Crawley, Slough, Brighton and Heathrow. Unemployment is up and people cannot escape the fact that there is no sign that the rate will abate during the coming months.
    Throughout the region there is great anger at the way that the Government are clutching at straws, in this minor decrease in the figures, and at their apparent indifference to the unemployed and to those who are struggling to maintain small businesses in which they have invested their life savings and who are working seven days a week and doing everything that they can to protect and promote the interests of their families. The situation is tragic and Conservative Members are to blame because of their indifference and the policies that they have prosecuted during the past 14 years and not merely the past 12 months.
    In my county and in Kent, Harlow has more than 5,500 unemployed. Dover and Gravesend both have more than 5,000, while more than 6,500 betrayed people of Basildon are unemployed.
    The Financial Secretary to the Treasury (Mr. Stephen Dorrell)rose——
    Mr. Mackinlay: No, I shall not give way because I do not have time and because the President of the Board of Trade discourteously refused to give way when I tried to speak on behalf of the people of south-east England just over a week ago.
    We have been told that the Labour party is talking Britain down—what hypocrisy and humbug. The fact is that we wish to protect and to promote the people of this country and its enterprise and industry.
    The President of the Board of Trade painted a picture of time and space. He did not mention what we expected to hear—what will be done to create employment and maintain enterprise in the United Kingdom and particularly in the south-east, which is my concern. Instead, he took us to every corner of the globe and back in time. He even referred to George Brown, as if he were
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    to blame for the present situation. The Chancellor's Parliamentary Private Secretary was four when George Brown came to office and he was 18 when the Conservatives came to office. It was a long time ago. Only one group of people are to blame for the situation that the country is in—it is Conservative Members who have presided over Britain's decline and let Britain down.
    Great play is made of the fact that the Government have brought down inflation. Certainly it is down substantially but that is no achievement if there are 4 million unemployed and if businesses are going bust. Surely, the art and skill of government should be to temper and to balance those difficult areas, to ensure that one constrains inflation as well as maintaining employment. The Government have singularly failed to do so.
    Conservative Members have said a great deal about patriotism and implied that somehow we are letting Britain down. I and other Opposition Members are proud of our country, of its hills and landscape, of its great history and culture, and, above all, we are proud of its people. What is a nation but its people? Our people are being stabbed in the back by the Government's total indifference to the plight of those languishing in the dole queues, of those whose businesses are going bust and of the retired and poor people of this land, who will have to pick up the tab because of the imposition of value added tax on their essential fuel.
    That is the failure of the Government, and it is only the beginning—a trailer for subsequent Budgets, when the Government will extend the base of VAT, which will hit the poorest hardest. Labour Members are making a stand and the Labour party will resist that all the way. We shall watch tonight as Conservative Members go into the Lobby to support the Chancellor who hit the poorest hardest.
    The Chancellor's reference to the channel tunnel route was another feature of the Budget and it was a smoke screen for his inactivity and not knowing where to go. The Secretary of State for Transport also referred to the route in a statement this afternoon. The route, they argue, is important for the regeneration of south-east England and to create jobs. We must distinguish between enterprise which will create jobs in the south-east and this particular route, which is perverse and is dictated partly by the fact that the Chancellor needed something to divert attention from his inadequacies this week and partly to minimise the political impact on Conservative seats in Kent and south-east London.
    The route has not been tested against any of the normal planning criteria that should be applied in a democratic country. If you wanted to put up a structure in your back garden, Mr. Deputy Speaker, or if you decided to build an airport in Northampton, you would have to go through a rigorous planning application, and no doubt if you were refused you would have access to a planning inquiry. The people of Kent and of south-east England are being denied that opportunity over the channel tunnel route, and that is outrageous. The route has been brought to us as a smoke screen, which shows that we have a bankrupt Government who have repeatedly failed over employment and the environment.
    7.37 pm
    Mr. Iain Mills: I represent a constituency in the heart of England, in the centre of the car and car component manufacturing areas, and I am joint chairman

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    of the all-party motor industry group—[HON MEMBERS: "Hear, hear."] I hank my colleagues for their encouragement.
    I have carefully examined the effect of the Budget on new car sales. The combination of the autumn statement and the removal of special car tax, which seems to have been forgotten, as well as aspects of measures in the Budget, have been helpful. As a result, in December, car sales in the home market were extremely encouraging, especially sales of Rover cars. I welcomed the President of the Board of Trade's mention of Rover, which has its headquarters in my constituency. In addition, in terms of export sales, would my hon. Friend the Minister pass on to his right hon. Friend the Chancellor the fact that the Peugeot 405 model sold in France is made at Ryton in Coventry on the edge of my constituency, which is a marvellous achievement?
    Land Rover has also increased its sales through exports, as has Vauxhall, Ford and the Japanese manufacturers who have moved to Britain. The doom and gloom spread by Opposition Members ignores the fact that we not only managed to attract Nissan, the first Japanese car manufacturing company to come to Britain, which is now exporting cars made in Britain to Japan, but Peugeot, which is making French cars in Coventry and exporting them to France. They are not French cars but British ones. We have also attracted Toyota and Honda. All those companies have encouraged and sustained many component manufacturers. We have created a car manufacturing base that is a vast improvement on that of the past.
    Opposition Members often get confused because our productivity rate is now so competitive that it no longer requires a high level of employment. Our output has improved greatly, but, because of that improved efficiency, there are fewer available jobs.
    How has the Budget helped the car industry? The changes to car tax have produced excellent results, but I am rather suspicious about the changes in fuel duties and the recoupment of £750 million. The figures that have been provided to me by the Society of Motor Manufacturers and Traders, Ford and others suggest that between £1 billion and £1.1 billion has been recouped as a result of the changes in vehicle excise duty and the fuel duties. That is a lot more than £50 million, and I would be grateful if my right hon. Friend the Chancellor could comment on that difference.
    The Budget was a lost opportunity, because if those who use leaded petrol had been penalised heavily, that could have provided a great encouragement to the use of unleaded fuel and diesel. I was disappointed that that was not done, because that change could have offered an environmental improvement. It could also have recouped some of the revenues lost when the Government got rid of the special car tax, which was a welcome move.
    The future establishment of a simple system of company car taxation would be most welcome, because it is important. The Government have gone down the right route by offering a 35 per cent. discount, but I have a number of questions for my right hon. Friend the Chancellor. He said that, overall, the changes would have a neutral effect and that there would be gainers and losers. I believe that the proposals may create losers because some people's companies may have negotiated a low price for a car. In the proposed six or nine-month period, how will my right hon. Friend establish the cost of such a car?
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    If one company gets a better discount than another, will that be reflected in the taxation on an employee? Will the cost of the Austin Montego or the Rover 800 be established as a national figure in terms of the price at which a company could buy such cars, or will certain companies get a better deal?
    Mr. Peter Bottomley: It is calculated on the list price.
    Mr. Mills: The changes relate to the cost price. Those in the industry were aiming for the list price.
    Mr. Dorrell: The answer is that the assessment will be made on the list price.
    Mr. Mills: I am glad to know that, because I was not clear about the actual cost involved. If a company can get a better discount, however, that can create confusion, which is somewhat unfair.
    I do not know whether my hon. Friend the Minister has seen the article in today's edition of The Daily Telegraph, which states that the latest changes may discourage company car use. That is something I fear. A saving of perhaps £510 on a two-litre or 1·8 litre car could result if a person gave up his company car and bought a car or was given money by his company to do that. That would result in a great loss of revenue to the Treasury. It would also lead to lower company car sales. I am keen to encourage such sales, because those cars are normally produced in Britain by manufacturers of all kinds rather than imported.
    Representatives of Rolls-Royce came to talk to the all-party motor industry group and expressed great concern about possible changes in the Budget. I have spoken to Mr. Peter Ward, the chairman of Rolls-Royce, in the Select Committee on Employment, and I have corresponded with him in detail about the Budget changes. I have also written to my right hon. Friend the Chancellor about them, because I am concerned about how they will affect that company, which is facing great difficulties. The President of the Board of Trade referred to that company's success, but largely in terms of the aerospace industry.
    There may not be too much sympathy from Opposition Members for Rolls-Royce owners, but under the changes proposed in the Budget, as the result of the new formula, some of those owners will be paying more than £7,000 in terms of their personal obligations to the Inland Revenue through taxation. That may seem a tiny sum in view of the cost of those cars, but given today's depressed market, there is every likelihod that the sale of Rolls-Royce cars will be seriously affected at a time when that company is close to its margins on performance.
    It is desperately important to consider that issue, because the new arrangement imposes a burden of taxation on Rolls-Royce cars that is totally disproportionate to that imposed on other manufacturers. I shall be glad to correspond with the Financial Secretary on this, but I should appreciate his initial thoughts. The Chancellor should impose a cap on the new price structure at no more than £60,000 to avoid such unfair discrimination and distortion.
    The effect of the Budget changes on home market car sales will be neutral, provided that those changes do not lead to a change from company car ownership. I am slightly disappointed about formula one motor racing cars. I know that the Financial Secretary is aware that

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    their manufacture represents a major, high-technology industry in the south-east. Our industry dominates motor racing throughout the world. Despite the sad loss of our hero, Nigel Mansell, those companies will still produce the cars and the technology. I congratulate Nigel on his win in Australia on Sunday, and I wish that he would come back and join us.
    Capital allowances would have helped motor racing as well as many other industries. I know the complex arguments about the advantages and disadvantages of such allowances, but it is important to encourage high-technology industries such as the manufacture of formula one motor racing cars. I am aware, however, that the extension of such allowances would provide widespread and unspecific help to industries, but I should appreciate my hon. Friend's comments on that.
    As a member of the Select Committee on Employment, and as an hon. Member, I welcome the change in VAT regulations on horses. I congratulate the Paymaster General on his excellent ability to listen with sympathy and to make the right judgment on this matter. I am speaking on behalf not of the owners, but of the many thousands of people who are employed as grooms and stable lads, and in other occupations in the horseracing industry. I know that those Opposition Members who are punters will agree that the change is a good move.
    I must end on a slightly negative note, however. When I met members of my association and others at the weekend, the concern about VAT on heating fuels was marked. The imposition of VAT will take place in two stages, but it is causing great concern to pensioners who are above the income support level.
    Many such pensioners live in the older parts of my constituency, such as Castle Bromwich, and they feel that their savings have been eroded, particularly those who are dependent on the return on savings. The low levels of interest rates may be excellent for industry, but they offer a poor rate of return for those who have savings and who depend on interest payments. I ask the Financial Secretary to consider the effects of the VAT imposition on those pensioners who are not on income support.
    7.47 pm
    Mr. Alex Salmond: The speeches by Conservative Back Benchers could be described as downbeat, pessimistic and almost fatalistic. I hope that they have considered the economic aggregates that lie behind the Budget, because they would certainly then know that economics could be considered the dismal science.
    In the past week, I have been greatly impressed by the writings of Anatole Kaletsky in The Times. On 17 March, he wrote:
    "Mr. Lamont is assuming that the economy will never grow by more than 2·75 per cent. a year in the foreseeable future. Last year, even when the economy was still in the depth of recession, the medium-term assumptions always contained several years of 3·5 per cent. growth."
    That raises an important and serious point, particularly for an economy that faces a £50,000 million deficit in its public sector borrowing requirement.
    A 2·5 per cent. average growth rate will not be enough to close that deficit in the economy. That inevitably means
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    that extremely painful choices will have to be made about tax increases. It also shows the mirage of the so-called economic miracle of the 1980s.
    One might expect that any restructuring of the United Kingdom economy after the longest and most prolonged recession in living memory would bounce the economy dramatically into recovery. In fact, the Chancellor's figures do not forecast a bounce back in the economy, but a stagger back into some form of positive growth. It will be extremely difficult to square the circle of the £50 billion deficit in the public sector borrowing requirement and the disappointing growth rates predicted in the Chancellor's figures.
    In terms of the economic aggregates, the underlying reality of the balance of payments shows a £12 billion deficit at the pits of the recession. That deficit is forecast to rise to £17 billion over the coming year. Although there will be some quantity effect after the depreciation of sterling, it is arguable that there is no equilibrium in the United Kingdom's balance of payments, and successive devaluations of sterling will chase down an economy that is fundamentally out of balance and out of equilibrium. It may be that the destruction of vast parts of the manufacturing sector over the 1980s has been so great that there are now black holes in the economy that will keep it in a permanent state of disequilibrium.
    The dismal truth of those two underlying statistics is that there will be a strong emphasis on chasing the tail of recession, with constant tax increases, in a vain attempt to close a PSBR deficit which, because of the underlying poor performance of the economy, cannot be closed. That process would occur whatever Government were in charge of the United Kingdom, as the underlying message of the Budget is that Britain is bankrupt.
    It is true that other Governments elsewhere have faced tough choices on tax increases. However, the difference between our Chancellor and President Clinton is that, when the President faced a tough choice over tax increases, he tried to ensure that the taxes fell on those who were able to pay them, whereas every choice taken by the Chancellor has aimed taxation at those least able to pay. Every decision has been aggressive, which means that the losers of the boom of the 1980s will turn into the double losers of the recession through the 1990s.
    I shall mention three aspects of the Budget that are not just anti-poor—as the whole Budget is—but produce anti-Scottish effects. The first of those aspects involves the constant year-by-year increases in petrol taxation.
    Rural regions will suffer greatly, and transport costs in the Scottish economy will increase substantially. Those of us who are active in Scottish politics remember only too well the Kincardine and Deeside by-election, when the Liberal Democrats were slated by the Secretary of State for Scotland for proposing, not a constant annual increase, but a one-off increase, in petrol duty. The Secretary of State for Scotland waxed eloquent about the impact of that surcharge—as it was called—on the rural areas and the economy of Scotland, but now the Chancellor's Budget predicts a substantial year-by-year impost on petrol duty.
    The petrol increase might have been defended in environmental terms if some consequent attempt had been made to reinforce the transport infrastructure north of the border to sustain and develop the public transportation system. However, all the investments in public transport in the Budget are made in the south-east of England, where

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    billions more pounds are being poured into the transport infrastructure. The Budget contains nothing for anywhere north of Potters Bar.
    The second aspect involves oil taxation. The Chancellor announced with a flourish that he was abolishing some aspects of petroleum revenue taxation. Some commentators were even gullible enough to describe that measure as a boost for the oil industry. The consequence of the taxation will be perhaps as much as £600 million accrued by the Exchequer from the oil industry over the next year or so.
    There is a case for increasing oil taxation at a boom time, because oil is a cyclical industry, and a taxation increase can be defended as a means of lowering the pressure of demand in the sector. But what possible case can there be for increasing taxation when the sector is already depressed? The immediate impact of the Chancellor's Budget measures announced last Tuesday has been the cancellation of drilling contracts in the North sea over the weekend, and hundreds of job losses in a sector that was already moving into a downturn.
    The third aspect was the taxation on heating—by far the most controversial measure in the Budget. For many years, the Scottish National party has argued for a cold climate allowance to take account of the fact that, in some areas of Scotland, it costs 30 per cent. more to heat a home than in the south-east of England. We did not expect to achieve that allowance from the Government, but even we did not expect a cold climate surcharge, with the Budget measures increasing that disadvantage.
    A number of statistics lie behind my concern. The report "Warm Homes in Cold Weather", released in October 1991, showed that, while deaths in January between 1976 and 1984 were 4 per cent. above the monthly average in west Germany, and 7 per cent. above the average in Sweden and Norway, deaths in Scotland in January were 16 per cent. higher than the average. Many Chancellors have been slated for not acting on the cost of living, but the present Chancellor deals in statistics that involve the cost of dying—the most severe aspect of the Budget.
    Scotland is the most energy-rich country in Europe, and one of the most environmentally sensitive in terms of energy production. The Scottish electricity industry is either low-carbon or no-carbon in its production. It is ironic that poor people in Scotland—pensioners and those on low incomes—will suffer poverty amid plenty. Those are the serious effects of the Chancellor's Budget, which will not save the world through green taxation. The Budget sacrifices the poor and those most vulnerable in Scottish society and society elsewhere.
    The House should vote against the first Budget resolution, on amendment of the law. If we passed that resolution, it would gag and bind the Bill in Committee. The first resolution does not allow subsequent discussion of the Bill to include any amendment proposing zero rating or reduced rates of value added tax. If the first Budget resolution is passed this evening, it will mean that, in Committee, hon. Members will have no chance to move zero rating on fuel for specific categories or even to lower the rate for some categories. No Minister has specified the amounts and funds available to help those most vulnerable in society as a result of the Budget impost. It would be incredible if, in Committee, hon. Members could not substantially amend the measure.
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    I have heard concern expressed on the issue, both over the weekend and by Conservative Members tonight. Even if they are not prepared to vote directly against the Budget measure, they should at least vote against the first resolution. Unless we vote against it this evening, it will be impossible later to ensure justice for the pensioners and those most vulnerable in society.
    7.57 pm
    Mr. Nicholas Winterton: We are having a most interesting debate and I have much sympathy with a number of the contributions that have been made—not least that of my hon. Friend the Member for Meriden (Mr. Mills) and my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). I particularly agree with what my hon. Friend the Member for Meriden said about Rolls-Royce motors. The Budget will greatly penalise one of the great motor companies of this country. It produces expensive cars, but I do not believe that its production should be penalised, as the Budget has done.
    I am deeply concerned about the impact of placing value added tax on heating and light, and the effect that it will have on those on low income, the unemployed and the elderly. I refer particularly to those on low incomes who fall just outside eligibility for assistance available under state income-related benefits.
    Unless we get categorical assurances from the Government that the position of these groups will be fully taken into account in respect of this large additional impost, I shall not be able to support the Government's measure.
    I come from an area where we have a good balance of industry and an excellent range of manufacturing industries, modern and traditional—Zeneca plc, the pharmaceutical division of ICI, Ciba plc, and a number of video technology, information technology and computer companies. We also have many companies in the traditional industries of textiles and clothing, such as Rieter Scragg, Mowbrays, Cressys and Adamley Textiles. These are traditional but still substantial employers, I am glad to say. We also have paper and board companies, and engineering firms, so we have a fine balance. I always seek to participate in these debates from a position of knowledge of manufacturing industry.
    When I spoke in the debate nearly a fortnight ago I made six suggestions for consideration by the Government: the introduction of 100 per cent. capital allowances; a commitment to a further reduction in interest rates; the abolition of stamp duty; the creation of a new task force to identify import substitution; a more favourable tax regime for fees for part-time study; and an explicit political commitment to promote British exports. I also called for a review of our laws on liquidation anti bankruptcy.
    For the very first time, the Chancellor has shown a receptiveness to the vital role that our manufacturing and construction industries play in providing employment and generating wealth. I am aware of the difficult balancing act that the Chancellor had to perform between the need to deal in the medium term with the threat of a spiralling PSBR and the need to ensure that the first weak breaths of economic recovery were not stifled by the dead hand of swingeing tax increases.
    I make these comments to show that I fully appreciate the problems faced by the Government and that I welcome

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    the greater attention that is being paid to our manufacturing and construction industries. The Manufacturing and Construction Industries Alliance, launched in this House about three weeks ago, together with the new all-party manufacturing group launched by my hon. Friend the Member for Coventry, South-West (Mr. Butcher) and the hon. Member for Huddersfield (Mr. Sheerman), and the initiatives in which the CBI and the Engineering Employers Federation are involved, have, I hope, had something of a catalytic, if not a causal, effect in concentrating the attention of the House and of Ministers on these important sectors.
    It is also clear that the Chancellor sought to deal with a number of the principles that I highlighted by giving greater and welcome assistance to our exporters through a boost in the export credit guarantee schemes, by reviewing the stamp duty on the sale of houses in the lower price bands, and by renewing his commitment to greater public spending, in partnership with the private sector, on infrastructure development projects. I also warmly welcome the change to the loan guarantee scheme, which will cut the cost and improve the availability of bank finance for smaller businesses. We want more long-term, fixed-interest loan schemes. We want more equity taken by the clearing banks, and fewer businesses financed by overdrafts.
    There is also much-needed help for small businesses in the form of a review of VAT procedures and an extension of the freezing of the business rate. Many thousands of small and not so small businesses will greatly benefit.
    If the Chancellor, however, is being asked by the House to walk a tightrope between curbing the PSBR and encouraging economic growth, we should not overlook the fact that he is being required also to juggle. If, as the Prime Minister and the Chancellor have both said, the conditions for economic growth—low inflation and low interest rates—are in place, then, in the absence of growth, we must look around for the missing factor in the equation. It is, of course, consumer confidence. In the months ahead, the success or otherwise of last week's Budget will be assessed against its impact on consumer spending intentions.
    That view, expressed by the alliance last week in a press release, is echoed by Mr. Howard Davies of the CBI, who, writing in the current edition of "The House Magazine", comments on the possible impact of the tax increases that have been announced by rightly saying:
    "There is a risk that they will affect spending decisions this year"—
    not in the years thereafter. If the fears of the alliance and the CBI prove to be justified, the Chancellor's Budget will have failed to give consumer confidence the boost that is so desperately required, and the overall impact of his proposals will not be, as he has said, neutral: they will be negative.
    When I spoke two weeks ago in a debate about manufacturing and construction, I called on all political parties to lay the foundations for a new cultural and political consensus that places the needs, problems and potential of these industries firmly on the parliamentary agenda. The intentions behind the Budget show that the Chancellor's mind is receptive to the proposals that I espouse, but, unfortunately, its practical proposals clearly show that he is not with us yet.
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    I ask the Paymaster General to assure me that any responsible proposals for greater help for manufacturers and exporters that are suggested in subsequent debates on the Finance Bill will be given careful and sympathetic consideration; and that if we make a convincing case for the introduction of 100 per cent. capital allowances, for example, it will be accepted and policies will be changed as a result.
    We have heard some first-class contributions to this debate. I am delighted to see the right hon. Member for Ashton-under Lyne (Mr. Sheldon) in his place. I agreed with much of what he said; it is only a pity that so few hon. Members are present to be influenced by these considered speeches. When we come to vote, we will be voting not on the merit of the debate but in accordance with party lines. That is tragic, because there is great ability in all parts of the House.
    Hon. Members on both sides have taken up the cudgels on behalf of manufacturing and construction. Let that expertise, experience and knowledge be put to good effect, so that we can once again regenerate the only source of non-inflationary economic growth: our manufacturing base. If we do, we will pass on a legacy to future generations of which the House and this Government can be proud.
    8.7 pm
    Mr. Gordon Prentice: I am pleased to follow the hon. Member for Macclesfield (Mr. Winterton). I represent the manufacturing capital of Britain. A higher percentage of people in Pendle than in any other constituency in the land work in manufacturing industry. My hon. Friend the Member for Livingston (Mr. Cook) opened the debate by referring to the fact—it is a fact—that the Government cheated their way back to power last 9 April. I want to pick up that theme, and to return to the Tory manifesto, "The Best Future for Britain".
    Manifestos are important, and this one is no exception. It represents a contract entered into between the Government and the people, so the Conservative manifesto cannot be lightly cast aside after 11 short months. In that time a great many things have been cast aside, most notably honesty. The whole political process in Britain has been corrupted by this Government, who told the British people that the Conservatives are
    "the only party that understands the need for low taxation."
    That rings hollow now.
    In the foreword to that manifesto the Prime Minister told the British people that he believed in low taxes—no doubt in the same way that he believed that the Government's duty should be
    "to protect the value of the currency without which all spending pledges are worthless."
    That was the man who devalued our currency. I doubt now whether he could talk about pledges, manifesto or otherwise, without being blown away in a gale of laughter. His pledges are totally devalued.
    The right hon. Gentleman used to believe in manifesto pledges and the mandates that they conferred. On 29 October, The Times informed us that he told a packed meeting of the 1992 Committee—in the context of the internal debate within the Tory party on Maastricht, which rages now as it did then:
    "The Conservative manifesto was not an a la carte menu from which they"
    that is, Conservative Members—
    "could merely pick the juicy items."

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    The fact is that the manifesto was not a menu at all; it was a work of fiction.
    At the CBI conference on 9 October last year, Mr. Philip Goldenberg of S. J. Berwin told the delegates, if that is what they were:
    "If the Government's election manifesto had been a company prospectus it would have had the entire Cabinet in jail."
    Quite so, but it is not just fabrication and invention that characterise the Government's record—it is also incompetence. The chairman of GKN, Sir David Lees, told the same conference:
    "A new economic theorem is developing known as Lamont's Law. It states that any economic indicator will invariably turn down once the Chancellor identifies it as a portent of economic recovery."
    He was telling us something that we already knew about—the green shoots syndrome.
    People have woken up to the difference between what the Chancellor has been telling them and what has actually been happening. The scale of duplicity and mendacity perpetrated on the people of Britain is truly spectacular. The Sunday Times, in an excellent editorial yesterday, said that the Budget was not
    "a budget for growth, or for jobs, or for business though it should have been for all three…It was a budget to pay for the past mistakes of John Major and Norman Lamont."
    There have been many mistakes.
    The Prime Minister of manufacturing presides over the relentless deindustrialisation of Britain. In my constituency a fortnight ago, Progress Engineering went down the tube, taking 40 jobs with it. Last week Wadkin Colne of Trawden folded, with a loss of 65 jobs. Those come on top of the cascade of job losses in my constituency month on month and year on year.
    The Prime Minister believes in protecting the value of the currency, but devalues in a move costing the country £5 billion. The Prime Minister pulled out of the exchange rate mechanism, although he had said that staying in the ERM was absolutely central to the Government's policy. The Prime Minister won the election on the basis of slogans such as "A double whammy" and "Labour's tax bombshell", but went on to hike taxes massively. I do not know what is worse—what was perpetrated on the British people 11 months ago, or what happened in 1979 when Saatchi and Saatchi said, "Labour isn't working'' and employment stood at 1·1 million: there are now 3 million unemployed.
    The £17·5 billion tax rise announced in the Budget is the biggest in British history. Allowances have been frozen, mortgage tax relief has been cut and value added tax has been loaded on to domestic fuel. Yet at the end of our debates on the Budget there are still no cast-iron guarantees that the poorest in society will be fully compensated. As the hon. Member for Macclesfield said, it is people just above the income support level who lose, and who will always lose unless there are such guarantees.
    What does it all mean for people in my region? In the north-west, 1,130,000 households will lose because MIRAS is to be restricted to the 20 per cent. rate and some 2,734,000 people will pay higher tax bills because allowances and thresholds have been frozen. Despite everything that the Government said at the time of the election about national insurance contributions—they lambasted Labour for its plan to remove the ceiling—there is to be a 1 per cent. rise which will affect 18 million employees generally, and 2,405,000 in the north-west.
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    Raising national insurance contributions is more regressive than a 1p rise in income tax because of the lower levels at which people start paying contributions.
    As my hon. Friend the Member for Livingston (Mr. Cook) said, about 500,000 people on wages so low that they do not pay income tax will be caught by the increases in national insurance contributions. What a state of affairs. The Sunday Times yesterday said that income tax was effectively being increased in the Budget through the sleight of hand of an extra 1 per cent. on national insurance contributions. Sleight of hand comes easily to a Chancellor who is also a conjuror and a member of the Magic Circle. However, it is not how everyone sees the Budget.
    I was speaking at a lunch meeting of the Pendle business club last Friday, which was presided over by Mr. Philip McIvor, the chairman of Farmhouse Biscuits. He told the meeting that the Budget was a Budget for jobs. That was pure fantasy, especially in Pendle where unemployment has risen by 85 per cent. since the Prime Minister entered No. 10. In the constituency in 1991—almost predating the current deep recession—269 companies registered for VAT, but 285 deregistered. It is not a Budget for jobs. In so far as Britain is pulling out of the recession, it is because there is a more competitive exchange rate which is likely to encourage export-led growth. That is purely fortuitous, because of what happened on 16 September when the Prime Minister and the Chancellor pulled Britain out of the ERM.
    The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) said that he feared for the future of Britain because of the destruction of so much of our industrial base. Lord Prior, a former Conservative Cabinet Minister, said that it would take 20 years to repair the damage that has been done—
    Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The hon. Gentleman's time is up.
    8.17 pm
    Mr. Peter Bottomley: Before discussing taxation and spending, I want to refer to what happened in Warrington on the weekend.
    We have our debates and our arguments; other people use bombs and bleeding, bullets and maiming as a substitute for political argument. I believe that the House would want the message to go out that we prefer debate and rational argument.
    If people want to put a point of view on Irish nationalism, they should get elected and come here, or get more than 2 per cent. of the votes for the Dail and speak in the Irish Parliament. They should not destroy children and crucify three-year-olds in pursuit of political argument.
    The Government should be praised for giving so much information to the House and to the country. In the autumn statement, they provided "Public Expenditure Analyses"—Cm. 2219—and gave most of the hints and clues on tax expenditure in appendix D, pages 135 to 138. In effect, they stated the options that they would be considering for reducing some of the gap between spending and taxation.
    In terms of extra duty on motor fuels, the Government were right. There are also strong arguments for their proposal to impose value added tax on domestic fuel. I criticise those hon. Members and commentators who take

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    it for granted that some of the factors that increase fuel costs cannot easily be changed. Sixty per cent. of pensioners live in homes that have inadequate heating systems. That should be tackled under a five-year programme that would create worthwhile work for those who need it most—in the same way that we tackled roofing problems some time ago during an earlier period of high unemployment.
    This coming week, we shall see the end of the coal obligation on generating companies—the requirement for them to pay an extra £1,000 million for the higher price of coal. The cost of burning coal to generate electricity and the extra profit margin involved probably have the same effect as VAT on domestic fuel. That obligation was accepted because it was felt that keeping more people under ground was a good thing, even though the cost must be met by electricity consumers. We have already heard that a higher proportion of that cost will be paid by those on low incomes, or the cost will account for a higher proportion of the incomes of those who are not earning. We should be realistic about both.
    In the same way, I suspect that some hon. Members and people outside the House would have regarded it as better if the cost of domestic gas had remained as high as in 1986, when British Gas was privatised, to avoid the 17·5 per cent. VAT imposition over the next two years, even if that made people worse off. After privatisation and competition, the real price of gas has become 20 per cent. lower than it has been, so even a 17·5 per cent. increase on that reduced index would have left users better off. We must be rational.
    As to reducing unemployment levels, I have a horror of not just the way that the coal communities appeared to have been disregarded but of the way that the debate has developed. If last autumn's argument was for an extra £100 million of spending a month to maintain an extra 25,000 jobs in mining communities, that represents £4,000 per miner job per month, or £48,000 a year.
    On the fringes of my constituency in south-east London, seven miles from this place, is the Woolwich Arsenal site. Over the past 70 years, it has lost 73,000 jobs—the equivalent of a colliery closing every single year for 70 years. The last 1,000 jobs go this year. Unemployment is running at 60 per cent. in the Arsenal ward of the hon. Member for Woolwich (Mr. Austin-Walker). That affects many of my constituents as well.
    A city challenge application asked for £12 million a year over five years—a total of £60 million—to generate between 2,000 and 4,000 jobs, with much private sector money coming in as well. It would have involved a development on derelict land seven miles from Westminster.
    We should ask whether the Government can rationally decide expenditure over and above the level of their taxation revenue, and whether the subsidy provided by the consumer or taxpayer to help transition in the mining industry could not be partly diverted to meet some of the city challenge applications that could not be approved by the Department of Environment. Both the economic and employment effects would be substantially better—in the same way that an extra £500 million of capital investment
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    in British Rail and London Underground would have a better economic and employment effect than transition being delayed too long for too many pits.
    Getting the framework of taxation right does not get proper attention. If I had longer to speak, I might question whether there should not be the same VAT arrangements in respect of greyhounds as those made for horses. Why should not the sport of kings' arrangement work for those of us who are going to the dogs?
    I praise the Government for acknowledging that they have lost £500 million a year in revenue on whisky—with or without an "e". We find that, because of fashion, recession and strangling the golden goose, whisky sales have been declining. In leaving whisky out of the count, and reducing the duty on that and other spirits, there may be a rebalance and people will be able to make a choice—especially when they are not driving.
    We should also examine the properness of tax expenditure. I have argued for most of my 17 years in the House that mortgage interest relief is counter-productive. I repeat also my comments on previous occasions about personal allowances. It is back to the Grey Book, which details the large sums of tax forgone by permitting personal allowances—and I refer not just to the married man's personal allowance. I welcome its reduction to 20 per cent. I would reduce the personal allowance to 20 per cent. and do the same in many other areas, so that help is concentrated where people need it.
    I remind of the House for the reason for the child benefit scheme, which was not mentioned in the Budget because it is dealt with relatively automatically. Child benefit is not a form of income support. I suspect that the Treasury would do better to wrap up the Department of Social Security and make its functions an adjunct to the Treasury, in the same way that the Inland Revenue and Customs and Excise are.
    There are further important measures to be taken in respect of income support. Child benefit should not be part of that. What is the justification for a cash child allowance? Looking at the family life cycle in social and economic policies, when people have children their taxable capacity is reduced and their needs increase. That is the justification for the allowance. It should not be a tax allowance that gives most help to people in the 40 per cent. tax hand, about the same help to those in the 20 per cent. or 25 per cent. band, and no help to those below the tax threshold. Would it be better to have a flat cash allowance? The answer is yes.
    My right hon. and noble Friend Lady Thatcher understood that, which is why in 1983 and after what I call the Lawson fallacy on child benefit, she made sure that the Chief Secretary to the Treasury and the Secretary of State for Social Security increased it. She understood, but we often forget. Every three or four years, it is worth making the argument again out in the open.
    If I had time to make a longer speech, I would talk about the effects of the Budget on trade. It is right, too, to encourage small business.
    We should ask when we will be willing to give up tax benefits at some stage or in some circumstances so that others—or people like ourselves in different circumstances—can gain more benefit either from tax expenditure, real benefits, or the chance of employment.

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    It is not a question of from whom we will take and to whom we will give. It is in each person's life cycle. When will they be willing to give up what they have, so that they and others can gain it when they need it?
    Matching needs and resources better requires a debate that goes beyond the scope of a Budget debate. I hope that is something that Labour's social justice commission will examine and that the Tory party will find a way of making that match. I hope that some of those issues will be considered across the Floor of the House, so that the Budget deficit will be reduced, people's well-being will be increased, and avoidable disadvantage, stress and handicap are minimised.
    8.27 pm
    Mr. Clive Betts: The Budget stands condemned on four grounds. It contains broken promises, offers no hope to the unemployed, is based on a Government act of faith that recovery will somehow occur, and provides no means of dealing with the British economy's long-term structural problems.
    We are told that, at the time of the 1992 general election, the Government had no plans to increase the scope of value added tax. Those are weasel words. The majority of people who voted for a Conservative Government did so in the firm belief that VAT would not be levied on goods or services such as domestic fuel during the lifetime of this Parliament. For the Government to claim now that they had no such plans in 1992 but that they might at some time during the next five years is dishonest.
    The Government claim that their promises were made sincerely in 1992. What of current Government commitments not to extend VAT to children's clothes, food or books? Are those commitments just as sincere as those made in 1992?
    The impact of the Budget measures was mentioned by several of my hon. Friends. We have not yet been given a figure by the Government, but they could still cushion the impact of their actions on people receiving income support and pensions. They cannot, however, protect the low-paid who are just above income support levels and for whom fuel expenditure represents pay a higher than average percentage of their income. Those same people must, on average, pay out a higher percentage of their incomes because of the national insurance increases. They, not the higher-paid, will suffer. The Government have offered those in low-paid employment a real double whammy.
    I personally welcome the changes in mortgage tax relief. I do not consider the mortgage tax relief scheme defensible; I have held that view for many years. But why did not the Government use the money to introduce a benefit scheme for low-income earners with mortgages—people who are not only struggling to make their mortgage payments now, but, in many thousands of cases, facing the prospect of repossession? The Government could have used the savings resulting from the change in the mortgage tax relief system to introduce benefits to assist those whose earnings place them just above income support level.
    What have the unemployed been offered? They have been offered no help and no hope. No help or hope has been offered to the 100-plus who are to lose their jobs at Whitbread in Sheffield, the 100-plus who will lose their
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    jobs at Trebor Bassett and the 100-plus who will lose their jobs at Avesta Sheffield. All those job losses have been announced in the last few weeks.
    What do we offer a 50-year-old ex-steel worker, made redundant up to 10 years ago, or a 25-year-old who has never had a job? Do we offer the possibility of one of 100,000 training places, when those people know, and we know, that there is no possibility of their getting a job at the end? That is not merely dishonest; it is immoral.
    The Government could have done so much. They could have released the capital receipts that are still locked up in local authority coffers; they could have presented sensible proposals for the development of a proper transport infrastructure, rather than the shambles and the constant delays of the channel tunnel link and the fiasco of the Jubilee line extension.
    When will the Government recognise that public investment must be in place before we can create a climate in which private investment can follow, instead of trying to cobble together deals that simply result in years of delay and no action on the ground? All that the Government appear to offer the unemployed is protection from the Labour party and the social chapter. That is a real bargain basement offer: "no pay or low pay" seems to be their policy.
    The whole Budget seems to have been motivated by faith—the belief that the recession will end, some time, somehow. In imposing VAT on fuel, the Government have admitted that they got it wrong: they thought that recovery was coming 12 months ago, but it did not materialise; hence the increase in the public sector borrowing requirement. Their economic approach is almost equivalent to the national health service abandoning medical science in favour of faith healing. Behind the facade of the "seven wise men" arguing away, we can almost see Treasury Ministers and their civil servants in a room in No. 11 Downing street—on their knees, eyes closed, holding their hands in front of them, willing the green shoots to appear. There seems to be no more substance than that to Government medium-term strategy.
    Every so often, a cry of joy will be heard as unemployment falls for a month—although every serious commentator recognises that that is merely a blip. Cries of delight will be heard when industrial production goes up in one month, but the fact that the far more important three-month average has not shifted will not be recognised. Retail sales have risen since Christmas, but, year on year, they are still down in real terms. Housing activity is increasing slightly, but the scale of the depression has been so great that that increase will not feed into the construction industry for a long time, and the Government are offering the industry no real assistance.
    The Government are willing recovery to occur, but what will happen if it does not? What will happen if it is delayed for another year—delayed until the tax increases begin to bite? Where in the Budget is the recognition that recovery is not certain, and that the timing is problematic? Where do we read of the consequences of the Government's getting it wrong, and—as they did 12 months ago—predicting a recovery that does not happen?
    Let us turn to the long-term problems. Where is Government policy in that regard? Since 1979, unemployment, manufacturing investment and the balance of payments have worsened. The Government's problem with the economy is not cyclical; it is a fundamental,

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    structural problem. The 1980s were a decade of private consumption and borrowing, which created personal debt. The Government should be turning the 1990s into a decade of investment in manufacturing and infrastructure, but there are no signs that they are doing so.
    The Government's dilemma—the PSBR is rising to record levels, while unemployment is doing the same—is a product of the real weakness of the British economy: the inherent failure of our manufacturing industry, its collapse in the 1980s, the loss of a third of manufacturing jobs and the dereliction and destruction of areas such as the lower Don valley in Sheffield, where 50,000 jobs were lost during that decade. The same fundamental problems have brought about our balance of payments crisis at the depth of the longest recession that the country has experienced since the war.
    The one thing for which the Government can claim some credit, in their terms, is getting inflation down; but we must ask whether they have solved even that problem. They have brought inflation down to below 4 per cent., but that was at the depth of a recession; they have never managed to achieve the same result at any of the peaks of economic activity since 1979, although each of those peaks has coincided with a higher level of unemployment than the previous one. That is the scale of the problem that the Government not only face—as we do—but have created, and for which they will not accept responsibility.
    The Budget does not recognise the existence of such problems. It does not attempt to solve the long-term difficulties of financing British industry, and the relationship between banks and manufacturing industry, which clearly is not working; it makes no attempt to deal with the long-term problems of financing and offering equity capital to small firms, and the skills gap that affects the whole of industry; and it does not try to stimulate research and development to secure long-term recovery. None of those issues is mentioned.
    On all counts, the Budget has failed. It has failed the whole nation with its broken promises. It has failed the unemployed by offering them nothing; it has failed to give a clear direction on medium-term strategy, offering faith and hope as a substitute; and it has failed to recognise the inherent structural failings of the economy, or to provide any policies to deal with those failings. It is a failed Budget from a failed Government.
    8.36 pm
    Mr. Anthony Steen: That was a merry speech.
    I do not know whether the 10-minute rule will apply to me, as I am the last Conservative Back Bencher who will speak this evening; hon. Members on both sides of the House may wish to hear a little more from the Conservative party, and I am happy to speak for a little longer. The 10-minute rule means that hon. Members cannot mention all the speeches that they have heard, although I know that they will be mentioned in the winding-up speeches. Some interesting speeches have been made—for instance, the speech of my hon. Friend the Member for Eltham (Mr. Bottomley), who always speaks so brilliantly that his tour de force must be read very carefully if the reader is to understand all the finer points. I am sure that the House will wish to return to that subject.
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    In the nine minutes available to me, I want to speak about the Budget's interesting proposals for small businesses. Unlike its predecessors, which have tended to introduce fiscal measures of one kind or another, this Budget recognises that the administrative arrangements for small businesses are often equally important. It is no good giving companies tax breaks if there are so many rules and regulations that they are prevented from being profitable. I welcome the introduction of self-assessment for income tax purposes, the fact that self-employed people will pay tax based on current and not preceding year' estimates, and the fact that companies that are not incorporated will not be required to have a statutory audit.
    The Budget, however, must be seen in the context of other initiatives to help small firms. The Government have abolished 5,000 business forms and 10,000 others. What did those forms do? How can the Government simply get rid of 5,000 forms? What were they all produced for, and what is the result of losing them? Why were they put there in the first place? What have we lost by taking them away? Will the number of civil servants and bureaucrats be reduced?
    Does bureacracy in this country increase in direct proportion to the number of rules and regulations that are abolished? Is there a new Parkinson's law whereby the more things we get rid of, the more staff employed increase? The Palace of Westminster is a good example. I have my office in one of the outbuildings, where a very expensive security system has been installed. The door opens only after a card has been inserted. Before this high security system was installed, there were no security guards. Now, with the system, there are two full-time security officers as well as a very expensive security system. There seem to be more and more opportunities to duplicate our staff as well as our technology.
    Mr. Patrick Cormack: And the doors often do not work.
    Mr. Steen: That is perfectly true, but that is another matter.
    Since 1957, the rate of introduction of Government rules and regulations has increased steadily. The trend has accelerated during the past six years. This most recent trend has been caused by the Government's practice of introducing new rules and regulations—statutory instruments—under ministerial powers, following primary enabling legislation. In 1992, the Government introduced 2,439 statutory instruments. It is not surprising that, in the same year, 24,424 companies became insolvent. It was not just the recession; it was the impact of the plethora of rules and regulations on enterprise. Many of the rules and regulations emanate from this place, as well as Europe.
    Each set of regulations develops a life force of its own. As it spins into orbit, it attracts lots of people around it. It is self-generating; it attracts more and more officials as it spins off into space. Officials will fight to the death to keep each regulation in place. Every time we introduce a regulation, either in this House or in Europe, we also introduce a new bureaucracy to service that regulation. Far too much stick and not enough carrot is given to companies to implement the rules and regulations.
    The Prime Minister has already said that he intends to do something about reversing that trend, but the buck starts and stops in Westminster. Just as central Government are trying to make local government more

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    cost effective, so we need to apply the same rules to ourselves. I wonder whether machinery exists in the House to deal with central Government Departments that are churning out rules and regulations. Some hon. Members may say that the advantage of the Mastricht debate is that it is preventing the Government from introducing more and more rules and regulations.
    I welcome both the Prime Minister's and the Government's intention, but we have to translate their belief into freeing up enterprise and reducing the amount of bureaucracy and the number of rules and regulations imposed on small businesses.
    What is the problem? By privatising companies, we have produced two organisations: first, the provider of the service; secondly, the regulator. That has led to a new scenario. Water authorities used to provide both water and water services. They also used to be the gamekeeper. Today, the job of water authorities is to provide clean water and to free the sea from pollution. The job of the National Rivers Authority—the gamekeeper—is to scrutinise the work of the water authorities and to prosecute them if they do not comply. It is rather like a man with the stick chasing a dog.
    The reason for the introduction of more and more rules and regulations and for their application with such ferocity and enthusiasm is because those two functions have been separated. We have not dealt with the effect of the introduction of the regulator.
    The Audit Commission is breathing down the necks of local authorities. It spends most of its time pressing local authorities to increase their standards of performance. Some standards incur the more rigorous application of statutory duties and regulatory enforcement. Consequently, enforcement officers are more zealous when faced with target enforcement standards. It is the classic mistake of using input rather than output measurement—an increase in efficiency but not effectiveness. In general, the Audit Commission adopts a regulatory approach. That is a fundamental error, as there are other ways of encouraging British management and industry to comply.
    The problem with negative enforcement is that it has resulted in a new approach that accepts accountability for compliance, with health, hygiene and safety standards, but oblivious to the current economic position. Rules and regulations shall be brought into force only when the nation can afford to do so.
    How are we now to proceed? First, there are 70,000 rules and regulations on the books. We cannot repeal many of them. Furthermore, all these officials are implementing the rules and regulations. They would not give up their jobs lightly.
    Secondly, we could starve the enforcement agencies, such as the National Rivers Authority or the local authorities so that they no longer had the money or the bureaucracy to enforce the regulations. The Chancellor of the Exchequer might find that approach attractive. He could save a lot of money by not providing resources to the enforcement agencies.
    Thirdly, we could slow down the enforcement of the rules and regulations. We ought not to be the first of all the European Community countries to enforce the regulations. We should not necessarily be among the slowest, such as Greece and Portugal, but we should slow down the pace of enforcement. That would be extremely helpful.
    Lastly, a new civil service culture is needed. That may be the result of the scrutiny team's recommendations. An
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    announcement was made earlier this month that a team would be set up, and 500 small firms would be asked to tell the Government what should be done about the regulations from which they suffer.
    Last year, red tape killed nearly 25,000 companies. Although I welcome the Prime Minister's initiative, I am concerned about how it will be translated into action. We shall be unable to compete with the rest of Europe so long as we smother business with rules and regulations which——
    Mr. Deputy Speaker: Order. The hon. Gentleman's time is up.
    8.46 pm
    Mr. Bill Etherington: I appreciate being called to speak in the debate, Mr. Deputy Speaker, having been absent for so much of it. However, I heard the President of the Board of Trade's speech this afternoon, and it was like a trip down memory lane. He referred to the dissatisfaction of the Conservatives with what they inherited when they took office in 1979. I am surprised that he did not go back to 1924 and castigate Ramsay Macdonald, or to 1945 and castigate Clement Attlee. What has to be realised, above all, is that the Government have been in power for so long that they cannot castigate anybody else for what has happened. They have been in power for over half a generation.
    My constituency is very depressed. The Budget has given no encouragement to many of my constituents. Nevertheless, I welcome three things. I welcome the fact that mortgage interest relief is to be reduced. I have long believed that property prices have been kept artificially high for many years because of mortgage interest relief. It would be a good thing if it were abolished altogether, although I realise that that will take time. I am also very pleased about the abolition of stamp duty on premises that are sold for less than £60,000. That will be very good for first-time buyers who are short of money.
    Most important of all, I am pleased not so much by what is in the Budget as by what was left out of it, although the Chancellor of the Exchequer made a playful reference to it. He told us that there is to be no imposition of VAT at this time on reading material. I very much welcome that announcement.
    We must view the Budget in the context of what has been happening in the past 14 years. It is an ironic coincidence that the Library issued a very good publication earlier this month. It could not have come at a better time. Research paper 92/93, entitled "The Burden of Taxation", points out that, since 1979, those who have been on above-average earnings have gained at the expense of those on below-average earnings. I recommend that Conservative Members read the document instead of trying to mislead the public by telling them otherwise. It is now possible for a person earning 150 per cent. of average earnings to pay a smaller proportion of his earnings in direct taxation than a person on average earnings.
    Every hon. Member is well aware that indirect taxation, such as VAT, bears more heavily on the poor. I wish to comment especially on the proposed imposition of VAT on domestic fuel at 8 per cent. next year and at 17·5 per cent. in 1995. Hon. Members, and especially Ministers, probably will not notice the increase in their fuel bills. It is fine for them to say that it is a good system, but they have clearly not considered the low-paid. I am not talking only

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    about poor pensioners. Many pensioners have small pensions in addition to their state pensions, which takes them above the income support level. They will be hit especially hard, but 12 million people live below the European decency threshold, and they will be hit even harder.
    It does not take much understanding to realise that many people whose incomes are not very high—perhaps both partners are having to work to give their children a reasonable standard of living—often live in premises that are not very well insulated. They do not always have a choice of fuel, and matters have not been helped by the fact that many councils have not been able to bring properties up to the required standard, because of a lack of cash. It is an indictment of the Government that they should consider a fuel tax when there is already so much fuel poverty. It is no exaggeration to say that, every year, people perish from hypothermia, largely because of the cost of fuel but also because many premises are not up to standard.
    I always remember a good comrade of mine saying many years ago that one can always judge a society by the way it treats its very old and very young. Just as many pensioners will suffer from this pernicious taxation, so many young people will also suffer. It does not bear thinking about.
    One of the most annoying aspects about the proposal is that, during the so-called boom years, many of those on above-average incomes did very well, and it seems only right and proper that, when the country runs into more stormy times, they should be expected to pay a little more, not less. Once again, the Government have shown just what sort of Government they are, how unfair and unjust, and how little respect they have for those who create the wealth, who are not necessarily those on high pay—indeed, I suggest, just the opposite.
    It must also be said that the fuel tax will affect charities. It is worth bearing in mind that, because of the failure of so many of the Government's social policies, more pressure is being put on charities. Charities will not be able to claim back the extra VAT that they will have to pay on fuel, and they will also suffer a loss of income tax relief on their investments.
    I may not know as much about finances as most Conservative Members, but I have been involved with charities. I know how they work, and I know that there often is a very thin line between them continuing to exist and having to wind up. I am very much afraid that the imposition of VAT will cause charities to suffer badly, especially those charities looking after old people, which will have to bear a disproportionate burden because of heating costs.
    There has been a tremendous amount of hypocrisy about the green effect of the proposal, and about our having to meet emission standards. If this country were sincere about meeting those standards, we would be spending money to ensure that all properties were properly insulated; we would be doing something about transferring freight and passengers from road to rail; and we would be investing in tram systems to take buses off the road. We would also be interested in combined heat and power schemes as an alternative to the seedy system of so-called competition in the electricity generation and
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    distribution industries, which, in addition to being monopolistic, have a vested interest against the efficient use of energy. Only when such measures are contemplated will I begin to believe that the Government are sincere in trying to meet their obligation to do something about emissions.
    8.55 pm
    Mr. Patrick Cormack: I did not expect to have the pleasure of participating in this debate, but I am glad to do so, if only briefly.
    I congratulate my right hon. Friend the Chancellor on an extremely innovative and thoughtful Budget. I am especially glad to be able to do that, as he is a very old friend of mine, and it is good to see him produce a Budget which will be something of a landmark Budget. He has been especially helpful to small businesses and, in spite of what the hon. Member for Sunderland, North (Mr. Etherington) said, he has done a great deal for charities, not only in this Budget but in a series of Budgets.
    I am delighted that my right hon. Friend has come into the Chamber. I wish to appeal to him on the subject that has occupied many of the headlines in the past few days—his understandable but controversial decision to impose value added tax on domestic fuel. I understand what prompted him to do it, and I appreciate that there must have been a great deal of mental wrestling in deciding where revenue was to be raised. Of course, many of us would have been up in arms had he put VAT on books and newspapers. Whatever he had decided to do, he would undoubtedly have been the target for some criticism.
    However, I ask my right hon. Friend to think very carefully in the year ahead. We have a year before any VAT is imposed on domestic fuel. It will first be imposed at 8 per cent., and will not reach its 17·5 per cent. level for two years. My right hon. Friend is well aware, as we all are, of the particular plight of the elderly. I worry very much about how many of them will be able to cope with a rate of 17·5 per cent. We have had assurances from the Prime Minister and others, for which we are grateful, that something will be done to compensate, but it has not been spelt out carefully or clearly enough. We want to know the full details as soon as possible.
    I am confident that something will be done adequately to compensate those who are on benefit, but I point out that many elderly people do not qualify for benefit—through their thrift and frugality they have been able to look after themselves, and they take great pride in that. It is on them that the burden will fall with especial and peculiar severity.
    I suggest to my right hon. Friend that there is a good solution. I have felt for a long time that there is a case for two-tier VAT. If my right hon. Friend puts 8 per cent. on domestic fuel next year, he should leave it at that. He should not raise the figure to 17·5 per cent. in the subsequent year. If the rate remains at 8 per cent., it will be far easier to cope with in terms of the increase in benefits. It will also be easier for those who do not have recourse to benefits to budget for the increase.
    My right hon. Friend could also set a useful precedent. I fully agree with him that it is a fundamental belief of our party that we should increase indirect rather than direct taxation. However, many people feel that 17·5 per cent., on whatever it is levied, is a high level of VAT. It is certainly a high level on fuel, one of the basic necessities of

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    life. I completely comprehend the green argument, and I was interested to receive from Friends of the Earth a paean of praise for the courage of my right hon. Friend——
    Mr. Patrick Nicholls: Surely not.
    Mr. Cormack: One can echo that to a degreee. Friends of the Earth are not always right.
    In congratulating my right hon. Friend on what: he has done and in thanking him for producing a far-reaching and innovative Budget, I say to him as a very old friend, "Please think again about VAT at 17·5 per cent. on domestic fuel, especially as it affects our elderly citizens."
    9 pm
    Ms Harriet Harman: I welcome the comments of the hon. Member for Staffordshire, South (Mr. Cormack). The way in which he, on behalf of his constituents, can get the Chancellor to think again about imposing VAT at 17·5 per cent. on gas and on electricity is to join us in the Lobby tonight and to vote against that proposal.
    This is a Budget of betrayal and of failure. It betrays the hope of the unemployed and it fails to set the economy on course for growth and investment. It puts up everyone's taxes to pay for the Tories' economic mistakes and it is unfair. Those who will pay most are those who can least afford it.
    The Tories' election promises on public services are now also threatened by spending cuts. The Tory manifesto promised that health spending would be increased year on year, that there would be more police on the beat, that there would be more nurseries and more help for students, and that pensions and child benefit levels would be protected. Yet it is to consider precisely those areas that the Chief Secretary is now to preside over a review of the Department of Health, of the Department for Education, of the Department of Social Security and of the Home Office. If the Tories can break their promises on taxation, how much easier they will find it to break their promises to defend a welfare state which few of their families use and which many of them despise.
    The Budget not only threatens vital services and fails to set the economy on course for jobs, for investment and for growth—it breaks the Tories' central election pledge to reduce taxes. The economy needed a Budget for jobs and for economic recovery. We should have had a Budget to break out of the vicious circle of unemployment, of waste and of decline. We should have had a Budget which forged a new cycle of skills, of productivity and of growth.
    In the past 14 years, manufacturing has grown by 50 per cent. in Japan and by 25 per cent. in America, but in Britain it has barely grown at all. We are falling behind on investment. The German industrial worker is backed by an average of £4,000 capital investment. The Japanese worker is backed by an average of £6,000. The British worker has only £2,500 capital investment behind him.
    We are also behind on skills. West Germany, Japan, Hong Kong, Singapore, Taiwan and South Korea have more of their young people at college and in further education than is the case in Britain. The competitive edge of an economy will be the skills of its people, so falling behind on skills and leaving people unemployed is not only a waste of people's individual talent and potential—it means that we shall fall further behind as economies compete in future.
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    We are also behind on research and development. Japan sees eight times as much of its profits ploughed back into research and development as we do. The fragile state of our manufacturing industry was revealed in the Sunday Times leak of the Department of Trade and Industry report, which the Government still refuse to publish—indeed, they still deny the facts that were clearly set out in it.
    Mr. Geoffrey Hoon: Does my hon. Friend agree that we get a lot of lectures from Conservative Members about the success of Japanese companies investing in the United Kingdom but that they rarely mention the fact that, threatened by recession, the Japanese Government have invested £40 billion to try to ensure that Japan remains competitive? Why are the British Government not trying to do the same?
    Ms Harman: I agree with my hon. Friend. Japan and the United States are investing and the EC wants to invest; the British Government alone, it seems, are blind to the lack of investment in our economy and try to tell us that everything is perfectly fine.
    Mr. Nicholls: As the hon. Lady applauds a Government investment of £40 billion, will she now tell us what she thinks the public sector borrowing requirement should be?
    Ms Harman: The high level of the PSBR is the result of high unemployment and a failure in our economy. What we would do is to bring down unemployment, introduce a proper strategy for industry and growth and bring down the PSBR. The PSBR is too high as a result of the failure of this Government's economic policy and particularly as a result of their allowing unemployment simply to grow.
    Mr. Peter Thurnham: The hon. Lady blames the Government for unemployment. Is it not a fact that every Labour Government who have ever been in power have left unemployment higher than when they came to power?
    Ms Harman: Unemployment has more than doubled since 1979. It increased by 61 per cent. between December 1990 and December 1992. We have the highest rate of increase in unemployment in the European Community.
    The Tories' economic judgment has been wrong throughout. They have been wrong about the fact of the economy going into recession. They have been wrong about the impact of the recession—particularly on our beleaguered manufacturing industry. They have been wrong about the length of the recession and they have been wrong about the depth of the recession. In 1989, the Prime Minister—then the Chancellor—said:
    "I do not believe that a recession is likely".
    In September 1990, in true King Canute style, he said:
    "We are not in recession".
    As soon as the Tories acknowledged that Britain was in recession, they began predicting the end of the recession. In December 1990, the Chancellor told the Select Committee on the Treasury and Civil Service that the recession would be
    "relatively short-lived and relatively shallow."
    Now, as unemployment remains at more than 3 million, with predictions in the Budget statement that 200,000 more people will lose their jobs by the end of this year, and when the prospect ahead is a yawning trade gap, we are told that we have had a five-star week for the economy.

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    The Government have repeatedly had to revise their figures on the economy as, time and again, predictions of growth have been too high and predictions of national debt too low. While the Chancellor has become famous as the star of the movie, "Honey, I Shrunk the Economy", the Chief Secretary to the Treasury is now breaking box office records with the sequel, "Honey, I Blew Up the PSBR".
    The human cost of unemployment is painfully high, with families and communities around the country blighted, but unemployment is also taking its toll on the public purse. It costs the taxpayer £9,000 per unemployed person per year in benefits paid out and lost tax revenue. The annual bill for keeping 3 million people who want to work unemployed is £270 billion a year. No wonder public finances are in a mess.
    While unemployment has risen, training programmes have been cut and the Budget offers extra help to only half the people who are expected to lose their jobs by the end of this year. The net new money that the Government have agreed for schemes to help the unemployed—schemes which were trumpeted before the Budget—simply has not materialised. The figure is only £125 million. Since 1987, the Government have cut £1·5 billion in real terms from spending on training and help for the unemployed. As unemployment has increased, the Government are hardly creeping back to the situation which existed before the cuts.
    Businesses have gone to the wall. There were 63,000 insolvencies this year, an increase of 31 per cent. since 1991. Against that background, the Department of Trade and Industry has suffered cuts. As my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) explained, the Budget does nothing for business. In fact, it anticipates a fall in business investment this year. It anticipates that there will be £400 million less invested in business this year than was invested last year.
    The President of the Board of Trade referred to a survey by the Institute of Directors as optimistic; yet that survey shows that half its members plan no investment this year. We would not be in this situation if the Government had taken the action that Labour has urged. Unless there is increased investment in capacity, skills and technology, British industry simply cannot recapture the markets that have been lost at home and abroad.
    Mr. Nicholls: The hon. Lady talks about our losing markets at home. Will she bear in mind the fact that, as a result of the social chapter, we are actually gaining markets from overseas countries?
    Ms Harman: Countries in the rest of the European Community which believe that it is important to have high-skill, high-wage, high-tech economies are going ahead of us. There is no future for our economy if it is a low-wage, low-skill economy competing with under-developed countries.
    Unless British industry is competitive, the trade deficit will grow and there will be no hope of a sustainable reduction in the PSBR. Raising taxes without tackling
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    unemployment and industrial decline merely deals with the consequences of the economic problems we face. It does not deal with the causes.
    The Government have not suffered from a shortage of public money. They received £115 billion in revenue from North sea oil and £62 billion in privatisation receipts, but that has all been frittered away. If the Government are hemmed in now—as they are—it is not as a result of lack of public money in the past. Rather, it is the result of a complete absence of ideas for the future. While our competitors invested, the Tories gave tax handouts to the rich. They were also content to see more and more millions paid out in benefits for the growing dole queue which they believed was a price worth paying. They have broken their promises, increased taxes and failed on the economy.
    In this Budget, the Government have sought to remedy the soaring public debt by raising taxes. Public debt is soaring as a result of the Government's mismanagement of the economy. The high level of public borrowing is a consequence of their economic failure, not a cause of it. This is a Budget in which everyone else has to pay for the Tories' mistakes. However, they still have not learnt from those mistakes.
    As my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) said, this is a Budget of yet more broken promises. Before the election, the Chancellor said:
    "We will not have to increase taxes."
    He went further and said:
    "I cannot see any circumstances in which that will be necessary."
    Before the election, the Prime Minister said:
    "We have no plans to increase value added tax."
    Indeed, he went further than that and said:
    "There will be no VAT increase."—[Official Report, 28 January 1992; Vol. 202, c. 808.]
    and he repeated:
    "We have no need and no plans to extend the scope of VAT."
    Dr. Liam Fox: As the hon. Lady finds it so unpleasant to raise taxes, will Labour now give a definite pledge to revoke the VAT—[Interruption.]
    Ms Harman: Could the hon. Gentleman repeat his question? His hon. Friends were shouting and I could not hear him.
    Dr. Fox: I am glad to give the hon. Lady more time to think about my question. We have had a lot of confusion from Labour Members in the past week about whether a Labour Government would revoke the VAT on fuels. Can the hon. Lady clear up the confusion and give the House and the country a clear answer—would a Labour Government revoke the imposition of VAT on fuels?
    Ms Harman: The question before the House tonight is whether those Conservative Members who promised their constituents that they would not increase VAT and extend its scope will vote against the VAT increase. During the election campaign the Prime Minister said:
    "We have no plans and no need to extend the scope of VAT."
    Labour Members will vote against the measure tonight to make the Government keep their election promises.
    The Prime Minister also said:
    "I have no plans to raise the top rate of tax or the level of national insurance contributions."

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    In the first Budget after the election, the Government have increased taxes and national insurance contributions and put VAT on gas and electricity. It is hard to overstate the cynicism and betrayal that that represents.
    The pledges on VAT and national insurance were not side issues: they were the centrepiece of the Conservative election campaign to cut taxes. It was put precisely by the President of the Board of Trade in a Conservative election release of 21 March 1992:
    "This election in the first week is about tax, in the second week is about tax and in the third week is about tax."
    Following the re-election of the Conservatives, we know that the first year is about tax, the second year is about tax and the third year is about tax.
    Mr. John Bowis: The hon. Lady and her party will vote against taxes, especially the tax on domestic fuels. Can she now tell us whether a Labour Government would repeal it?
    Ms Harman: I have made it absolutely clear that we shall be voting against the imposition of VAT on gas and domestic fuel. We shall not support the Government in breaking their promise—and if the hon. Gentleman had any conscience and sense of accountability to his constituents, neither would he. [Interruption.]
    Mr. Nicholls: On a point of order, Mr. Deputy Speaker. I cannot hear whether a Labour Government would repeal the imposition of VAT or not.
    Mr. Deputy Speaker: Order. The noise seems to be coming from both sides of the House.
    Ms Harman: If 11 Conservative Members voted against the measure, it would be defeated. I hope that that will happen tonight.
    The pledges were echoed in speeches and Tory political broadcasts nightly: "You can trust the Tories—they won't put up your taxes." No one can be in any doubt now—the Government have put up taxes and they can never be trusted again.
    Last week the hon. Member for Brigg and Cleethorpes (Mr. Brown) boasted that the Chancellor had sought his views. If ever we were in any doubt about the Chancellor's judgment, there is the evidence. The hon. Gentleman told us:
    "The only thing I asked my right hon. Friend"—
    the Chancellor—
    "to do was tax, tax hard, tax heavily and tax as soon as possible."—[Official Report, 17 March 1993; Vol. 221, c. 317.]
    That is not what he told his constituents when he asked for their votes less than a year ago. I shall give him the opportunity to remind the House what he told his constituents before I quote from the election special in the Evening Telegraph.
    Mr. Michael Brown: The hon. Lady should be aware that, since 1979, I have always told my constituents that, when it comes to a public sector borrowing requirement, we will have none of it.
    Ms Harman: Curiously enough, I find it difficult to reconcile that with what the hon. Gentleman said in the Grimsby Evening Telegraph in the election special headed "The Last Words". The hon. Member for Brigg and Cleethorpes, seeking election, said:
    "Only a Conservative Government can continue the process of empowering the people with lower taxation."
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    Not only have the Government broken their election promises, but they are hitting the poor hardest. When money is to be given away, the Tories give it to the richest. When money is to be taken, they take it back from the poorest. Chancellor Lawson gave £6 billion to the richest in 1988, and £6 billion is to be taken back in 1993 by the present Chancellor from everyone. The department of applied economics at Cambridge has calculated that all households will eventually be hit, but the full implementation of the measures over the next three years will cost the poorest tenth twice as much as the wealthiest tenth.
    Mr. Ian Bruce: When Labour presented its Budget for jobs—eight pages of A3—why were the only proposals for taxation a tax on water, a tax on gas, a tax on electricity and a tax on telephones? Why is Labour's so-called windfall tax, which would have hit both industry and the poor, good for Labour while the tax which has been introduced by the Conservatives, which will protect the poor, is somehow flawed?
    Ms Harman: That neatly illustrates the difference between Labour and the Government. We suggested using the accumulated profits. That would have had no impact on the ordinary consumer whereas the Government tax ordinary people, including pensioners and the low-paid, in order to protect the vested interests of their friends whom they put on the boards of the privatised utilities.
    Taken together, the Budget's proposals for 1p on national insurance contributions, 17·5 per cent. VAT on fuel, a real cut of 2·6 per cent. in tax-free allowances, the limiting of the married couple's allowance to relief at 20 per cent. and the reduction of mortgage tax relief to 20 per cent., impose a tax increase on all households. Most will lose about 2 per cent. of their income in extra tax under the measures in the Budget, but on average the 10 per cent. of households with the highest incomes will lose less than 1·5 per cent. of their income while those with the lowest 10 per cent. of income will lose twice that and 3 per cent. extra of their income will go in tax.
    The increase in tax will begin in April this year when 200,000 people who currently do not earn enough to pay tax start to pay it for the first time. Not only has the Chancellor increased taxes, but those least able to pay will pay most and those most able to pay will pay least. As my hon. Friend the Member for Pendle (Mr. Prentice) said, the 1p increase on national insurance will mean that half a million people who do not earn enough to pay income tax will have to pay an extra 1p in the pound.
    The Financial Secretary owned up on the ITN "Talking Points" programme on Wednesday when he explained to us why the richest must pay least. He said:
    "We mustn't kill the goose that lays the golden egg."
    That is the discredited trickle-down theory of economics. But while trying to protect the geese which at some future date may lay some golden eggs, the Chancellor has refused to answer the concern that the poorest will be hit by the increase in their fuel bills.
    Let us examine what Ministers have said about compensation for pensioners and people on low incomes. There has been Government confusion before breakfast, before lunch and before dinner. The next day we get up and the Government are in confusion again. On Tuesday the Chancellor said that he would take the VAT rise into account. On Wednesday the Chief Secretary said that it was all a matter of swings and roundabouts. On Thursday the junior Social Security Minister said that the rise was

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    nothing special and not out of the ordinary. By lunch on Thursday, the Social Security Minister said that extra help would be provided. On Sunday, the Chancellor ruled out full compensation as too expensive and too complicated.
    So what is the Government's position? We know that that they have to compensate people for the rise in retail prices. They must give us a commitment tonight that they will compensate pensioners and people on low incomes in full for the rise in value added tax. Pensioners and families on low incomes spend £1 in every £7 on fuel. The average bill is £12 per week, so for many people VAT will mean up to £2 more per week on their fuel bill. Will the Chancellor compensate them in full? Will he not just say that there are swings and roundabouts, but compensate in full? Will he not just dismiss it as nothing special, but compensate in full? Will he not just give extra help, but compensate in full?
    The Government went to the electorate with a commitment. They did not say that they had no plans to raise VAT; they said that they would not raise it. When they went to the electorate, they did not say that they might not raise VAT; they said that there were no circumstances in which they would raise it.
    Mr. Forman: Will the hon. Lady give way?
    Ms Harman: No, I have given way at least eight times and I shall not do so again.
    If Conservative Members vote with the Government this evening they, too, will be guilty of breaking their election promises and no one will trust them again. Having said that they would not put VAT on fuel, they did so. Having said that there will be compensation, they are refusing to say how much. How can people trust them? The Government expect the House to vote for tax measures that we know will hit the poorest, but they have given no details of the compensation scheme. I suppose that we are expected simply to take them on trust.
    Mr. Forman rose——
    Ms Harman: I shall not give way.
    Mr. Forman rose——
    Mr. Deputy Speaker: Order. The hon. Lady has made it clear that she is not giving way.
    Ms Harman: Last Wednesday, the Chief Secretary to the Treasury explained to the House how those promises came to be broken. He said that the Government had not intended to put up VAT, or to increase national insurance contributions. After the election, no one was more surprised than the Government to discover that the recession went from bad to worse—for reasons which were quite out of their control, of course. So the Government put VAT on gas and electricity and increased national insurance contributions, and the Chancellor told us that that was the plain truth. What are we to make of that?
    The Chancellor also blamed circumstances beyond his control for the state of the economy in an interview with The Independent on Sunday on 14 March, when he said:
    "what I think happened last year was that the situation deteriorated very much internationally".
    But the Treasury forecast for the economy cannot have been blown off course because in the 1992 Budget forecast just about the only prediction that the Government got
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    right-was about the world economy. Either their judgment about the economy was disastrously wrong, or they were practising the politics of deception, or they made those promises without bothering much whether they would be in a position to honour them.
    They used to say that George Washington could not tell a lie and that Richard Nixon could not tell the truth. Our Prime Minister cannot tell the difference. Under this Government, it is not merely the pound that has been devalued, but democracy itself.
    If the Government's economic judgment was so disastrously wrong, why should the British people ever trust them again? They stand condemned not only for an unforgivable lack of foresight, but because they did not have the wit to listen to people who were warning them about the true state of the economy. Did they engage in deception, or did they fail to understand what was happening in the economy? The answer probably lies somewhere in between the two. The Government have such contempt for the electorate that they did not care whether they would be in a position to stand by their promises, just so long as they got in again.
    There does not appear to be any sign of anguish on the Government Bench—no sign of regret for breaking their promises. The brows of the Chancellor and of the Chief Secretary remain unfurrowed. In fact, they have both been smirking their way through these debates and through radio and television studios. They think that they have pulled a fast one on the electorate and that they will be able to get away with it. It is the true sign of a party that has been in government too long when it sees the democratic process as nothing more than something to be manipulated to secure one more term of office. The British people will not be treated with such arrogance and contempt, and the party that did it will never stop paying the price.
    I suggest to Tory Members, particularly those on the Back Benches, that if they have a conscience, now is the time that they should examine it. Tory Members have a choice tonight: what we have before us is an election fraud, and they can either go along with it or reject it. They can either follow discredited Ministers through the Lobby, or they can keep the promises that they made to their constituents and vote with us against the Budget.
    9.30 pm
    The Chancellor of the Exchequer (Mr. Norman Lamont): This is the fourth day of the Budget debate. Inevitably, I have been unable to listen to all the speeches, but I have read the Hansard reports of all the speeches that have been made hitherto.
    Almost everyone has acknowledged that the Budget was framed against exceptionally difficult circumstances. That was the theme of the speeches made by my hon. Friends the Members for Aylesbury (Mr. Lidington) and for Staffordshire, Moorlands (Mr. Knox). I have had to make some very difficult decisions and face up to some very unpalatable choices. We know that the Labour party can never face up to difficult decisions.
    Above all, in framing my Budget, I believe that I had to do two things. First, I had to ensure that nothing should damage recovery this year. Secondly, I had to address the problem of mounting Government debt to ensure that the nation's finances are put on a sound footing for the future.

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    I have no doubt that, unless Government borrowing is kept under firm control, it will be the biggest threat to sustained recovery in the 1990s. That was the theme of the speeches of my hon. Friends the Members for Rutland and Melton (Mr. Duncan), for Brigg and Cleethorpes (Mr. Brown), and for Cirencester and Tewkesbury (Mr. Clifton-Brown), who made a powerful speech—one which his predecessor, Lord Ridley, whom we remember with affection, would have agreed strongly with and commended.
    Beyond those two specific objectives, I also wanted to show the country that the Government have a clear strategy for getting Britain back on the road to sound finance. As I said, that is the way in which to sustain recovery. That is the lead for which I believe the country was looking, and it was given in the Budget.
    I have spelt out the tax and revenue plans not just for one year, but for three. With public spending ceilings now firmly established for the years ahead, I have laid down a medium-term fiscal strategy to match our medium-term financial strategy. I have made it clear that the strategy should be legislated for as far as possible in this year's Finance Bill so that it should carry credibility with the markets.
    The result of my measures will be to reduce borrowing over the years by up to 1·5 per cent. of GDP and to cut the deficit by more than half in the next five years. Difficult decisions are involved, but those reductions represent a considerable step towards addressing the problem that must be addressed today.
    In the year ahead, I have been able to give extra help to industry, so strengthening the recovery in its early stages. The Budget contained a huge variety of measures to help business in the short-term. First, there are measures to help the self-employed and small businesses, which have played such a crucial role in the past in the British economy and which can, again, lead us out of recession in the 1990s.
    I doubt whether there has even been a Budget that has contained such a wide range of deregulatory measures that will sweep away so much of bureaucracy and red tape, which are extremely aggravating to, and time-consuming for, so many small businesses. I know from the speech of my hon. Friend the Member for South Hams (Mr. Steen) that that is of particular interest to him.
    There are proposals to lessen the burden of the statutory audit. I am also making far-reaching changes to the VAT penalty regime—moving from a regime of automatic penalties to one that is more discretionary. I know that those changes will relieve much of the burden and many of the anxieties felt by many small business men. The changes have been widely welcomed by the organisations for small businesses.
    I have proposed to introduce self-assessment for up to one third of all taxpayers. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) was worried that some people might find that difficult, but there is a choice. There is no compulsion over the matter. However, I believe that many people will find it an attractive option. It goes together with the drastic simplification of the taxation of the self-employed that I announced at the same time. Taken together, those proposals represent the most fundamental reform to the administration of tax since the pay-as-you-earn system was introduced in 1944.
    I announced proposals for extending and improving the loan guarantee system in a way to give an added incentive
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    to fixed-rate borrowing, of which there is too little in this country. Over future years, it could give stability and security for small businesses.
    Those measures add up to formidable package of help for small businesses. It was welcomed by my hon. Friends the Members for Cambridgeshire, South-West (Sir A. Grant), for Ribble Valley (Mr. Evans) and for Surrey, North-West (Sir M. Grylls), who rightly called it a five-star Budget for small business. One might have thought that the Opposition would welcome at least one of the measures, but they did not welcome any of them.
    I have introduced a range of measures to help larger British businesses. The first of those is a massive increase in the Export Credits Guarantee Department facilities for companies operating in the most important and fastest-growing markets around the world. As a result of what I announced on Budget day, British firms will be able to go out and compete knowing that they do so on equal terms with their competitors.
    Secondly, I introduced measures to deal with the admittedly highly technical problem of advance corporation tax. My hon. Friend the Member for Surrey, East (Mr. Ainsworth) said that he thought that he noticed some fluttering of the eyelids among hon. Members during that part of the Budget speech. That may be so, but, nevertheless, the proposals responded to great concern and were of great interest to some of the international businesses that operate in this country. The proposals will help to make Britain an even more attractive location for inward investment than it already is. I also took action over the uniform business rate to ensure that no business will face a real increase in rates this year. That will help 800,000 premises, many of them in the south, whose owners have given the move a warm welcome.
    Finally, I made announcements about some private infrastructure projects, including the channel tunnel rail link. Those announcements have been widely welcomed; they followed on from the policy changes that I announced in the autumn statement. As my right hon. Friend the Member for Guildford (Mr. Howell) said, they will enable this country to do what many other countries do: tap private savings in order to finance large infrastructure projects in cities and elsewhere.
    Those are substantial measures. Therefore, it is little surprise that, contrary to what the hon. Member for Peckham (Ms Harman) said, the Budget was warmly welcomed by organisations representing British industry and commerce. We heard a few quotations from Opposition Members who have tried to find the odd organisation here and there with critical views of the Budget. In a Budget that raised revenues by £6·5 billion and £10 billion, it would be surprising if somebody did not have something critical to say.
    The list of organisations that have given a warm welcome to the Budget include the Confederation of British Industry, the Association of British Chambers of Commerce, the Institute of Directors, the Society of Motor Manufacturers and Traders, the Council of Mortgage Lenders, the Forum of Private Business and the Federation of Small Businesses. The chairmen and chief executives of many individual companies went on record as welcoming the Budget. They included GKN, GEC, Coats Viyella, Abbey National and BP. They are some of the most successful companies in the country, and they know that this Budget is good for them and good for business.
    Mr. Stuart Bell: Will the right hon. Gentleman deal with a significant point that I have not heard mentioned so far? Value added tax is a tax on value added, obviously, for those who wish to buy goods. Why, then, did he use VAT on heating and fuel bills to hit poor people who need to use electricity anyway?
    Mr. Lamont: Much of this debate has centred on that very point—my decision to extend VAT to domestic fuel and power. I fully recognise the concern felt about the effect that these proposals will have on poorer households, particularly those of poorer pensioners. That is why I clearly stated in my Budget speech that we fully intend to give extra help to those on income-related benefits, over and above the automatic impact on pensions and other benefits through the higher retail prices index. I wholly understand the anxiety of some households, but we have clearly said that we will bring forward the uprating of income-related benefits so that the extra help that we provide will be available at the time that it is needed—before the increased fuel bills arrive next spring.
    Mr. Gordon Brown rose——
    Mr. Lamont: This party has an excellent record of helping the worst-off, not by keeping expensive, across-the-board subsidies, benefiting both rich and poor, but by doing what should be done in any modern welfare state: targeting the resources on the most needy and the worst off. That has been our priority. No Government have done more for poorer pensioners and families with children——
    Mr. Brown: Will the Chancellor accept that he said during the election campaign that there would be no circumstances in which a VAT increase would be imposed? Will he give us a straightforward answer to a simple question? Will he compensate pensioners and others on low income in full—yes or no?
    Mr. Lamont: I have explained exactly what we are doing, and I assure the House that it will be our intention to protect the poorest people in the country. [Interruption.] The hon. Gentleman can shout all he likes. We do not want to put poorer people in a position in which they cannot pay their fuel bills because of the changes. We have made it clear that we will adjust the income-related benefits. We have an excellent record on that, and since 1988 we have provided additional help for less well off pensioners and disabled people—help that will be worth about £700 million in real terms next year. We have continued to increase the income-related benefits even while average fuel charges have been falling, by more than 8 per cent. in real terms since 1986. There is still downward pressure on domestic electricity and gas bills.
    Because of these reductions, my proposal to put VAT on fuel will not necessarily mean that prices rise by anything like 17·5 per cent. over the next three years. Those on income support will also be able to keep the additions made to their benefits to reflect their liability to pay 20 per cent. of the community charge, even though they will not be required to make any contribution to the council tax. That alone is worth £2·80 to a married couple and £1·60 to a single person from next month. That shows our commitment to looking after those who are worst off.
    Mr. Gordon Brown: Why cannot the Chancellor give a straightforward answer to a simple question? Does he not
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    understand that it is because he fails to do so that no one in the country trusts him? Will he compensate pensioners and others on low incomes in full—yes or no?
    Mr. Lamont: I have answered the question. I will take no lectures from a party which, when in government, put up electricity bills by 30 per cent. in real terms. We know who the Minister at the Department of Energy was at the time. It was the Leader of the Opposition. That was what he did for poorer people then; what price his rhetoric now?
    Mr. John Smith: The Chancellor has been asked a very simple and clear question—will he compensate pensioners in full? Why cannot he say yes or no?
    Mr. Lamont: The right hon. and learned Gentleman, as always, cannot face up to the facts of his own record. I note that when he put forward his manifesto for the leadership of the Labour party, he even told us in his election address:
    "We should…consider the increased use of the fiscal system to promote environmental protection and conservation."
    According to the Opposition, the idea of VAT on fuel and power never crossed their minds; they never considered it. How strange it is then that, in their policy document "Looking to the Future", under the heading "Value Added Taxation", they say:
    "Zero rating on items such as food, fares, books and children's clothing should remain."
    But where, the country will want to know, was fuel and power—the zero rate that did not bark? I expect that the right hon. and learned Gentleman will tell us that it was a typing error. The trouble is that in the very next sentence the document says:
    "we will look at ways of…increasing taxes on environmentally damaging products."
    This Government went to the environmental conference in Rio, fought for a reasonable and achievable deal, and have taken steps to reach it. The Opposition have wrapped themselves in greenery and chanted incantations about global warming, yet they now oppose the very steps that we are taking to deal with that. They are the people whose word means absolutely nothing.
    Mr. Morgan: The Chancellor cannot have it both ways. At one point he told us that the reason for the imposition of VAT on domestic fuel was the unexpectedly high increase in public sector borrowing subsequent to the election, of which he was wholly unaware at the time of the election. What he has just said directly contradicts that: he now says that the Rio summit is the reason. If my memory serves me right, the Rio summit was held before the election. Which is it?
    Mr. Lamont: The hon. Gentleman is completely wrong; the Rio summit was in June last year.
    As always, the most important question asked in the debate was the one asked not by the Opposition, but by Conservative Members. It was the question posed by my right hon. Friends the Members for Shropshire, North (Mr. Biffen) and for Westmorland and Lonsdale (Mr. Jopling)—whether the action that I propose in the Budget is extensive enough and early enough to meet the objectives that I have set. That is the real question and it is precisely the most difficult and central matter on which I had to make a judgment.
    I very much took the view taken by my right hon. Friend the Member for Worthing (Sir T. Higgins) and my

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    hon. Friend the Member for Woodspring (Dr. Fox), that we had to take account of the fact that confidence had been knocked hard by the length of the recession and that large tax increases too early would undermine recovery. Therefore, in my opinion, it was right not to raise taxes this year, but to go for a neutral Budget which, as my hon. Friend the Member for Woodspring said, would increase taxation as economic growth gets fully under way. I believe that to be a reasonable and appropriate reaction to the position that we face.
    For those of us on the Conservative Benches, raising revenue is never a welcome task; it is something which we consider only when that is vital for the public finances. In this Budget, I had in mind two objectives in deciding how to raise revenue—first, that my particular tax measures should not hit particular sectors that would impede recovery; secondly, that the tax changes that I made should be sensible tax reforms in their own right. For that reason, I concentrated on tax measures that accord with the philosophy of this Government and of this party—that is, rather than increasing marginal tax rates, I concentrated on broadening the base of the tax system and on reducing the value of allowances.
    Above all, I reconfirmed in many of my changes—particularly the reduction to 20 per cent. of certain allowances—our commitment as a Government to getting the basic rate of income tax down to 20p in the pound eventually. That remains our target and our objective.
    As my hon. Friend the Member for Bridlington (Mr. Townend) pointed out, raising revenue is just one side. We must look additionally at public spending, which must also be expected to take part of the strain. We made a start on that process in last year's autumn statement. The settlement that we achieved then shows that the growth of public spending will be under control, because the growth in the new control total is set to be below the trend growth in the economy as a whole. The long-term review of public spending under my right hon. Friend the Chief Secretary is designed to address the problem.
    If we want to control public spending, we must continually re-examine each and every Department and function of government and question whether it is appropriate and necessary to continue with it today.
    This Budget is genuinely addressed to meeting the problems of the country. It is not something which Labour would ever understand because it is a Budget designed to do what is right—not to curry favour or popularity. It is a Budget designed to give the country hope for the future, by giving a clear lead.
    What has been Labour's reaction? In four days of debate, we have heard not one word of policy. The hon. Member for Dunfermline, East (Mr. Brown) seems to have made a conscious decision not to have a policy. He is the first shadow Chancellor to give an hour-long speech about the economy, as he did the other day, without ever mentioning monetary or fiscal policy.
    In all the hon. Gentleman's outpourings, sound bites, new approaches, fresh starts, agendas for the 1990s and new beginnings, he has not told us whether he thinks that Government borrowing is too high, too low or just right. The hon. Gentleman cannot tell us whether taxes are too high or too low. In four days of debate, the hon. Gentleman has not produced one constructive suggestion.
    Since the hon. Gentleman became shadow Chancellor he has, we are told, made two important speeches about the economy. One was about agriculture. It was an
    708
    interesting speech, but the hon. Gentleman is certainly the first would-be finance Minister to talk more about the suckler cow premium than about narrow money.
    What of the hon. Gentleman's right hon. and hon. Friends? The right hon. and learned Member for Monklands, East (Mr. Smith) had just one suggestion. Replying to my Budget statement, he said that I should abolish Budget purdah. That certainly would not affect him very much, because the right hon. and learned Gentleman does not have any policies to hide.
    All we heard from Labour in the debate was endless whining and harking back to the last general election. The right hon. and learned Member for Monklands, East is the last person who should complain about the general election. He did not do badly out of it. First, he lost the election for his party with his own tax proposals—then had himself made party leader as compensation.
    If Labour wants to talk about the last general election, let us talk about it—I am happy to do so. The Labour party, as always, needs to have its myths if it is to exist. We heard in the debate the myth that somehow Labour was cheated at the last general election. In 1992, as in 1979, the Conservative party was elected as the party of sound finance and of low taxation—particularly low direct taxation. In 1979 and in the two years thereafter, the needs of the times dictated a rise in taxes. That happened in 1979 and 1981, but once we had borrowing down, taxes and spending were steadily reduced as a percentage of gross domestic product.
    Mr. John Smith: Does the right hon. Gentleman remember saying, during a Channel 4 news broadcast—[Interruption.] I know that Conservative Members do not want to hear this. He said:
    "We will not have to increase taxes. I cannot see any circumstances in which that will be necessary."
    What meaning did the right hon. Gentleman wish to convey to his listeners then?
    Mr. Lamont: I have explained, and explained fully. I believe that not to have addressed the problem of the budget deficit would have been to run away from the most fundamental promise that we made to the British people.
    There is a real difference and distinction between the two parties, and it is one that cannot be fudged or obfuscated. In 1992—as was shown by the speeches of all Opposition Front Benchers—the Labour party was committed to massive increases in public spending, and high public spending means high taxes: the two go hand in hand. It is impossible to pretend otherwise; to seek to deny the connection is truly to deliberately deceive the British people.
    Opposition Members should listen to the hon. Member for Dagenham (Mr. Gould). He talks a lot more sense, especially after his lunches with my right hon. Friend the Chief Secretary. The other day, he said:
    "I think the Labour party ought to accept that we will always be likely to have a higher tax burden than our opponents".
    We know that, he knows that and so do the British people.
    If the Labour party wants to know why it lost the last general election, let me explain. It was for two reasons. First, there was the disastrous shadow Budget introduced by the Leader of the Opposition. This is the difference between the tax increases that he proposed, and the tax increases in this Budget: he proposed tax increases to expand public spending. He was trying to bribe one part of

    709
    the electorate with the other part's money. Moreover, he could not add up and discover that many people in the south earn more than £20,000 a year.
    Secondly, Labour lost the election because the shadow Budget was not the whole story; it was the beginning of Labour's potential tax hike. Labour's own spending programme amounted to massively more than those on the Opposition Front Bench ever admitted.
    Mr. Brian Wilson: Will the right hon. Gentleman give way?
    Mr. Lamont: No.
    I have always said that, as we move out of a phase of recession into recovery, there will be good figures and bad figures. One indicator, however, does not appear in the books: it can be seen only from the Conservative Benches. That indicator is the length of the faces of Opposition Treasury spokesmen. As the news gets better, those faces get longer—none more so than that of the hon. Member for Dunf
    ermline, East, who likes nothing more than a relentless diet of gloom and depression.
    What a miserable time the hon. Gentleman had last week. On Monday, there was the news that manufacturing output had risen by 0·8 per cent., to its highest level since August 1991. Then, on Wednesday, retail sales were shown to have been nearly 2 per cent. higher in the last three months than they were a year earlier. On Thursday, the hon. Gentleman's face grew longer and longer as unemployment actually fell. A few more weeks like that, and he will be positively suicidal.
    Opposition Members complain when we accuse them of talking Britain down. I shall set a simple test, in which I may have to involve my right hon. and learned Friend the Home Secretary. We shall launch a nationwide hunt over the next week: no stone will be left unturned, no avenue unexplored. We shall look everywhere. Nothing will stop us from finding the hon. Member for Dunfermline, East's press release welcoming Thursday's drop in unemployment.
    Of course, the hon. Gentleman has a long track record. On Wednesday, he told us—we know how much weight to place on it—
    "I make one Budget forecast—that, after the Budget, unemployment will rise this month".—[Official Report, 17 March; Vol. 221, c. 289.]
    True to form, the hon. Gentleman was wrong, as always.
    British business is well placed to succeed and expand in the rest of 1993. My Budget will keep Britain on track for recovery. It is good for exporters; it is good for jobs; it will ensure sound finance; it will bring taxes down. And at the next election we shall bring Labour down—to their fifth and final defeat.
    Question put:——
    The House divided: Ayes 306, Noes 279.

    Division No. 195]

    [10pm

    AYES

    Adley, Robert

    Arnold, Jacques (Gravesham)

    Ainsworth, Peter (East Surrey)

    Arnold, Sir Thomas (Hazel Grv)

    Aitken, Jonathan

    Ashby, David

    Alexander, Richard

    Atkins, Robert

    Alison, Rt Hon Michael (Selby)

    Atkinson, Peter (Hexham)

    Allason, Rupert (Torbay)

    Baker, Rt Hon K. (Mole Valley)

    Amess, David

    Baker, Nicholas (Dorset North)

    Ancram, Michael

    Baldry, Tony

    Arbuthnot, James

    Banks, Matthew (Southport)

    710

    Banks, Robert (Harrogate)

    Freeman, Roger

    Bates, Michael

    French, Douglas

    Batiste, Spencer

    Fry, Peter

    Bellingham, Henry

    Gale, Roger

    Bendall, Vivian

    Gallie, Phil

    Beresford, Sir Paul

    Gardiner, Sir George

    Biffen, Rt Hon John

    Garel-Jones, Rt Hon Tristan

    Blackburn, Dr John G.

    Garnier, Edward

    Bonsor, Sir Nicholas

    Gill, Christopher

    Booth, Hartley

    Gillan, Cheryl

    Boswell, Tim

    Goodlad, Rt Hon Alastair

    Bottomley, Peter (Eltham)

    Goodson-Wickes, Dr Charles

    Bottomley, Rt Hon Virginia

    Gorman, Mrs Teresa

    Bowden, Andrew

    Gorst, John

    Bowis, John

    Grant, Sir Anthony (Cambs SW)

    Boyson, Rt Hon Sir Rhodes

    Greenway, Harry (Ealing N)

    Brandreth, Gyles

    Greenway, John (Ryedale)

    Brazier, Julian

    Griffiths, Peter (Portsmouth, N)

    Bright, Graham

    Grylls, Sir Michael

    Brooke, Rt Hon Peter

    Gummer, Rt Hon John Selwyn

    Brown, M. (Brigg & Cl'thorpes)

    Hague, William

    Browning, Mrs. Angela

    Hamilton, Rt Hon Archie (Epsom)

    Bruce, Ian (S Dorset)

    Hamilton, Neil (Tatton)

    Budgen, Nicholas

    Hampson, Dr Keith

    Burns, Simon

    Hanley, Jeremy

    Burt, Alistair

    Hannam, Sir John

    Butcher, John

    Hargreaves, Andrew

    Butterfill, John

    Hawkins, Nick

    Carlisle, John (Luton North)

    Hawksley, Warren

    Carlisle, Kenneth (Lincoln)

    Hayes, Jerry

    Carrington, Matthew

    Heald, Oliver

    Carttiss, Michael

    Heath, Rt Hon Sir Edward

    Cash, William

    Heathcoat-Amory, David

    Churchill, Mr

    Hendry, Charles

    Clark, Dr Michael (Rochford)

    Heseltine, Rt Hon Michael

    Clarke, Rt Hon Kenneth (Ruclif)

    Higgins, Rt Hon Sir Terence L.

    Clifton-Brown, Geoffrey

    Hill, James (Southampton Test)

    Coe, Sebastian

    Hogg, Rt Hon Douglas (G'tham)

    Colvin, Michael

    Horam, John

    Congdon, David

    Hordern, Rt Hon Sir Peter

    Conway, Derek

    Howarth, Alan (Strat'rd-on-A)

    Coombs, Anthony (Wyre For'st)

    Howell, Rt Hon David (G'dford)

    Coombs, Simon (Swindon)

    Hughes Robert G. (Harrow W)

    Cope, Rt Hon Sir John

    Hunt, Rt Hon David (Wirral W)

    Cormack, Patrick

    Hunt, Sir John (Ravensbourne)

    Couchman, James

    Hunter, Andrew

    Cran, James

    Hurd, Rt Hon Douglas

    Currie, Mrs Edwina (S D'by'ire)

    Jack, Michael

    Curry, David (Skipton & Ripon)

    Jackson, Robert (Wantage)

    Davis, David (Boothferry)

    Jenkin, Bernard

    Day, Stephen

    Jessel, Toby

    Deva, Nirj Joseph

    Johnson Smith, Sir Geoffrey

    Devlin, Tim

    Jones, Gwilym (Cardiff N)

    Dickens, Geoffrey

    Jones, Robert B. (W Hertfdshr)

    Dorrell, Stephen

    Jopling, Rt Hon Michael

    Douglas-Hamilton, Lord James

    Kellett-Bowman, Dame Elaine

    Dover, Den

    Key, Robert

    Duncan, Alan

    Kilfedder, Sir James

    Duncan-Smith, Iain

    King, Rt Hon Tom

    Dunn, Bob

    Kirkhope, Timothy

    Durant, Sir Anthony

    Knapman, Roger

    Eggar, Tim

    Knight, Mrs Angela (Erewash)

    Elletson, Harold

    Knight, Greg (Derby N)

    Emery, Rt Hon Sir Peter

    Knight, Dame Jill (Bir'm E'st'n)

    Evans, David (Welwyn Hatfield)

    Knox, David

    Evans, Jonathan (Brecon)

    Kynoch, George (Kincardine)

    Evans, Nigel (Ribble Valley)

    Lait, Mrs Jacqui

    Evans, Roger (Monmouth)

    Lamont, Rt Hon Norman

    Evennett, David

    Lang, Rt Hon Ian

    Faber, David

    Lawrence, Sir Ivan

    Fabricant, Michael

    Legg, Barry

    Fenner, Dame Peggy

    Leigh, Edward

    Field, Barry (Isle of Wight)

    Lennox-Boyd, Mark

    Fishburn, Dudley

    Lester, Jim (Broxtowe)

    Forman, Nigel

    Lidington, David

    Forsyth, Michael (Stirling)

    Lilley, Rt Hon Peter

    Forth, Eric

    Lloyd, Peter (Fareham)

    Fowler, Rt Hon Sir Norman

    Lord, Michael

    Fox, Dr Liam (Woodspring)

    Luff, Peter

    Fox, Sir Marcus (Shipley)

    Lyell, Rt Hon Sir Nicholas

    711

    MacGregor, Rt Hon John

    Shepherd, Richard (Aldridge)

    MacKay, Andrew

    Skeet, Sir Trevor

    McLoughlin, Patrick

    Smith, Sir Dudley (Warwick)

    McNair-Wilson, Sir Patrick

    Smith, Tim (Beaconsfield)

    Maitland, Lady Olga

    Soames, Nicholas

    Major, Rt Hon John

    Speed, Sir Keith

    Malone, Gerald

    Spencer, Sir Derek

    Mans, Keith

    Spicer, Sir James (W Dorset)

    Marland, Paul

    Spicer, Michael (S Worcs)

    Marshall, John (Hendon S)

    Spink, Dr Robert

    Marshall, Sir Michael (Arundel)

    Spring, Richard

    Martin, David (Portsmouth S)

    Sproat, Iain

    Mates, Michael

    Squire, Robin (Hornchurch)

    Mawhinney, Dr Brian

    Stanley, Rt Hon Sir John

    Mayhew, Rt Hon Sir Patrick

    Steen, Anthony

    Mellor, Rt Hon David

    Stephen, Michael

    Merchant, Piers

    Stern, Michael

    Milligan, Stephen

    Stewart, Allan

    Mills, Iain

    Streeter, Gary

    Mitchell, Andrew (Gedling)

    Sumberg, David

    Mitchell, Sir David (Hants NW)

    Sweeney, Walter

    Moate, Sir Roger

    Sykes, John

    Monro, Sir Hector

    Tapsell, Sir Peter

    Montgomery, Sir Fergus

    Taylor, Ian (Esher)

    Moss, Malcolm

    Taylor, John M. (Solihull)

    Needham, Richard

    Taylor, Sir Teddy (Southend, E)

    Nelson, Anthony

    Temple-Morris, Peter

    Newton, Rt Hon Tony

    Thomason, Roy

    Nicholls, Patrick

    Thompson, Sir Donald (C'er V)

    Nicholson, David (Taunton)

    Thompson, Patrick (Norwich N)

    Nicholson, Emma (Devon West)

    Thornton, Sir Malcolm

    Norris, Steve

    Thurnham, Peter

    Onslow, Rt Hon Sir Cranley

    Townend, John (Bridlington)

    Oppenheim, Phillip

    Townsend, Cyril D. (Bexl'yh'th)

    Ottaway, Richard

    Tracey, Richard

    Page, Richard

    Tredinnick, David

    Paice, James

    Trotter, Neville

    Patnick, Irvine

    Twinn, Dr Ian

    Patten, Rt Hon John

    Vaughan, Sir Gerard

    Pattie, Rt Hon Sir Geoffrey

    Viggers, Peter

    Pawsey, James

    Waldegrave, Rt Hon William

    Peacock, Mrs Elizabeth

    Walden, George

    Pickles, Eric

    Walker, Bill (N Tayside)

    Porter, Barry (Wirral S)

    Waller, Gary

    Porter, David (Waveney)

    Ward, John

    Portillo, Rt Hon Michael

    Wardle, Charles (Bexhill)

    Powell, William (Corby)

    Waterson, Nigel

    Rathbone, Tim

    Watts, John

    Redwood, John

    Wells, Bowen

    Renton, Rt Hon Tim

    Wheeler, Rt Hon Sir John

    Richards, Rod

    Whitney, Ray

    Riddick, Graham

    Whittingdale, John

    Robathan, Andrew

    Widdecombe, Ann

    Roberts, Rt Hon Sir Wyn

    Wiggin, Sir Jerry

    Robertson, Raymond (Ab'd'n S)

    Wilkinson, John

    Robinson, Mark (Somerton)

    Willetts, David

    Rowe, Andrew (Mid Kent)

    Winterton, Mrs Ann (Congleton)

    Rumbold, Rt Hon Dame Angela

    Winterton, Nicholas (Macc'f'ld)

    Ryder, Rt Hon Richard

    Wolfson, Mark

    Sackville, Tom

    Wood, Timothy

    Sainsbury, Rt Hon Tim

    Yeo, Tim

    Scott, Rt Hon Nicholas

    Young, Sir George (Acton)

    Shaw, David (Dover)

    Shaw, Sir Giles (Pudsey)

    Tellers for the Ayes:

    Shephard, Rt Hon Gillian

    Mr. David Lightbown and

    Shepherd, Colin (Hereford)

    Mr. Sydney Chapman.

    NOES

    Abbott, Ms Diane

    Barnes, Harry

    Adams, Mrs Irene

    Barron, Kevin

    Ainger, Nick

    Battle, John

    Ainsworth, Robert (Cov'try NE)

    Bayley, Hugh

    Allen, Graham

    Beckett, Rt Hon Margaret

    Alton, David

    Beggs, Roy

    Anderson, Donald (Swansea E)

    Bell, Stuart

    Anderson, Ms Janet (Ros'dale)

    Benn, Rt Hon Tony

    Armstrong, Hilary

    Bennett, Andrew F.

    Ashdown, Rt Hon Paddy

    Benton, Joe

    Ashton, Joe

    Bermingham, Gerald

    Banks, Tony (Newham NW)

    Berry, Dr. Roger

    712

    Betts, Clive

    Gould, Bryan

    Blair, Tony

    Grant, Bernie (Tottenham)

    Blunkett, David

    Griffiths, Nigel (Edinburgh S)

    Boateng, Paul

    Griffiths, Win (Bridgend)

    Boyes, Roland

    Grocott, Bruce

    Bradley, Keith

    Gunnell, John

    Bray, Dr Jeremy

    Hain, Peter

    Brown, Gordon (Dunfermline E)

    Hall, Mike

    Brown, N. (N'c'tle upon Tyne E)

    Hanson, David

    Bruce, Malcolm (Gordon)

    Hardy, Peter

    Burden, Richard

    Harman, Ms Harriet

    Byers, Stephen

    Harvey, Nick

    Caborn, Richard

    Hattersley, Rt Hon Roy

    Callaghan, Jim

    Henderson, Doug

    Campbell, Mrs Anne (C'bridge)

    Heppell, John

    Campbell, Menzies (Fife NE)

    Hill, Keith (Streatham)

    Campbell-Savours, D. N.

    Hinchliffe, David

    Canavan, Dennis

    Hoey, Kate

    Cann, Jamie

    Hogg, Norman (Cumbernauld)

    Carlile, Alexander (Montgomry)

    Home Robertson, John

    Chisholm, Malcolm

    Hoon, Geoffrey

    Clapham, Michael

    Howarth, George (Knowsley N)

    Clark, Dr David (South Shields)

    Howells, Dr. Kim (Pontypridd)

    Clarke, Eric (Midlothian)

    Hoyle, Doug

    Clarke, Tom (Monklands W)

    Hughes, Kevin (Doncaster N)

    Clelland, David

    Hughes, Robert (Aberdeen N)

    Clwyd, Mrs Ann

    Hughes, Roy (Newport E)

    Cohen, Harry

    Hughes, Simon (Southwark)

    Connarty, Michael

    Hume, John

    Cook, Frank (Stockton N)

    Hutton, John

    Cook, Robin (Livingston)

    Illsley, Eric

    Corbett, Robin

    Ingram, Adam

    Corbyn, Jeremy

    Jackson, Glenda (H'stead)

    Corston, Ms Jean

    Jackson, Helen (Shef'ld, H)

    Cousins, Jim

    Jamieson, David

    Cryer, Bob

    Janner, Greville

    Cummings, John

    Johnston, Sir Russell

    Cunliffe, Lawrence

    Jones, Barry (Alyn and D'side)

    Cunningham, Jim (Covy SE)

    Jones, Ieuan Wyn (Ynys Môn)

    Cunningham, Rt Hon Dr John

    Jones, Jon Owen (Cardiff C)

    Dafis, Cynog

    Jones, Lynne (B'ham S O)

    Dalyell, Tam

    Jones, Martyn (Clwyd, SW)

    Darling, Alistair

    Jones, Nigel (Cheltenham)

    Davidson, Ian

    Kaufman, Rt Hon Gerald

    Davies, Bryan (Oldham C'tral)

    Keen, Alan

    Davies, Rt Hon Denzil (Llanelli)

    Kennedy, Charles (Ross,C&S)

    Davies, Ron (Caerphilly)

    Kennedy, Jane (Lpool Brdgn)

    Davis, Terry (B'ham, H'dge H'l)

    Khabra, Piara S.

    Denham, John

    Kinnock, Rt Hon Neil (Islwyn)

    Dewar, Donald

    Kirkwood, Archy

    Dixon, Don

    Leighton, Ron

    Dobson, Frank

    Lestor, Joan (Eccles)

    Donohoe, Brian H.

    Lewis, Terry

    Dowd, Jim

    Litherland, Robert

    Dunwoody, Mrs Gwyneth

    Livingstone, Ken

    Eagle, Ms Angela

    Lloyd, Tony (Stretford)

    Eastham, Ken

    Llwyd, Elfyn

    Etherington, Bill

    Loyden, Eddie

    Evans, John (St Helens N)

    Lynne, Ms Liz

    Fatchett, Derek

    McAllion, John

    Field, Frank (Birkenhead)

    McAvoy, Thomas

    Fisher, Mark

    McCartney, Ian

    Flynn, Paul

    McCrea, Rev William

    Forsythe, Clifford (Antrim S)

    Macdonald, Calum

    Foster, Rt Hon Derek

    McFall, John

    Foster, Don (Bath)

    McKelvey, William

    Foulkes, George

    Mackinlay, Andrew

    Fraser, John

    McLeish, Henry

    Fyfe, Maria

    Maclennan, Robert

    Galbraith, Sam

    McMaster, Gordon

    Galloway, George

    McNamara, Kevin

    Gapes, Mike

    McWilliam, John

    Garrett, John

    Madden, Max

    George, Bruce

    Maginnis, Ken

    Gerrard, Neil

    Mahon, Alice

    Gilbert, Rt Hon Dr John

    Mandelson, Peter

    Godman, Dr Norman A.

    Marek, Dr John

    Godsiff, Roger

    Marshall, David (Shettleston)

    Golding, Mrs Llin

    Marshall, Jim (Leicester, S)

    Gordon, Mildred

    Martin, Michael J. (Springburn)

    713

    Martlew, Eric

    Ross, Ernie (Dundee W)

    Maxton, John

    Ross, William (E Londonderry)

    Meacher, Michael

    Rowlands, Ted

    Michael, Alun

    Ruddock, Joan

    Michie, Bill (Sheffield Heeley)

    Salmond, Alex

    Michie, Mrs Ray (Argyll Bute)

    Sedgemore, Brian

    Milburn, Alan

    Sheerman, Barry

    Miller, Andrew

    Sheldon, Rt Hon Robert

    Mitchell, Austin (Gt Grimsby)

    Shore, Rt Hon Peter

    Molyneaux, Rt Hon James

    Short, Clare

    Moonie, Dr Lewis

    Simpson, Alan

    Morgan, Rhodri

    Skinner, Dennis

    Morley, Elliot

    Smith, Andrew (Oxford E)

    Morris, Rt Hon A. (Wy'nshawe)

    Smith, C. (Isl'ton S & F'sbury)

    Morris, Estelle (B'ham Yardley)

    Smith, Rt Hon John (M'kl'ds E)

    Morris, Rt Hon J. (Aberavon)

    Smith, Llew (Blaenau Gwent)

    Mowlam, Marjorie

    Snape, Peter

    Mudie, George

    Soley, Clive

    Mullin, Chris

    Steinberg, Gerry

    Murphy, Paul

    Stevenson, George

    Oakes, Rt Hon Gordon

    Stott, Roger

    O'Brien, Michael (N W'kshire)

    Strang, Dr. Gavin

    O'Brien, William (Normanton)

    Straw, Jack

    O'Hara, Edward

    Taylor, Mrs Ann (Dewsbury)

    Olner, William

    Taylor, Matthew (Truro)

    Orme, Rt Hon Stanley

    Thompson, Jack (Wansbeck)

    Parry, Robert

    Trimble, David

    Pendry, Tom

    Turner, Dennis

    Pickthall, Colin

    Tyler, Paul

    Pike, Peter L.

    Vaz, Keith

    Pope, Greg

    Walker, Rt Hon Sir Harold

    Powell, Ray (Ogmore)

    Wallace, James

    Prentice, Ms Bridget (Lew'm E)

    Walley, Joan

    Prentice, Gordon (Pendle)

    Wardell, Gareth (Gower)

    Prescott, John

    Wareing, Robert N

    Primarolo, Dawn

    Watson, Mike

    Purchase, Ken

    Welsh, Andrew

    Quin, Ms Joyce

    Wicks, Malcolm

    Radice, Giles

    Williams, Rt Hon Alan (Sw'n W)

    Randall, Stuart

    Williams, Alan W (Carmarthen)

    Raynsford, Nick

    Wilson, Brian

    Redmond, Martin

    Winnick, David

    Reid, Dr John

    Worthington, Tony

    Robertson, George (Hamilton)

    Wray, Jimmy

    Robinson, Geoffrey (Co'try NW)

    Wright, Dr Tony

    Robinson, Peter (Belfast E)

    Roche, Mrs. Barbara

    Tellers for the Noes:

    Rogers, Allan

    Mr. Peter Kilfoyle and

    Rooker, Jeff

    Mr. Alan Meale.

    Rooney, Terry

    Question accordingly agreed to.
    Resolved,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
    714

    (a) for zero-rating or exempting any supply, acquisition or importation;

    (b) for refunding any amount of tax;

    (c) for varying the rate of that tax otherwise than in relation to all supplies, acquisitions and importations; or

    (d) for relief other than relief applying to goods of whatever description or services of whatever description.

    Madam SPEAKER then proceeded, pursuant to paragraph (3) of Standing Order No. 50 (Ways and Means motions), to put forthwith the Questions necessary to dispose of the further motions.

    Budget Resolutions and Economic Situation

      2. BEER (RATE: EXISTING REGIME)
      Resolved,
      That, as from 6 o'clock in the evening of 16th March 1993, the rate of duty specified in section 36 of the Alcoholic Liquor Duties Act 1979 as that section has effect apart from section 7(1) of the Finance Act 1991 shall be increased from £1·108 per hectolitre for every degree by which the original gravity of beer exceeds 1000 degrees to £1·163 per hectolitre for every such degree.
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

      3. BEER (RATE: NEW REGIME)
      Resolved,
      That—

      (1) In section 36(1) of the Alcoholic Liquor Duties Act 1979, as substituted by section 7(1) of the Finance Act 1991, for "£10·60" there shall be substituted "£10·45".

      (2) This Resolution shall come into force on 1st June 1993.

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

      4. BEER (ABOLITION OF CERTAIN RELIEFS)
      Resolved,
      That provision may be made amending sections 42 and 45, and repealing section 43, of the Alcoholic Liquor Duties Act 1979.

      5. WINE AND MADE-WINE
      Resolved,
      That, as from 6 o'clock in the evening of 16th March 1993, for the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 there shall be substituted the following Table—

    TABLE OF RATES OF DUTY ON WINE AND MADE-WINE
      PART I

        WINE OR MADE-WINE OF A STRENGTH NOT EXCEEDING 22 PER CENT.
        Description of wine or made-wine

        Rates of duty per hectolitre

        £

        Wine or made-wine of a strength not exceeding 2 per cent.

        13·23

        Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.

        22·04

        Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.

        30·86

        Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.

        39·69

        Wine or made-wine of a strength exceeding and 5 per cent. but not exceeding 5·5

        48·50

        Wine or made-wine of a strength exceeding 5·5 per cent. but not exceeding 15 per cent. and not being sparkling

        132·26

        Sparkling wine or sparkling made-wine of a strength exceeding 5·5 per cent. but not exceeding 15 per cent.

        218·40

        Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.

        220·43

    PART II

      WINE OR MADE-WINE OF A STRENGTH EXCEEDING 22 PER CENT.
      Description of wine or made-wine

      Rates of duty per litre of alcohol in the wine or made-wine

      218·40

      £

      Wine or made-wine of a strength exceeding 22 per cent.

      218·40

      19·81"

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

    6. MIXING OF WINE AND SPIRITS
    Resolved,
    That section 58 of the Alcoholic Liquor Duties Act 1979 may be amended.

    7. SPARKLING WINE OR MADE-WINE
    Resolved,
    That provisions may be substituted for paragraphs 1 and 2 of schedule 1 to the Alcoholic Liquor Duties Act 1979.

    8. CIDER
    Resolved,
    That, as from 6 o'clock in the evening of 16th March 1993, the rate of duty specified in section 62(l) of the Alcoholic Liquor Duties Act 1979 shall be increased from £21·32 per hectolitre to £22·39 per hectolitre.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    9. TOBACCO PRODUCTS (RATES)
    Resolved,
    That, as from 6 o'clock in the evening of 16th March 1993, for the Table in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted—

    "TABLE

    1. Cigarettes

    An amount equal to 20 per cent. of the retail price plus £48·75 per thousand cigarettes.

    2. Cigars

    £72·30 per kilogram.

    3. Hand-rolling tobacco

    £76·29 per kilogram

    4. Other smoking tobacco and chewing tobacco

    £31·93 per kilogram."

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

    10. HAND-ROLLING TOBACCO
    Resolved,
    That the definition of hand-rolling tobacco in the Tobacco Products Duty Act 1979 may be amended.

    11. HYDROCARBON OIL (RATES)
    Resolved,
    That, as from 6 o'clock in the evening of 16th March 1993, the Hydrocarbon Oil Duties Act 1979 shall have effect with the following amendments—

    717

    (1) In section 6(l) for "£0·2779" and "£0·2285" there shall be substituted "0.3058" and "£0-2514" respectively.

    (2) In section 11(1) for "£0·0095" and "£0·0135" there shall be substituted "£0·0105" and "£0·0149" respectively.

    (3) In section 13A(1) for "£0·0437" there shall be substituted "£0·0482".

    (4) In section 14(1) for "£0·0095" there shall be substituted "£0·0105".

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

    12. HYDROCARBON OIL DUTIES (MEASUREMENTS)
    Resolved,
    That provision may be made for the purposes of the Hydrocarbon Oil Duties Act 1979 as to the methods of ascertaining or determining—

    (a) the volume of any substance; and

    (b) the amount of any duty that has been paid, or of any rebate that has been allowed, in respect of any substance.

    13. HYDROCARBON OIL DUTIES (FUEL SUBSTITUTES)
    Resolved,
    That provision may be made for charging excise duty on—

    (a) mineral oils within the meaning of the Directive of the Council of the European Communities dated 19th October 1992 No. 92/81/EEC, as amended; and

    (b) substances which are set aside for use or used as fuel for engines, motors or other machinery or as additives or extenders in any such fuel.

    14. GAMING MACHINE LICENCE DUTY (RATES)
    Resolved,
    That—
    (1) The Tables set out in section 23(1) of the Betting and Gaming Duties Act 1981 shall be amended as follows—

    (a) in Table A for "£375" there shall be substituted "£450";

    (b) in Table B for "£375" there shall be substituted "£450" and for "£960" there shall be substituted "£1,150".

    (2) This Resolution applies in relation to licences for any period beginning on or after 1st May 1993.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    15. LOTTERY DUTY
    Resolved,
    That provisions may be made for and in connection with the imposition of a duty of exise on the taking of tickets or chances in lotteries.

    16. VEHICLES EXCISE DUTY (RATES: GENERAL)
    Resolved,
    That—

    (1) The Vehicles (Excise) Act 1971 shall be amended as follows.

    (2) In Schedule 1, in the Table set out in Part II—

    (a) in the second column of paragraph 2 for "30·00" there shall be substituted "35·00";

    (b) in the second column of paragraph 3 for "50·00" there shall be substituted "55·00";

    (c) in the second column of paragraph 5 for "50·00" there shall be substituted "55·00".

    (3) In Schedule 2, in the Table set out in Part II—

    (a) in the second column of the first entry for "110" there shall be substituted "125";

    718

    (b) in the second column of the second entry for "130" there shall be substituted "150".

    (4) In Schedule 3, in the Table set out in Part II—

    (a) in the second column of paragraph 1 for "30·00" there shall be substituted "35·00";

    (b) in the second column of paragraph 2 for "90·00" there shall be substituted "100·00";

    (c) in the second column of paragraph 4 for "75·00" there shall be substituted "85·00".

    (5) In Schedule 4, in paragraph 1(1) of Part I for "130" there shall be substituted "150".

    (6) In Schedule 4, in paragraph 6 of Part I—

    (a) in sub-paragraph (1) for "£75" there shall be substituted "£85";

    (b) in sub-paragraphs (2)(a), (2)(b) and (4) for "£90" (in each place) there shall be substituted "£100".

    (7) In Schedule 5, in the Table set out in Part II—

    (a) in the second column of paragraph I for "60·00" there shall be substituted "70·00";

    (b) in the second column of paragraph 2 for "110·00" there shall be substituted "125·00".

    (8) This Resolution shall apply in relation to licences taken out after 16th March 1993.

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

    17. VEHICLES EXCISE DUTY (EXCEPTIONAL LOADS: 1)
    Resolved,
    That—

    (1) The Vehicles (Excise) Act 1971 shall he amended as follows.

    (2) In paragraph 2 of Schedule 4A for "£3,250" there shall be substituted "£4,250".

    (3) This Resolution shall apply in relation to licences taken out after 16th March 1993.

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

    18. VEHICLES EXCISE DUTY (EXCEPTIONAL LOADS: 2)
    Resolved,
    That paragraph 2 of Schedule 4A to the Vehicles (Excise) Act 1971 may be amended in relation to licences taken out on or after a day appointed by the Secretary of State.

    19. VEHICLES EXCISE DUTY (OLD BICYCLES)
    Resolved,
    That—
    (1) The Vehicles (Excise) Act 1971 shall be amended as follows
    (2) In Schedule 1 for paragraph 2 there shall be substituted—
    "2. Where a bicycle the cylinder capacity of whose engine exceeds 150 cubic centimetres is one constructed before 1933 it shall be treated for the purposes of this Schedule as having an engine of cylinder capacity not exceeding 150 cubic centimetres."
    (3) In paragraph 4(a) of that Schedule for "2(a)" there shall be substituted "2".
    (4) This Resolution shall apply in relation to licences taken out after 16th March 1993.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    20. VEHICLES EXCISE DUTY (TRADE LICENCES)
    Resolved,
    That—

    (1) The Vehicles (Excise) Act 1971 shall be amended as follows.

    (2) In subsection (5) of section 16, including that subsection as set out in paragraph 12 of Part I of Schedule 7—

    719

    (a) for "£100" there shall be substituted "the rate mentioned in subsection (5A)(a) below", and

    (b) for "£20" there shall be substituted "the rate mentioned in subsection (5A)(b) below".

    (3) In that section the following subsection shall be inserted after subsection (5)—

    "(5A) The rates referred to in subsection (5) above are—

    (a) the annual rate applicable to a vehicle falling within paragraph 2 of Part II of Schedule 5 to this act in relation to a licence taken out when the trade licence is taken out;

    (b) the annual rate applicable to a vehicle falling within paragraph 3 of Part II of Schedule 1 to this act in relation to a licence taken out when the trade licence is taken out."

    (4) This Resolution shall apply in relation to licences taken out after 16th March 1993.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    21. VALUE ADDED TAX (FUEL AND POWER)
    Motion made, and Question put:—
    That provision may be made—

    (a) for supplies falling within Group 7 of Schedule 5 to the Value Added Tax Act 1983 to cease to be zero-rated, and

    (b) as to the rates at which tax is to be charged on those supplies and on the equivalent acquisitions and importations.

    The House divided: Ayes 303, Noes 278.

    Division No. 196]

    [10.15 pm

    AYES

    Adley, Robert

    Butcher, John

    Ainsworth, Peter (East Surrey)

    Butterfill, John

    Aitken, Jonathan

    Carlisle, John (Luton North)

    Alexander, Richard

    Carlisle, Kenneth (Lincoln)

    Allason, Rupert (Torbay)

    Carrington, Matthew

    Amess, David

    Carttiss, Michael

    Ancram, Michael

    Cash, William

    Arbuthnot, James

    Churchill, Mr

    Arnold, Jacques (Gravesham)

    Clark, Dr Michael (Rochford)

    Arnold, Sir Thomas (Hazel Grv)

    Clarke, Rt Hon Kenneth (Ruclif)

    Ashby, David

    Clifton-Brown, Geoffrey

    Atkins, Robert

    Coe, Sebastian

    Atkinson, Peter (Hexham)

    Colvin, Michael

    Baker, Rt Hon K. (Mole Valley)

    Congdon, David

    Baker, Nicholas (Dorset North)

    Conway, Derek

    Baldry, Tony

    Coombs, Anthony (Wyre For'st)

    Banks, Matthew (Southport)

    Coombs, Simon (Swindon)

    Banks, Robert (Harrogate)

    Cope, Rt Hon Sir John

    Bates, Michael

    Cormack, Patrick

    Batiste, Spencer

    Couchman, James

    Bellingham, Henry

    Cran, James

    Bendall, Vivian

    Currie, Mrs Edwina (S D'by'ire)

    Beresford, Sir Paul

    Curry, David (Skipton & Ripon)

    Biffen, Rt Hon John

    Davis, David (Boothferry)

    Blackburn, Dr John G.

    Day, Stephen

    Bonsor, Sir Nicholas

    Deva, Nirj Joseph

    Booth, Hartley

    Devlin, Tim

    Boswell, Tim

    Dickens, Geoffrey

    Bottomley, Peter (Eltham)

    Dorrell, Stephen

    Bottomley, Rt Hon Virginia

    Douglas-Hamilton, Lord James

    Bowden, Andrew

    Dover, Den

    Bowis, John

    Duncan, Alan

    Boyson, Rt Hon Sir Rhodes

    Duncan-Smith, Iain

    Brandreth, Gyles

    Dunn, Bob

    Brazier, Julian

    Durant, Sir Anthony

    Bright, Graham

    Eggar, Tim

    Brooke, Rt Hon Peter

    Elletson, Harold

    Brown, M. (Brigg & Cl'thorpes)

    Emery, Rt Hon Sir Peter

    Browning, Mrs. Angela

    Evans, David (Welwyn Hatfield)

    Bruce, Ian (S Dorset)

    Evans, Jonathan (Brecon)

    Budgen, Nicholas

    Evans, Nigel (Ribble Valley)

    Burns, Simon

    Evans, Roger (Monmouth)

    Burt, Alistair

    Evennett, David

    720

    Faber, David

    Legg, Barry

    Fabricant, Michael

    Leigh, Edward

    Fenner, Dame Peggy

    Lennox-Boyd, Mark

    Field, Barry (Isle of Wight)

    Lester, Jim (Broxtowe)

    Fishburn, Dudley

    Lidington, David

    Forman, Nigel

    Lightbown, David

    Forsyth, Michael (Stirling)

    Lilley, Rt Hon Peter

    Forth, Eric

    Lloyd, Peter (Fareham)

    Fowler, Rt Hon Sir Norman

    Lord, Michael

    Fox, Dr Liam (Woodspring)

    Luff, Peter

    Fox, Sir Marcus (Shipley)

    Lyell, Rt Hon Sir Nicholas

    Freeman, Roger

    MacGregor, Rt Hon John

    French, Douglas

    MacKay, Andrew

    Fry, Peter

    McLoughlin, Patrick

    Gale, Roger

    McNair-Wilson, Sir Patrick

    Gallie, Phil

    Maitland, Lady Olga

    Gardiner, Sir George

    Major, Rt Hon John

    Garel-Jones, Rt Hon Tristan

    Malone, Gerald

    Garnier, Edward

    Mans, Keith

    Gill, Christopher

    Marland, Paul

    Gillan, Cheryl

    Marshall, John (Hendon S)

    Goodlad, Rt Hon Alastair

    Marshall, Sir Michael (Arundel)

    Goodson-Wickes, Dr Charles

    Martin, David (Portsmouth S)

    Gorman, Mrs Teresa

    Mates, Michael

    Gorst, John

    Mawhinney, Dr Brian

    Grant, Sir Anthony (Cambs SW)

    Mayhew, Rt Hon Sir Patrick

    Greenway, Harry (Ealing N)

    Mellor, Rt Hon David

    Greenway, John (Ryedale)

    Merchant, Piers

    Griffiths, Peter (Portsmouth, N)

    Milligan, Stephen

    Grylls, Sir Michael

    Mills, Iain

    Gummer, Rt Hon John Selwyn

    Mitchell, Sir David (Hants NW)

    Hague, William

    Moate, Sir Roger

    Hamilton, Rt Hon Archie (Epsom)

    Monro, Sir Hector

    Hamilton, Neil (Tatton)

    Montgomery, Sir Fergus

    Hampson, Dr Keith

    Moss, Malcolm

    Hanley, Jeremy

    Needham, Richard

    Hannam, Sir John

    Nelson, Anthony

    Hargreaves, Andrew

    Newton, Rt Hon Tony

    Hawkins, Nick

    Nicholls, Patrick

    Hawksley, Warren

    Nicholson, David (Taunton)

    Hayes, Jerry

    Nicholson, Emma (Devon West)

    Heald, Oliver

    Norris, Steve

    Heath, Rt Hon Sir Edward

    Onslow, Rt Hon Sir Cranley

    Heathcoat-Amory, David

    Oppenheim, Phillip

    Hendry, Charles

    Ottaway, Richard

    Heseltine, Rt Hon Michael

    Page, Richard

    Higgins, Rt Hon Sir Terence L.

    Paice, James

    Hill, James (Southampton Test)

    Patnick, Irvine

    Hogg, Rt Hon Douglas (G'tham)

    Patten, Rt Hon John

    Horam, John

    Pattie, Rt Hon Sir Geoffrey

    Hordern, Rt Hon Sir Peter

    Pawsey, James

    Howarth, Alan (Strat'rd-on-A)

    Peacock, Mrs Elizabeth

    Howell, Rt Hon David (G'dford)

    Pickles, Eric

    Hughes Robert G. (Harrow W)

    Porter, Barry (Wirral S)

    Hunt, Rt Hon David (Wirral W)

    Porter, David (Waveney)

    Hunt, Sir John (Ravensbourne)

    Portillo, Rt Hon Michael

    Hunter, Andrew

    Rathbone, Tim

    Hurd, Rt Hon Douglas

    Redwood, John

    Jack, Michael

    Renton, Rt Hon Tim

    Jackson, Robert (Wantage)

    Richards, Rod

    Jenkin, Bernard

    Riddick, Graham

    Jessel, Toby

    Robathan, Andrew

    Johnson Smith, Sir Geoffrey

    Roberts, Rt Hon Sir Wyn

    Jones, Gwilym (Cardiff N)

    Robertson, Raymond (Ab'd'n S)

    Jones, Robert B. (W Hertfdshr)

    Robinson, Mark (Somerton)

    Jopling, Rt Hon Michael

    Rowe, Andrew (Mid Kent)

    Kellett-Bowman, Dame Elaine

    Rumbold, Rt Hon Dame Angela

    Key, Robert

    Ryder, Rt Hon Richard

    King, Rt Hon Tom

    Sackville, Tom

    Kirkhope, Timothy

    Sainsbury, Rt Hon Tim

    Knapman, Roger

    Scott, Rt Hon Nicholas

    Knight, Mrs Angela (Erewash)

    Shaw, David (Dover)

    Knight, Greg (Derby N)

    Shaw, Sir Giles (Pudsey)

    Knight, Dame Jill (Bir'm E'st'n)

    Shephard, Rt Hon Gillian

    Knox, David

    Shepherd, Colin (Hereford)

    Kynoch, George (Kincardine)

    Shepherd, Richard (Aldridge)

    Lait, Mrs Jacqui

    Skeet, Sir Trevor

    Lamont, Rt Hon Norman

    Smith, Sir Dudley (Warwick)

    Lang, Rt Hon Ian

    Smith, Tim (Beaconsfield)

    Lawrence, Sir Ivan

    Soames, Nicholas

    721

    Speed, Sir Keith

    Tredinnick, David

    Spencer, Sir Derek

    Trotter, Neville

    Spicer, Sir James (W Dorset)

    Twinn, Dr Ian

    Spicer, Michael (S Worcs)

    Vaughan, Sir Gerard

    Spink, Dr Robert

    Viggers, Peter

    Spring, Richard

    Waldegrave, Rt Hon William

    Sproat, Iain

    Walden, George

    Squire, Robin (Hornchurch)

    Walker, Bill (N Tayside)

    Stanley, Rt Hon Sir John

    Waller, Gary

    Steen, Anthony

    Ward, John

    Stephen, Michael

    Wardle, Charles (Bexhill)

    Stern, Michael

    Waterson, Nigel

    Stewart, Allan

    Watts, John

    Streeter, Gary

    Wells, Bowen

    Sumberg, David

    Wheeler, Rt Hon Sir John

    Sweeney, Walter

    Whitney, Ray

    Sykes, John

    Whittingdale, John

    Tapsell, Sir Peter

    Widdecombe, Ann

    Taylor, Ian (Esher)

    Wiggin, Sir Jerry

    Taylor, John M. (Solihull)

    Wilkinson, John

    Taylor, Sir Teddy (Southend, E)

    Willetts, David

    Temple-Morris, Peter

    Winterton, Mrs Ann (Congleton)

    Thomason, Roy

    Wolfson, Mark

    Thompson, Sir Donald (C'er V)

    Wood, Timothy

    Thompson, Patrick (Norwich N)

    Yeo, Tim

    Thornton, Sir Malcolm

    Young, Sir George (Acton)

    Thurnham, Peter

    Townend, John (Bridlington)

    Tellers for the Ayes:

    Townsend, Cyril D. (Bexl'yh'th)

    Mr. Sydney Chapman and

    Tracey, Richard

    Mr Andrew Mitchell.

    NOES

    Abbott, Ms Diane

    Clarke, Tom (Monklands W)

    Adams, Mrs Irene

    Clelland, David

    Ainger, Nick

    Clwyd, Mrs Ann

    Ainsworth, Robert (Cov'try NE)

    Cohen, Harry

    Allen, Graham

    Connarty, Michael

    Alton, David

    Cook, Frank (Stockton N)

    Anderson, Donald (Swansea E)

    Cook, Robin (Livingston)

    Anderson, Ms Janet (Ros'dale)

    Corbett, Robin

    Armstrong, Hilary

    Corbyn, Jeremy

    Ashdown, Rt Hon Paddy

    Corston, Ms Jean

    Ashton, Joe

    Cousins, Jim

    Banks, Tony (Newham NW)

    Cryer, Bob

    Barnes, Harry

    Cummings, John

    Barron, Kevin

    Cunliffe, Lawrence

    Battle, John

    Cunningham, Jim (Covy SE)

    Bayley, Hugh

    Cunningham, Rt Hon Dr John

    Beckett, Rt Hon Margaret

    Dafis, Cynog

    Beggs, Roy

    Dalyell, Tam

    Bell, Stuart

    Darling, Alistair

    Benn, Rt Hon Tony

    Davidson, Ian

    Bennett, Andrew F.

    Davies, Bryan (Oldham C'tral)

    Benton, Joe

    Davies, Rt Hon Denzil (Llanelli)

    Bermingham, Gerald

    Davies, Ron (Caerphilly)

    Berry, Dr. Roger

    Davis, Terry (B'ham, H'dge H'l)

    Betts, Clive

    Denham, John

    Blair, Tony

    Dewar, Donald

    Blunkett, David

    Dixon, Don

    Boateng, Paul

    Dobson, Frank

    Boyes, Roland

    Donohoe, Brian H.

    Bradley, Keith

    Dowd, Jim

    Bray, Dr Jeremy

    Eagle, Ma Angela

    Brown, Gordon (Dunfermline E)

    Eastham, Ken

    Brown, N. (N'c'tle upon Tyne E)

    Etherington, Bill

    Bruce, Malcolm (Gordon)

    Evans, John (St Helens N)

    Burden, Richard

    Fatchett, Derek

    Byers, Stephen

    Field, Frank (Birkenhead)

    Caborn, Richard

    Fisher, Mark

    Callaghan, Jim

    Flynn, Paul

    Campbell, Mrs Anne (C'bridge)

    Forsythe, Clifford (Antrim S)

    Campbell, Menzies (Fife NE)

    Foster, Rt Hon Derek

    Campbell-Savours, D. N.

    Foster, Don (Bath)

    Canavan, Dennis

    Foulkes, George

    Cann, Jamie

    Fraser, John

    Carlile, Alexander (Montgomry)

    Fyfe, Maria

    Chisholm, Malcolm

    Galbraith, Sam

    Clapham, Michael

    Galloway, George

    Clark, Dr David (South Shields)

    Gapes, Mike

    Clarke, Eric (Midlothian)

    Garrett, John

    722

    George, Bruce

    Madden, Max

    Gerrard, Neil

    Maginnis, Ken

    Gilbert, Rt Hon Dr John

    Mahon, Alice

    Godman, Dr Norman A.

    Mandelson, Peter

    Godsiff, Roger

    Marek, Dr John

    Golding, Mrs Llin

    Marshall, David (Shettleston)

    Gordon, Mildred

    Marshall, Jim (Leicester, S)

    Gould, Bryan

    Martin, Michael J. (Springburn)

    Grant, Bernie (Tottenham)

    Martlew, Eric

    Griffiths, Nigel (Edinburgh S)

    Maxton, John

    Griffiths, Win (Bridgend)

    Meacher, Michael

    Grocott, Bruce

    Michael, Alun

    Gunnell, John

    Michie, Bill (Sheffield Heeley)

    Hain, Peter

    Michie, Mrs Ray (Argyll Bute)

    Hall, Mike

    Milburn, Alan

    Hanson, David

    Miller, Andrew

    Hardy, Peter

    Mitchell, Austin (Gt Grimsby)

    Harman, Ms Harriet

    Molyneaux, Rt Hon James

    Harvey, Nick

    Moonie, Dr Lewis

    Hattersley, Rt Hon Roy

    Morgan, Rhodri

    Henderson, Doug

    Morley, Elliot

    Heppell, John

    Morris, Rt Hon A. (Wy'nshawe)

    Hill, Keith (Streatham)

    Morris, Estelle (B'ham Yardley)

    Hinchliffe, David

    Morris, Rt Hon J. (Aberavon)

    Hoey, Kate

    Mowlam, Marjorie

    Hogg, Norman (Cumbernauld)

    Mudie, George

    Home Robertson, John

    Mullin, Chris

    Hoon, Geoffrey

    Murphy, Paul

    Howarth, George (Knowsley N)

    Oakes, Rt Hon Gordon

    Howells, Dr. Kim (Pontypridd)

    O'Brien, William (Normanton)

    Hoyle, Doug

    O'Hara, Edward

    Hughes, Kevin (Doncaster N)

    Olner, William

    Hughes, Robert (Aberdeen N)

    O'Neill, Martin

    Hughes, Roy (Newport E)

    Orme, Rt Hon Stanley

    Hughes, Simon (Southwark)

    Parry, Robert

    Hume, John

    Pendry, Tom

    Hutton, John

    Pickthall, Colin

    Illsley, Eric

    Pike, Peter L.

    Ingram, Adam

    Pope, Greg

    Jackson, Glenda (H'stead)

    Powell, Ray (Ogmore)

    Jackson, Helen (Shef'ld, H)

    Prentice, Ms Bridget (Lew'm E)

    Jamieson, David

    Prentice, Gordon (Pendle)

    Janner, Greville

    Prescott, John

    Johnston, Sir Russell

    Primarolo, Dawn

    Jones, Barry (Alyn and D'side)

    Purchase, Ken

    Jones, Ieuan Wyn (Ynys Mßn)

    Quin, Ms Joyce

    Jones, Jon Owen (Cardiff C)

    Radice, Giles

    Jones, Lynne (B'ham S O)

    Randall, Stuart

    Jones, Martyn (Clwyd, SW)

    Raynsford, Nick

    Jones, Nigel (Cheltenham)

    Redmond, Martin

    Kaufman, Rt Hon Gerald

    Reid, Dr John

    Keen, Alan

    Robertson, George (Hamilton)

    Kennedy, Charles (Ross,C&S)

    Robinson, Peter (Belfast E)

    Kennedy, Jane (Lpool Brdgn)

    Roche, Mrs. Barbara

    Khabra, Piara S.

    Rogers, Allan

    Kilfedder, Sir James

    Rooker, Jeff

    Kinnock, Rt Hon Neil (Islwyn)

    Rooney, Terry

    Kirkwood, Archy

    Ross, Ernie (Dundee W)

    Leighton, Ron

    Ross, William (E Londonderry)

    Lestor, Joan (Eccles)

    Rowlands, Ted

    Lewis, Terry

    Ruddock, Joan

    Litherland, Robert

    Salmond, Alex

    Livingstone, Ken

    Sedgemore, Brian

    Lloyd, Tony (Stretford)

    Sheerman, Barry

    Llwyd, Elfyn

    Sheldon, Rt Hon Robert

    Loyden, Eddie

    Shore, Rt Hon Peter

    Lynne, Ms Liz

    Short, Clare

    McAllion, John

    Simpson, Alan

    McAvoy, Thomas

    Skinner, Dennis

    McCartney, Ian

    Smith, Andrew (Oxford E)

    McCrea, Rev William

    Smith, C. (Isl'ton S & F'sbury)

    Macdonald, Calum

    Smith, Rt Hon John (M'kl'ds E)

    McFall, John

    Smith, Llew (Blaenau Gwent)

    McKelvey, William

    Snape, Peter

    Mackinlay, Andrew

    Soley, Clive

    McLeish, Henry

    Steinberg, Gerry

    Maclennan, Robert

    Stevenson, George

    McMaster, Gordon

    Stott, Roger

    McNamara, Kevin

    Strang, Dr. Gavin

    McWilliam, John

    Straw, Jack

    723

    Taylor, Mrs Ann (Dewsbury)

    Welsh, Andrew

    Taylor, Matthew (Truro)

    Wicks, Malcolm

    Thompson, Jack (Wansbeck)

    Williams, Rt Hon Alan (Sw'n W)

    Trimble, David

    Williams, Alan W (Carmarthen)

    Turner, Dennis

    Wilson, Brian

    Tyler, Paul

    Winnick, David

    Vaz, Keith

    Worthington, Tony

    Walker, Rt Hon Sir Harold

    Wray, Jimmy

    Wallace, James

    Wright, Dr Tony

    Walley, Joan

    Wardell, Gareth (Gower)

    Tellers for the Noes:

    Wareing, Robert N

    Mr. Alan Meale and

    Watson, Mike

    Mr. Peter Kilfoyle.

    Question accordingly agreed to.

    22. VALUE ADDED TAX (SUPPLIES OF GOLD ETC.)
    Resolved,
    That the Value Added Tax Act 1983 shall have effect in relation to supplies of goods which (disregarding section 5 of that Act) are made on or after 1st April 1993 with the insertion after section 37B of the following section—

    22. VALUE ADDED TAX (SUPPLIES OF GOLD ETC.)

      Customers to account for tax on supplies of gold etc.
      37C.—(1) Where any person makes a supply of gold to another person and that supply is a taxable supply but not a zero-rated supply, the supply shall be treated for the purposes of Schedule 1 to this Act—

      (a) as a taxable supply of that other person (as well as a taxable supply of the person who makes it); and

      (b) in so far as that other person is supplied in connection with the carrying on by him of any business, as a supply made by him in the course of furtherance of that business,

      but nothing in paragraph (b) above shall require any supply to be disregarded for the purposes of that Schedule on the grounds that it is a supply of capital assets of that other person's business.
      (2) Where a taxable person makes a supply of gold to a person who—

      (a) is himself a taxable person at the time when the supply is made; and

      (b) is supplied in connection with the carrying on by him of any business.

      it shall be for the person supplied, on the supplier's behalf, to account for and pay tax on the supply, and not for the supplier.
      (3) So much of this Act and of any other enactment or any subordinate legislation as has effect for the purposes of, or in connection with, the enforcement of any obligation to account for and pay value added tax shall apply for the purposes of this section in relation to any person who is required under subsection (2) above to account for and pay any tax as if that tax were tax on a supply made by him.
      (4) Section 5(1) to (5) above shall not apply for determining when any supply of gold is to be treated as taking place.
      (5) References in this section to a supply of gold are references to—

      (a) any supply of goods consisting in gold, including gold coins, or

      (b) any supply of goods containing gold where the consideration for the supply (apart from any tax) is, or is equivalent to, an amount which does not exceed, or exceeds by no more than a negligible amount, the open market value of the gold contained in the goods."

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

  23. VALUE ADDED TAX

    (PRECIOUS AND SEMI-PRECIOUS METALS AND STONES)
    Resolved,
    That provision may be made authorising the modification of the Value Added Tax Act 1983 in relation to supplies of
    724
    goods or services consisting in, or relating to, any precious or semi-precious metal or stones or anything containing any such metal or stones.

  24. VALUE ADDED TAX (FUEL FOR PRIVATE USE)
  Resolved,
  That—

  (1) Paragraph 3 of Schedule 6 to the Finance Act 1986 and the Table B set out after that paragraph shall not have effect in relation to any case where the prescribed accounting period begins after 5th April 1993.

  (2) Accordingly, that Schedule shall have effect in relation to any such case with the following amendments, namely—

  (a) in paragraph 5(1)(a), for the words from "cubic capacity" to "in question" there shall be substituted "vehicle specified in Table A above, that Table";

  (b) in paragraph 5(1)(b), for "cubic capacity specified in those Tables" and "the Table in question" there shall be substituted, respectively, "vehicle specified in that Table" and "that Table";

  (c) in paragraph 6(1), for the words from "Tables" onwards there shall be substituted "Table A above is the capacity of its engine as calculated for the purposes of the Vehicles (Excise) Act 1971"; and

  (d) in paragraph 6(2), for "Tables A and B" there shall be substituted "Table A".

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

  25. VALUE ADDED TAX

    (PERSONS BELONGING IN OTHER MEMBER STATES)
    Resolved,
    That provision may be made amending the Value Added Tax Act 1983 in relation to cases where goods are supplied by a person who does not have an establishment in the United Kingdom and is taxable in another member State.

  26. VALUE ADDED TAX (BAD DEBTS)
  Resolved,
  That—

  (1) In section 11(1)(c) of the Finance Act 1990 for "one year" there shall be substituted "six months".

  (2) This Resolution shall come into force on 1st April 1993 and shall apply in relation to supplies made on or after 1st April 1992.

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

  27. VALUE ADDED TAX (DEFAULT SURCHARGE)
  Resolved,
  That—

  (1) In section 19 of the Finance Act 1985, in subsection (5)—

  (a) at the end of paragraph (b) there shall be inserted "and", and

  (b) for paragraphs (c) and (d) there shall be substituted the following paragraph—

  "(c) in relation to each such period after the second, the specified percentage is 15 per cent."

  (2) This Resolution shall apply in relation to any liability to a surcharge arising on or after 1st April 1993.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  28. INCOME TAX (CHARGE AND RATES FOR 1993–94)
  Resolved,
  That—

  (1) Income tax shall be charged for the year 1993–94, and for that year—

  (a) the lower rate shall be 20 per cent.,

  (b) the basic rate shall be 25 per cent., and

  (c) the higher rate shall be 40 per cent.

  (2) For the year 1993–94 section 1(2) of the Income and Corporation Taxes Act 1988 shall apply as if—

  (a) the amount specified in paragraph (aa) were £2,500, and

  (b) the amount specified in paragraph (b) were £23,700; and accordingly section 1(4) of that Act shall not apply for the year 1993–94.

  (3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 before 18th May 1993.

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

  29. INCOME TAX
  TABLE B

  Cars with an original market value up to £19,250 and not having a cylinder capacity

  Original market value of car

  Age of car at end of relevant year of assessment

  Under 4 years

  4 years or more

  Less than £6,000

  £2,310

  £1,580

  £6,000 or more but less than £8,500

  £2,990

  £2,030

  £8,500 or more but not more than £19,250

  £4,800

  £3,220

  TABLE C

  Cars with an original market value of more than £19,250

  Original market value of car

  Age of car at end of relevant year of assessment

  Under 4 years

  4 years or more

  More than £19,250 but not more than £29,000

  £6,210

  £4,180

  More than £29,000

  £10,040

  £6,660"

  (2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 before 18th May 1993.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  29. INCOME TAX

    (PERSONAL AND MARRIED COUPLE'S ALLOWANCES)
    Resolved,
    That sections 257 and 257A of the Income and Corporation Taxes Act 1988 shall apply for the year 1993–94 as if the amounts specified in them were the same as the amounts specified in them as they apply for the year 1992–93, and accordingly section 257C(1) of that Act shall not apply for the year 1993–94.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    30. RELIEF FOR INTEREST (LIMIT FOR 1993–94)
    Resolved,
    That, for the year 1993–94, the qualifying maximum defined in section 367(5) of the Income and Corporation Taxes Act 1988 shall be £30,000.
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    PART I

      TABLES OF FLAT RATE CASH EQUIVALENTS
      TABLE A

      Cars with an original market value up to £19,250 and having a cylinder capacity

      Cylinder capacity of car in cubic centimeters

      Age of car at end of relevant year of assessment

      Under 4 years

      4 years or more

      1,400 or less

      £2,310

      £1,580

      More than 1,400 but not more than 2,000

      £2,990

      £2,030

      More than 2,000

      £4,800

      £3,220

    31. EARNINGS CAP ETC. (INDEXATION)
    Resolved,
    That the figure £75,000 shall be deemed to be the figure found for the year 1993–94, for the purposes of section 590C of the Income and Corporation Taxes Act 1988, by virtue of section 590C(4) and (5).
    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    32. CHARITABLE DONATIONS

      (PAYROLL DEDUCTION SCHEMES)
      Resolved,
      That, for the year 1993–94 and subsequent years of assessment, section 202(7) of the Income and Corporation Taxes Act 1988 shall have effect with the substitution of "£900" for "£600".
      And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

    33. CORPORATION TAX

      (CHARGE AND RATE FOR FINANCIAL YEAR 1993)
      Resolved,
      That corporation tax shall be charged for the financial year 1993 at the rate of 33 per cent.

    34. CORPORATION TAX (SMALL COMPANIES: 1993)
    Resolved,
    That for the financial year 1993–

    (a) the small companies' rate shall be 25 per cent., and

    (b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be one fiftieth.

    35. BENEFITS IN KIND (CARS)
    Resolved,
    That—
    (1) For the year 1993–94, Schedule 6 to the Income and Corporation Taxes Act 1988 shall have effect with the substitution for Part I of the following—

36. BENEFITS IN KIND (CAR FUEL)
Resolved,
That—

"TABLE A

Cylinder capacity of car in cubic centimeters

Cash equivalent

1,400 or less

£600

More than 1,400 but not more than 2,000

£760

More than 2,000

£1,130

TABLE AB

Cylinder capacity of car in cubic centimeters

Cash equivalent

2,000 or less

£550

More than 2,000

£710

TABLE B

Original market value of car

Cash equivalent

Less than £6,000

£600

£6,000 or more but less than £8,500

£760

£8,500 or more

£1,130"

(1) For the year 1993–94, section 158 of the Income and Corporation Taxes Act 1988 shall have effect with the following amendments.
(2) For the Tables in subsection (2) there shall he substituted—
(3) In subsection (5) the words "or 3" shall be omitted.
(4) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 before 18th May 1993.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

37. BENEFITS IN KIND (VANS)
Resolved,
That provision may be made relating to vans available for private use.

38. INTEREST (CORPORATION TAX)
Resolved,
That provision may be made restricting interest allowable as a deduction in computing corporation tax.

39. INTEREST ETC. ON DEBTS BETWEEN ASSOCIATED COMPANIES
Resolved,
That provision may be made in relation to interest and other returns on debts owed (directly or indirectly) to companies resident in the United Kingdom by associated companies of theirs which are not so resident.

40. RELIEF ON INTEREST PAYMENTS
Resolved,
That—
(1) In section 355 of the Income and Corporation Taxes Act 1988, after subsection (1) there shall be inserted the following subsections—
"(1A) Where, in the case of any loan—

(a) the condition specified in subsection (1)(a) above would not (apart from this subsection) be fulfilled with respect to any land, caravan or house-boat by reason of its having ceased at any time to be used by a particular person as his only or main residence; and

(b) the borrower's intention at that time was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of that land, caravan or house-boat,

that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to that land, caravan or house-boat (as well as with respect to any other land, caravan or house-boat with respect to which it is in fact fulfilled) from that time until the end of that period or (if sooner) the abandonment by the borrower of his intention to dispose of the land, caravan or house-boat in question.
(1B) Where—

(a) subsection (1A) above has effect in the case of any loan ('the first loan') so that the condition specified in subsection (1)(a) above is treated in relation to any person as fulfilled with respect to any land, caravan or house-boat, and

(b) there is another loan raised by the borrower to defray money to be applied as mentioned in section 354(1) with a view to the use of any other land, caravan or house-boat as the borrower's only or main residence,

interest on the other loan shall be treated as eligible for relief to the same extent (if any) as if no interest were payable on the first loan."
(2) In subsection (2) of that section, after "subsection (1)" there shall be inserted "or (1A)".
(3) In section 365 of that Act, after subsection (1) there shall be inserted the following subsections—
"(1A) Where, in the case of any loan—

(a) the condition specified in subsection (1)(d) above would not (apart from this subsection) be fulfilled
730
with respect to any land by reason of its having ceased at any time to be used by a particular person as his only or main residence; and

(b) the intention at that time of the person to whom the loan was made, or of each of the annuitants owning an estate or interest in that land, was to take steps, before the end of the period of 12 months after the day on which it ceased to be so used, with a view to the disposal of his estate or interest,

that condition shall be treated in relation to interest on that loan as continuing to be fulfilled with respect to the land from that time until the end of that period of (if sooner) the abandonment by that person or any of those annuitants of his intention to dispose of his estate or interest.
(1B) If it appears to the Board reasonable to do so, having regard to all the circumstances of a particular case, they may direct that in relation to that case subsection (1A) above shall have effect as if for the reference to 12 months there were substituted a reference to such longer period as meets the circumstances of that case."
(4) In consequence of paragraphs (1) to (3) of this Resolution, that Act shall have effect with the following consequential amendments—

(a) in section 354(1), for "to (6)" there shall be substituted "to (4)";

(b) sections 354(5) and (6), 356D(9), 357(4) and 371 shall cease to have effect;

(c) in section 370(1), for "371" there shall be substituted "372";

(d) in section 370(6), after paragraph (b) there shall be inserted—
"and section 355(1A) shall have effect as if after the word 'used' in paragraph (a) there were inserted the words 'wholly or to a substantial extent'.";

(e) in section 370(7), after paragraph (a) there shall be inserted the following paragraph—

"aa subsections (1A) and (1B) of that section shall have effect as if—

(i) after the word 'used' in paragraph (a) of subsection (IA) there were inserted the words 'wholly or partly';

(ii) for the words 'subsection (1)(a)', wherever they occur, there were substituted the words 'subsection (1)';

(iii) for the words 'land, caravan or house-boat', wherever they occur without being immediately preceded by the word 'other', there were substituted the word 'dwelling'; and

(iv) for the words 'other land, caravan or house-boat', wherever they occur, there were substituted the words 'land, caravan or house-boat'; and".

(5) This Resolution shall have effect in relation to payments of interest made on or after 16th March 1993 (whenever falling due).
(6) Where this Resolution applies by virtue of paragraph (5) of this Resolution in a case where the condition specified in section 355(1)(a) or 365(1)(d) of the Income and Corporation Taxes Act 1988 ceased to be fulfilled before 16th March 1993, the power of the Commissioners of Inland Revenue by virtue of this Resolution to extend the period specified in section 355(1A) or 365(1A) of that Act—

(a) shall be exercisable in any case in relation to that period irrespective of when that period began in that case; and

(b) in so far as it is exercisable in relation to the period specified in section 355(1A) of that Act where an equivalent period has been extended in any case under section 354(6) or 371(2) or (3) of that Act, shall be deemed to have been exercised so that

731
(subject to any further extensions) the period in question ends when that equivalent period would have ended.

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

41. TAX CREDITS ETC.
Resolved,
That provision may be made as to tax credits in respect of distributions and as to the rate at which other amounts are treated as having borne tax.

42. FOREIGN DIVIDENDS
Resolved,
That, in relation to transactions effected on or after 6th April 1993, Schedule 3 to the Income and Corporation Taxes Act 1988 shall be amended as follows—
(1) In sub-paragraph (1) of paragraph 6A, for "basic rate" there shall be substituted "applicable rate".
(2) After sub-paragraph (2) of that paragraph there shall be inserted the following sub-paragraph—
"(2A) Payments of tax made on any person's behalf under this paragraph shall be treated as made for the purpose only of being applied in the discharge of that person's liability to tax charged (otherwise than by virtue of this paragraph) on the dividends or proceeds to which the payments relate."
(3) After sub-paragraph (3) of that paragraph there shall be inserted the following sub-paragraph—
"(4) For the purposes of sub-paragraph (1) above the applicable rate shall be—

(a) the lower rate, in the case of a foreign dividend which is neither interest nor any other annual payment which is made otherwise than by way of dividend; and

(b) the basic rate in any other case."

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

43. CHARGEABLE GAINS (ANNUAL EXEMPT AMOUNT)
Resolved,
That provision may be made as to the operation of section 3 of the Taxation of Chargeable Gains Act 1992 for the year 1993–94.47.

44. CHARGEABLE GAINS (PERSONAL EQUITY PLANS)
Resolved,
That provision may be made for the purposes of the Taxation of Chargeable Gains Act 1992 in relation to persons who subscribe to a personal equity plan by transferring or renouncing shares or rights to shares.

45. CHARGEABLE GAINS (DEBENTURES ISSUED IN EXCHANGE)
Resolved,
That provision may be made, for the purposes of the taxation of chargeable gains, in relation to debentures issued or treated as issued by one company in exchange for shares in or debentures of another company.

46. CHARGEABLE GAINS (DE-GROUPING)
Resolved,
That provision may be made amending section 179 of the Taxation of Chargeable Gains Act 1992.

47. CHARGEABLE GAINS (INSURANCE: TRANSFERS OF BUSINESS)
Resolved,
That provision (including provision having retrospective effect) may be made amending section 211 of the Taxation of Chargeable Gains Act 1992.

48. CHARGEABLE GAINS (UNIT TRUSTS AND OFFSHORE FUNDS OF INSURANCE COMPANIES)
Resolved,
That provision (including provision having retrospect effect) may be made amending the transitional provision made in connection with sections 212 and 213 of the Taxation of Chargeable Gains Act 1992.

49. CHARGEABLE GAINS (RESTRICTION ON SET OFF OF PRE-ENTRY LOSSES)
Resolved,
That provision may be made for restricting the allowable losses that may be taken into account in computing the total profits of a company which is or has been a member of a group of companies.

50. CHANGES IN THE OWNERSHIP OF COMPANIES
Resolved,
That section 245 of the Income and Corporation Taxes Act 1988 may be amended.

51. EXCHANGE GAINS AND LOSSES
Resolved,
That charges (including charges by reference to past events) may be imposed by—

(a) provisions about gains and losses accruing from fluctuations in exchange rates;

(b) provisions connected with provisions mentioned in paragraph (a) above.

52. PROFITS OR LOSSES (CURRENCY)
Resolved,
That provision may be made about currencies to be used in calculating profits and losses for corporation tax purposes.

53. NON-RESIDENTS
Resolved,
That provision may be made about trustees, companies and other persons not resident in the United Kingdom.

54. OVERSEAS LIFE INSURANCE COMPANIES
Resolved,
That provision (including provision having retrospective effect) may be made in relation to overseas life insurance companies.

55. LLOYD'S UNDERWRITERS
Resolved,
That provision (including provision having retrospective effect) may be made about Lloyd's underwriters.

56. AUTHORISED LLOYD'S UNDERWRITING AGENTS
Resolved,
That provision may be made about authorised Lloyd's underwriting agents.

57. EMPLOYERS' PENSION CONTRIBUTIONS
Resolved,
That provision may be made in relation to contributions by employers under approved retirement benefit schemes.

58. APPROVED SHARE OPTION SCHEMES
Resolved,
That provision may be made about approved share option schemes.

59. BUSINESS EXPANSION SCHEME (RESTRICTION ON RELIEF)
Resolved,
That provision may be made for restricting entitlement to relief under Chapter III of Part VII of the Income and Corporation Taxes Act 1988.

60. APPLICATION OF INCOME TAX ACTS TO PUBLIC OFFICES ETC.
Resolved,
That provision may be made amending section 829 of the Income and Corporation Taxes Act 1988.

61. CAPITAL ALLOWANCES
Resolved,
That provision (including provision having retrospective effect) may be made amending the Capital Allowances Act 1990.

62. PETROLEUM REVENUE TAX
Motion made, and Question put:—
That provision may be made reducing the rate of petroleum revenue tax to 50 per cent. and making other modifications of that tax.
The House divided: Ayes 304, Noes 40.

Division No. 197]

[10.28 pm

AYES

Adley, Robert

Brown, M. (Brigg & Cl'thorpes)

Ainsworth, Peter (East Surrey)

Browning, Mrs. Angela

Aitken, Jonathan

Bruce, Ian (S Dorset)

Alexander, Richard

Burns, Simon

Allason, Rupert (Torbay)

Burt, Alistair

Amess, David

Butterfill, John

Ancram, Michael

Carlisle, John (Luton North)

Arbuthnot, James

Carlisle, Kenneth (Lincoln)

Arnold, Jacques (Gravesham)

Carrington, Matthew

Arnold, Sir Thomas (Hazel Grv)

Carttiss, Michael

Ashby, David

Cash, William

Atkinson, Peter (Hexham)

Churchill, Mr

Baker, Rt Hon K. (Mole Valley)

Clark, Dr Michael (Rochford)

Baker, Nicholas (Dorset North)

Clarke, Rt Hon Kenneth (Ruclif)

Baldry, Tony

Clifton-Brown, Geoffrey

Banks, Matthew (Southport)

Coe, Sebastian

Banks, Robert (Harrogate)

Colvin, Michael

Bates, Michael

Congdon, David

Batiste, Spencer

Conway, Derek

Beggs, Roy

Coombs, Anthony (Wyre For'st)

Bellingham, Henry

Coombs, Simon (Swindon)

Bendall, Vivian

Cope, Rt Hon Sir John

Beresford, Sir Paul

Couchman, James

Biffen, Rt Hon John

Cran, James

Blackburn, Dr John G.

Currie, Mrs Edwina (S D'by'ire)

Bonsor, Sir Nicholas

Curry, David (Skipton & Ripon)

Booth, Hartley

Davis, David (Boothferry)

Boswell, Tim

Day, Stephen

Bottomley, Peter (Eltham)

Deva, Nirj Joseph

Bottomley, Rt Hon Virginia

Devlin, Tim

Bowden, Andrew

Dickens, Geoffrey

Bowis, John

Dorrell, Stephen

Boyson, Rt Hon Sir Rhodes

Douglas-Hamilton, Lord James

Brandreth, Gyles

Dover, Den

Brazier, Julian

Duncan, Alan

Bright, Graham

Duncan-Smith, Iain

Brooke, Rt Hon Peter

Dunn, Bob

734

Durant, Sir Anthony

Kirkhope, Timothy

Eggar, Tim

Knapman, Roger

Elletson, Harold

Knight, Mrs Angela (Erewash)

Emery, Rt Hon Sir Peter

Knight, Greg (Derby N)

Evans, David (Welwyn Hatfield)

Knight, Dame Jill (Bir'm E'st'n)

Evans, Jonathan (Brecon)

Knox, David

Evans, Nigel (Ribble Valley)

Kynoch, George (Kincardine)

Evans, Roger (Monmouth)

Lait, Mrs Jacqui

Evennett, David

Lamont, Rt Hon Norman

Faber, David

Lang, Rt Hon Ian

Fabricant, Michael

Lawrence, Sir Ivan

Fenner, Dame Peggy

Legg, Barry

Field, Barry (Isle of Wight)

Leigh, Edward

Fishburn, Dudley

Lennox-Boyd, Mark

Forman, Nigel

Lester, Jim (Broxtowe)

Forsyth, Michael (Stirling)

Lidington, David

Forsythe, Clifford (Antrim S)

Lightbown, David

Forth, Eric

Lilley, Rt Hon Peter

Fowler, Rt Hon Sir Norman

Lloyd, Peter (Fareham)

Fox, Dr Liam (Woodspring)

Lord, Michael

Fox, Sir Marcus (Shipley)

Luff, Peter

Freeman, Roger

Lyell, Rt Hon Sir Nicholas

French, Douglas

MacGregor, Rt Hon John

Fry, Peter

MacKay, Andrew

Gale, Roger

McLoughlin, Patrick

Gallie, Phil

McNair-Wilson, Sir Patrick

Gardiner, Sir George

Maginnis, Ken

Garel-Jones, Rt Hon Tristan

Maitland, Lady Olga

Garnier, Edward

Major, Rt Hon John

Gill, Christopher

Malone, Gerald

Gillan, Cheryl

Mans, Keith

Goodlad, Rt Hon Alastair

Marland, Paul

Goodson-Wickes, Dr Charles

Marshall, John (Hendon S)

Gorman, Mrs Teresa

Marshall, Sir Michael (Arundel)

Gorst, John

Martin, David (Portsmouth S)

Grant, Sir Anthony (Cambs SW)

Mates, Michael

Greenway, Harry (Ealing N)

Mawhinney, Dr Brian

Greenway, John (Ryedale)

Mellor, Rt Hon David

Griffiths, Peter (Portsmouth, N)

Merchant, Piers

Grylls, Sir Michael

Milligan, Stephen

Gummer, Rt Hon John Selwyn

Mills, Iain

Hague, William

Mitchell, Sir David (Hants NW)

Hamilton, Rt Hon Archie (Epsom)

Moate, Sir Roger

Hamilton, Neil (Tatton)

Molyneaux, Rt Hon James

Hampson, Dr Keith

Monro, Sir Hector

Hanley, Jeremy

Montgomery, Sir Fergus

Hannam, Sir John

Moss, Malcolm

Hargreaves, Andrew

Needham, Richard

Hawkins, Nick

Nelson, Anthony

Hawksley, Warren

Newton, Rt Hon Tony

Hayes, Jerry

Nicholls, Patrick

Heald, Oliver

Nicholson, David (Taunton)

Heath, Rt Hon Sir Edward

Nicholson, Emma (Devon West)

Heathcoat-Amory, David

Norris, Steve

Hendry, Charles

Onslow, Rt Hon Sir Cranley

Heseltine, Rt Hon Michael

Oppenheim, Phillip

Higgins, Rt Hon Sir Terence L.

Ottaway, Richard

Hill, James (Southampton Test)

Page, Richard

Hogg, Rt Hon Douglas (G'tham)

Paice, James

Horam, John

Patnick, Irvine

Hordern, Rt Hon Sir Peter

Patten, Rt Hon John

Howarth, Alan (Strat'rd-on-A)

Pattie, Rt Hon Sir Geoffrey

Howell, Rt Hon David (G'dford)

Pawsey, James

Hughes Robert G. (Harrow W)

Peacock, Mrs Elizabeth

Hunt, Rt Hon David (Wirral W)

Pickles, Eric

Hunt, Sir John (Ravensbourne)

Porter, David (Waveney)

Hunter, Andrew

Portillo, Rt Hon Michael

Hurd, Rt Hon Douglas

Powell, William (Corby)

Jack, Michael

Rathbone, Tim

Jackson, Robert (Wantage)

Redwood, John

Jenkin, Bernard

Renton, Rt Hon Tim

Jessel, Toby

Richards, Rod

Johnson Smith, Sir Geoffrey

Riddick, Graham

Jones, Gwilym (Cardiff N)

Robathan, Andrew

Jones, Robert B. (W Hertfdshr)

Roberts, Rt Hon Sir Wyn

Jopling, Rt Hon Michael

Robertson, Raymond (Ab'd'n S)

Kellett-Bowman, Dame Elaine

Robinson, Mark (Somerton)

Key, Robert

Ross, William (E Londonderry)

Kilfedder, Sir James

Rowe, Andrew (Mid Kent)

King, Rt Hon Tom

Rumbold, Rt Hon Dame Angela

735

Ryder, Rt Hon Richard

Thornton, Sir Malcolm

Sackville, Tom

Thurnham, Peter

Sainsbury, Rt Hon Tim

Townend, John (Bridlington)

Shaw, David (Dover)

Townsend, Cyril D. (Bexl'yh'th)

Shaw, Sir Giles (Pudsey)

Tracey, Richard

Shephard, Rt Hon Gillian

Tredinnick, David

Shepherd, Colin (Hereford)

Trimble, David

Shepherd, Richard (Aldridge)

Trotter, Neville

Skeet, Sir Trevor

Twinn, Dr Ian

Smith, Sir Dudley (Warwick)

Vaughan, Sir Gerard

Smith, Tim (Beaconsfield)

Viggers, Peter

Soames, Nicholas

Waldegrave, Rt Hon William

Speed, Sir Keith

Walden, George

Spencer, Sir Derek

Walker, Bill (N Tayside)

Spicer, Sir James (W Dorset)

Waller, Gary

Spicer, Michael (S Worcs)

Ward, John

Spink, Dr Robert

Wardle, Charles (Bexhill)

Spring, Richard

Waterson, Nigel

Sproat, Iain

Watts, John

Squire, Robin (Hornchurch)

Wells, Bowen

Stanley, Rt Hon Sir John

Wheeler, Rt Hon Sir John

Steen, Anthony

Whitney, Ray

Stephen, Michael

Whittingdale, John

Stern, Michael

Widdecombe, Ann

Stewart, Allan

Wiggin, Sir Jerry

Streeter, Gary

Wilkinson, John

Sumberg, David

Willetts, David

Sweeney, Walter

Winterton, Mrs Ann (Congleton)

Sykes, John

Winterton, Nicholas (Macc'f'ld)

Tapsell, Sir Peter

Wolfson, Mark

Taylor, Ian (Esher)

Wood, Timothy

Taylor, John M. (Solihull)

Yeo, Tim

Taylor, Sir Teddy (Southend, E)

Young, Sir George (Acton)

Temple-Morris, Peter

Thomason, Roy

Tellers for the Ayes:

Thompson, Sir Donald (C'er V)

Mr. Sydney Chapman and

Thompson, Patrick (Norwich N)

Mr. Andrew Mitchell.

NOES

Abbott, Ms Diane

Llwyd, Elfyn

Alton, David

Loyden, Eddie

Ashdown, Rt Hon Paddy

Lynne, Ms Liz

Barnes, Harry

McCrea, Rev William

Betts, Clive

Maclennan, Robert

Bruce, Malcolm (Gordon)

Madden, Max

Campbell, Menzies (Fife NE)

Marshall, David (Shettleston)

Canavan, Dennis

Martin, Michael J. (Springburn)

Carlile, Alexander (Montgomry)

Michie, Mrs Ray (Argyll Bute)

Connarty, Michael

Parry, Robert

Corbyn, Jeremy

Raynsford, Nick

Cryer, Bob

Robinson, Peter (Belfast E)

Dafis, Cynog

Rooker, Jeff

Foster, Don (Bath)

Salmond, Alex

Godman, Dr Norman A.

Skinner, Dennis

Harvey, Nick

Taylor, Matthew (Truro)

Hogg, Norman (Cumbernauld)

Tyler, Paul

Hughes, Simon (Southwark)

Wallace, James

Johnston, Sir Russell

Jones, Ieuan Wyn (Ynys Môn)

Tellers for the Noes:

Jones, Nigel (Cheltenham)

Mr. Archy Kirkwood and

Kennedy, Charles (Ross,C&S)

Mr. Andrew Welsh.

Question accordingly agreed to.

63. INHERITANCE TAX (INDEXATION)
Resolved,
That provision may be made—

(a) amending section 8 of the Inheritance Tax Act 1984;

(b) as to the operation of subsection (1) of that section as regards chargeable transfers made in the year beginning 6th April 1993.

64. STAMP DUTY (THRESHOLD)
Resolved,
That the following provisions shall have effect for the period beginning 23rd March 1993 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) Section 55 of the Finance Act 1963 and section 4 of the Finance Act (Northern Ireland) 1963 shall be amended as follows—

(a) in subsection (1) of each section for "£30,000" (in each place) there shall be substituted "£60,000";

(b) in subsection (2) of each section for "£300" there shall be substituted "£600".

(2) This Resolution applies to—

(a) instruments executed on or after 16th March 1993 and before 23rd March 1993 and not stamped before 23rd March 1993;

(b) instruments executed on or after 23rd March 1993.

(3) For the purposes of section 14(4) of the Stamp Act 1891 the law in force at the time of execution of an instrument falling within paragraph (2)(a) above shall be deemed to be that as varied in accordance with paragraph (1) above.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.

65. STAMP DUTY (RIGHT TO ACQUIRE)
Resolved,
That provision may be made about stamp duty with regard to any case where there is an exercise of the right to acquire on rent to mortgage terms (in England and Wales) or to purchase by way of the rent to loan scheme (in Scotland).

66. RELIEF FROM TAX

  (INCIDENTAL AND CONSEQUENTIAL CHARGES)
  Resolved,
  That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from taxation.

PROCEDURE RESOLUTIONS

  PROCEDURE (MUTUAL RECOVERY AND DISCLOSURE OF INFORMATION)
  Resolved,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision for implementing requirements' with respect to mutual recovery and the disclosure of information which are imposed in relation to excise duties by the Directive of the Council of the European Communities dated 14th December 1992 No. 92/108/EEC and the Directive of the Council dated 25th February 1992 No. 92/12/EEC.

  PROCEDURE (TRADING FUNDS)
  Resolved,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision with respect to trading funds.

  PROCEDURE (FUTURE TAXATION)
  Resolved,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

  (a) provision for supplies falling within Group 7 of Schedule 5 to the Value Added Tax Act 1983 to cease to be

  737
  zero-rated and as to the rates at which tax is to be charged on those supplies and on the equivalent acquisitions and importations;

  (b) provision about cars available for private use;

  (c) provision about car fuel;

  (d) provision about the rate of advance corporation tax;

  (e) provision about indexation;

  (f) provision about Lloyd's underwriters.

FINANCE BILL [Money]
Queen's Recommendation havng been signified—
Resolved,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise—

(a) the payment out of money provided by Parliament of amounts which, by virtue of that Act, are payable in respect of distributions received by charities and persons to whom section 507 or 508 of the Income and Corporation Taxes Act 1988 applies;

(b) any increase in the sums payable out of money provided by Parliament which is attributable to any provision of that Act relating to trading funds;

(c) any increase in the sums payable into the Consolidated Fund which is attributable to any provision of that Act relating to trading funds;

(d) any increase in the sums payable out of or into the National Loans Fund which is attributable to any provision of that Act relating to functions of the National Debt Commissioners.

Bill ordered to be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Clarke, Mr. Secretary Heseltine, Mr. Secretary MacGregor, Mr. Secretary Howard, Mr. Secretary Lilley, Mrs. Secretary Shephard, Mr. Michael Portillo, Mr. Stephen Dorrell, Sir John Cope and Mr. Anthony Nelson do prepare and bring it in.

FINANCE BILL [Money]
  FINANCE (No. 2) BILL
  Mr. Stephen Dorrell accordingly presented a Bill to grant certain duties, to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 167.]

Statutory Instruments, &c
Madam Speaker: With permission, I shall put together the motions relating to statutory instruments.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).

Statutory Instruments, &c
  PNEUMOCONIOSIS
  That the draft Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 1993, which were laid before this House on 26th February, be approved.
  ASIAN DEVELOPMENT BANK
  That the draft Asian Development Bank (Fifth Replenishment of the Asian Development Fund and Second Regularized Replenishment of the Technical Assistance Special Fund) Order 1993, which was laid before this House on 1st March, be approved.
  INTERNATIONAL FINANCE CORPORATION
  That the draft International Finance Corporation (1991 General Capital Increase) Order 1993, which was laid before this House on 1st March, be approved.
  CHILD SUPPORT
  That the draft Child Support (Miscellaneous Amendments) Regulations 1993, which were laid before this House on 2nd March, be approved.
  CHILD BENEFIT
  That the draftChild Benefit and Social Security (Miscellaneous Amendments) Regulations 1993, which were laid before this House on 2nd March, be approved.

  CHESSINGTON COMPUTER CENTRE
  That the draft Chessington Computer Centre Trading Fund Order 1993, which was laid before this House on 2nd March, be approved.—[Mr. Wood.]
  Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS
Motion made, and Question put forthwith pursuant to Standing Order No. 102(9) (European Standing Committees.).
EUROPEAN COMMUNITY DOCUMENTS

  SERBIA AND MONTENEGRO (TRADE SANCTIONS)
  That this House takes note of European Community Documents Nos. 7150/92, 7945/92, 8365/92, 8409/92, 10528/92 and 11236/92, relating to the imposition of trade sanctions against Serbia and Montenegro; and, while endorsing the Government's view that all steps necessary to ensure the effective implementation of sanctions against Serbia and Montenegro should he taken, believes that further action enforcing sanctions is needed.—[Mr. Wood.]
  Question agreed to.

Tin Mining Subsidence (Cornwall)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]
10.41 pm
Mr. Sebastian Coe: I am grateful for the opportunity to raise in the House a pressing concern that has consistently effected my constituency and the rest of Cornwall—damage to property resulting from tin mining subsidence. I refer to all Cornwall because, in Gunnerslake, my hon. Friend the Member for Cornwall, South-East (Mr. Hicks) has been working hard for the past three months on behalf of three constituents who have suffered from such damage. My hon. Friend is, unfortunately, unable to be with us this evening.
Before informing hon. Members of the situation we face in Cornwall, I should like to outline briefly the history and significance of tin mining to that county.
Much of the tin mining was situated in the district of Kerrier. Its rich deposits of tin were exploited from the earliest times, and the urban area of Redruth grew up around the mines. By the 15th century, tin mining was emerging as a central and vital feature of the Cornish economy. Its importance was borne out by the power invested in the Stannary courts. As far back as 1305, Edward 1, through two different charters, one for Cornwall and one for Devon, outlined the privileges granted to tinners. That helped to create the situation described by the Cornish historian, Philip Payton, of tinners being
"a class of independent workers, living and working according to their own rules, answerable only to their kind, and jealous of their rights and privileges."
They were a little like hon. Members in this place.
As mining grew in importance in the Cornish economy, it began to command deep respect and status, and it was followed by other Cornish industries. That influence of immense importance went a long way towards moulding modern Cornwall's socio-economic fabric.
The industrial revolution and the arrival of steam engines helped to propel the tin industry into modern times, and Cornwall managed to command a near-monopoly of world production. That emphasises the uniqueness of Cornwall and the sharp difference between its economy and that of the rest of England which, in structure, remains the case today.
Scarcely a week goes by without a report in a local newspaper of someone suffering damage to property as a result of old tin mining works. Such subsidence causes various problems to property that is highlighted by searches, surveys and inspections. It dines not need the trained eye to notice the obvious cracks in structure and ceilings, but whose role is it to compensate for such devaluation of property? The standard answer is that, after any subsidence from mining, the owner of the surface has the right to bring legal action against whoever did the mining.
For coal, there is an alternative course of action, which is normally much easier and more suitable: to claim compensation work to make good property from British Coal. That option, or its equivalent, does not exist for tin mining. There are no special Acts, and there is no single state-owned operator that has taken on the assets and liabilities of previous operations.
740
Following the decline of the industry, mines were abandoned and, after selling marketable equipment, little tidying up was done. In many cases, tips, shafts and engine houses remained for long periods in a state much as when the mine was closed. Subsequently, some of the tips were worked over and the material reprocessed, and some engine houses were dismantled. More recently, mine waste has been quarried for landfill.
The expansion of the industry and increase in population in recent years has resulted in a shortage of suitable building land. Large parts of the district of Kerrier are unavailable for development, either to protect unexploited mineral reserves or because of environmental constraints. That means that there is considerable pressure to redevelop land left derelict as the result of mining activity. Planning policies at county and district levels reflect local concern about the extent and impact of derelict land. Those authorities are committed to bringing derelict land back into use.
It is usual when buying a property to find a provision that retains the mining rights for some other owner. Indeed, in most cases, mineral ownership is totally severed from the surface freehold. Most mines were abandoned a long time ago, and the ownership of the mining rights has disseminated and become uncertain over time. One may be able to trace part-owners—for example, someone owning 13/365ths—but no complete ownership due to the nature of the inheritance. Some 100 years ago, there may have been one or two owners, but not now.
Liability is almost impossible to work out, particularly as many of the mines, especially in Redruth, predate 1872 and were not required to be registered. Without the ability to trace an owner for liability, to whom could a household with a property damaged by subsidence go for compensation?
The only other alternative is to look to insurance companies. However, they are now refusing to provide cover for certain areas, and often refuse even to consider particular post codes. I am the first to defend the right of a commercial enterprise to choose its own custom, but the present practice does not help my constituents. The insurance companies could be considered to be inflexible by refusing to insure any house in a specific district. That displays a lack of understanding. Tin mines, unlike coal mines, are worked via vertical shafts, not horizontal ones. Therefore, one house may be affected, and a house two doors down may not be.
The issue of damages and who is liable is central to my concern. Halsbury's "Laws of England", volume 31, section 117, describes how damages are decided. I do not intend to detain the House with the legalese, nor do I wish to "do a Rumpole", but the process is clearly described. When subsidence occurs after the original owner has ceased to own the property, a later occupier is not generally liable for the subsidence. Due to the confiscatory nature of death duties in earlier times, the state acquired all the benefits of the land, but none of the liabilities.
I shall draw a comparison with the position relating to coal mining subsidence. In essence, the coal case is far easier and better controlled, partly because it is covered by specific legislation—most recently the Coal Mining Subsidence Act 1991. British Coal has to accept liability, no matter which coal mining concern originally caused the damage. Compensation is paid, or work to make good undertaken, provided only that the claim is made within six years of the damage becoming apparent.

741
If agreements cannot be reached, the claimants can appeal to the Lands Tribunal. Alternatively they can use the cheap arbitration scheme organised by British Coal, and run by the Chartered Institute of Arbitrators. This is a far more favourable position than that held by tin mining subsidence sufferers in my constituency.
In fact, the problems are much greater even than the law suggests, because of the difficulty in tracing the owner of the minerals, let alone the defunct company which did the mining. As I have already stated, the minerals owner is normally not the same person as the surface freeholder, and it is extremely difficult to discover who the mineral owner is. The Chamber of Mines has a confidential list of some owners, but even these will not normally allow their names to go to the householders threatening legal action. The Duchy of Cornwall is the largest minerals owner but also the most secretive: it has actually removed its records to London so as to make it virtually impossible for potential litigants to discover when the Duchy is liable.
It is also unlikely that a surveyor could be sued for failing to notify a householder. Solicitors organise searches for mine workings, but their reports would be worded so as to protect them from liability if subsidence later occurred.
Mr. Matthew Taylor: I think that the hon. Gentleman is aware that a constituent of mine died when a shaft opened up under her immediately outside her back door. The family has since campaigned hard to obtain all possible information on where the shafts are. Not only is it difficult to trace those who may have worked the mine or who may have the mineral rights, but the very existence of the problem is almost impossible to determine, given the history of this mining. Yet the council, which might be able to provide the information, is given no funding at all for gathering such information in what would be a major undertaking. I hope that the hon. Gentleman will impress that point on the Minister.
Mr. Coe: I welcome that intervention. A mining search, of course, is only as good as the records that are consulted—and as the interpretation put on them by the researcher. On the whole, the records are notoriously poor, but common sense dictates that local councils, through archives or local knowledge, must be aware of the situation of most of these mines, and must therefore be in a position to advise potential developers where they are located.
The position is very unsatisfactory, and might be made even worse by a court ruling two years ago that the National Trust, as surface freeholder, was liable to cap an uncapped mine shaft on land that it had recently bought. That might suggest that householders would in future be liable to cap mineshafts in similar circumstances.
I am not attempting to suggest a solution to this immense problem, but something must be done. The "polluter pays" principle simply cannot work in this case. Morally, compensation must be the order of the day. I hope that this debate will prompt the Minister to reconsider the situation.
10.53 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry): My hon. Friend the Member for Falmouth and Camborne (Mr. Coe) has set out thoroughly the problems facing parts of Redruth and the whole of Cornwall arising from historic tin mining. He has shown admirable concern for the plight of his constituents who are adversely affected. I congratulate him on raising this matter and on the clear way he has presented the issues. As he said, our hon. Friend the Member for Cornwall, South-East (Mr. Hicks) has also activley sought solutions to these problems.
Since problems of mining subsidence are not restricted to Cornwall, perhaps it would be helpful if I explained the Government's general approach to the problems of historic mining activity before looking at the situation in Cornwall.
Britain has a long history of mining for a wide variety of minerals. Apart from the coalfields, there are the metal mining fields of Devon and Cornwall, the Mendips, Wales, the Pennine uplands and the Lake district, and the salt mines of Cheshire. The old limestone mines of the black country have also become well known over the last 10 years or so and much of the building stone for Bath was provided by underground mining. Less well known are the sand and sandstone mines of west Yorkshire, Lancashire and Surrey, chalk mines throughout the south-east, including several in London, and other mines for iron ore and ironstone, potash, gypsum, anhydride, ball clay, fullers earth, fireclay, slate, chert and flint. There are examples in many of those areas of subsidence due to old mines causing damaging to property. Because reliable records are available only since the latter half of the 19th century, the first intimation of earlier mine workings has often been the occurrence of subsidence.
In support of the development of land use planning policy, we have carried out a number of mining-related research projects over the last 10 years or so. These have included specific area studies of limestone working in the black country, coal mining in south Wales, chalk and flint mining in Norwich and metal mining in Cornwall. Studies of the methods of treatment of disused mine shafts and of compiling and using information on mining were published in 1988.
The broad national picture was obtained during the "Review of mining instability in Great Britain", published in 1992. As well as regional and technical reports, that includes a case study report specifically on metalliferous mines in Kerrier, of which my hon. Friend is aware. That research has supported the development of advice in planning policy guidance note 14, "Development on unstable land", published in April 1990. This advises that, where development is proposed in areas which are known or suspected to be undermined, due account should be taken of the potential effects of subsidence on that development.
The responsibility for investigating a site to determine whether subsidence is likely to be a problem is that of the developer. However, local planning authorities are advised that they should regard the possibility of mining subsidence as a material planning consideration and take account of it at all stages of the planning process. Purchasers are also advised that they should make such inquiries as they consider necessary to satisfy themselves as to the stability of the land. It is recognised, however, that

743
searches are only as good as the information available—a point rightly made by my hon. Friend. For many mining areas, information, when it exists, is often not readily available.
More specific planning guidance on the treatment of disused mine openings and the availability of information on mined ground is currently being developed. I hope to be able to publish it later in the year. We shall continue to review the effectiveness of our policies in reducing the impact of subsidence and will consider the need for further guidance.
Mr. Matthew Taylor: The Minister has touched on a point that I raised earlier about the availability of information. As I said, a constituent of mine died, having had no information that there might be a problem. The local borough council—and, I believe, all other councils in Cornwall—has sought to gather information but, as the Minister will understand, it is an expensive process. In the review, will he consider the possibility of funding councils for part of the costs of gathering such information so that it can be made available to people?
Mr. Baldry: I shall come to that point when I discuss the historic position.
Whatever consideration is now given to new development—much of what I have said has related to new development—it is a fact of life that much of the development in this country preceded such considerations. Indeed, all the matters which are the cause of concern in Cornwall preceded them. Consequently, there are many areas where development has already taken place above old mine workings and thus may be at risk from subsidence. That is what happened in the case raised by the hon. Gentleman and in other places in Cornwall.
Derelict land grant funding has therefore been made available for the investigation and treatment of land liable to become derelict due to actual or apprehended subsidence due to abandoned underground mines. Land likely to be affected by subsidence cause by coal mining was excluded because it was already covered by the Coal Mining (Compensation for Subsidence) Acts. Derelict land grant funding for the stabilisation of underground mines is available in Cornwall. It is a precondition of that that local authorities will have to have some regard to where such mines might be if they are to have derelict land grant funding.
Financial help has been given to the treatment of tin mines in Cornwall. In 1988, we made it clear that derelict land grant would be available for the capping or back-filling of mine shafts, even where the work does not form part of a wider scheme for the reclamation of derelict land. Priority has been given to the treatment of mine shafts on land needed for development or redevelopment, or with a high degree of public access—such as open land next to a footpath. My hon. Friend will be aware that as a consequence of that initiative intensive shaft-capping programmes have been undertaken by both Kerrier and Carrick district councils—so we have invested substantial sums of money to help tackle that problem.
Our general approach to the problems of mining subsidence is thus to attempt to prevent the problems arising by proper consideration within the planning system, and by the use of derelict land grant funds to deal
744
with mine shafts and underground workings where there is a significant element of risk to public safety or where substantial existing development is at risk.
As the House will be aware, the Urban Regeneration Agency will—when it comes into full operation—subsume derelict land grant. As the consultation paper on the agency made clear, in constructing its unified grant regime, and issuing our guidance to the agency, we shall take account of the current priorities for derelict land grant. It will, of course, be for the agency to determine its initial work programme. In doing so, I am confident that it will take full account of existing derelict land grant programmes in Cornwall.
Despite all those measures, subsidence does happen, and I fully appreciate that it causes much distress to people and damage to property that is expensive to repair. As my hon. Friend made clear, apart from coal, there is no statutory compensation scheme and the liability under common law for any damage is that of the person who caused the damage. I fully acknowledge that, in the case of abandoned mines, there is a problem, in that the persons who caused the damage have largely long since disappeared, if they were ever known, and there may be no successors in title other than the surface landowner.
In practice, most household insurance policies cover subsidence, whatever the cause. There is thus a remedy to cover the costs of subsidence damage to property. However, the Government recognise that there can be problems and my hon. Friend argued the case for a publicly funded compensation scheme to cover such cases. Insurance policies normally cover damage to property, but a collapse in the garden or grounds which does not affect the property or cause loss of value due to the perception of subsidence risk may not be covered. The commercial judgment of insurance companies may also result in difficulties in obtaining insurance cover where properties have already been damaged by subsidence or where a threat of subsidence has been identified.
Such problems have arisen not just in Cornwall but in other areas affected by historic mining. The proposal for a publicly funded compensation scheme was carefully considered in 1987 in respect of limestone mines in the black country. It was concluded that the insurance industry already provided protection in respect of subsidence damage under normal household building insurance contracts, and it was felt inappropriate for central Government to fund any such scheme.
However, assurances were obtained from the major insurers providing household insurance and from the Building Societies Association that they would not discriminate against areas potentially at risk from limestone subsidence, provided that there was no evidence of existing damage to the property involved. That means that insurance risks and mortgage applications are considered on their merits. Subsidence cover is available at standard terms and conditions, subject to normal underwriting considerations.
My officials will certainly raise the issues mentioned by my hon. Friend with the Association of British Insurers as part of their continuing discussions on limestone and other mining subsidence, and I will ensure that they pay particular regard to the problems identified in Cornwall.
Within my hon. Friend's constituency have been found the richest deposits of tin and copper in the British Isles. The area contains some of the longest-lived and most famous mines of south-west England, as well as the sole

745
surviving tin mine at South Crofty. The area also has a long history of subsidence dating from the time of mining or shortly after abandonment. As my hon. Friend knows, that is continuing.
It must be said, however, that, considering the amount of mining that took place, the amount of subsidence is relatively limited. That is largely dues to the strength of the rock surrounding the workings and their narrowness and depth. My hon. Friend described the nature of tin workings, which is somewhat different from that of some other minerals. I fully realise, however, that that is not much compensation for the individuals whose properties have been affected.
An analysis of 74 subsidence events in Kerrier district between 1974 and 1990 formed part of the case study that I have already mentioned: it showed that shaft collapses are the most common type of subsidence event, constituting 41 of the 74. Although that is a significant number, it represents a small proportion of the 6,000-plus shafts estimated to be in Kerrier, and the 12,000-plus in Cornwall as a whole. Collapses of unstable shallow stope workings are much less frequent, although they can affect larger areas than shaft collapses. About one third of those subsidence events were on public highways or in open spaces, or near enough to such areas to present a danger to public safety. About one third involved damage to gardens and grounds of properties. Only nine of the 74 involved structural damage to buildings—that is, only nine out of some 12,000 shafts.
Other parts of Cornwall also suffer from shaft collapse and subsidence. The events at Gunnislake last summer were widely reported in the national press. Two houses have had to be demolished, and derelict land grant has been awarded to Caradon district council to treat the shafts and to counter the threat of subsidence damage to land beyond the confines of the individual properties.
My hon. Friend is also aware of the concern with which local authorities in Cornwall regard the problems of historic mining. The local planning authorities are diligent in their consideration of mining issues, which is based both on their own records and the advice of the mineral valuers. Both the county and district councils co-operated fully with my Department's research at Chacewater and St. Day in the mid-1980s. That study aimed to develop techniques to enable planners and developers better to take account of ground conditions in this and other metal-mining areas. The computerised database which resulted was transferred to the county council as a basis for extension to other parts of the county as and when the opportunity arose. I understand that it is used fairly intensively.
The local authorities have also carried out a number of land reclamation schemes, funded by derelict land grant, to enable derelict mining areas to be put to alternative use—providing, for instance, housing, industrial development or public open space. The treatment of mine shafts and
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workings within the schemes, and the shaft capping programmes that I have already mentioned, have been funded where they represent value for money.
In Cornwall, as elsewhere, the costs involved need to be justified by a significant threat to the public and/or a large number of properties. Where only single properties are affected by collapse or the threat of subsidence, it has generally been regarded as a matter for the property owners or their insurers. Clearly, with limited derelict land grant funds available and many competing demands, it is not possible for every incident to be remedied from the public purse when alternatives are available in the insurance market. It would not be appropriate for the Government to act on all occasions as insurer of last resort.
My hon. Friend should also note that—even when derelict land grant has been paid for the treatment of shafts or mine workings—if properties have been damaged, compensation for the structures has been dealt with by the owners' insurers. If it has been necessary to acquire the land to enable the reclamation scheme to be carried out it has been acquired at derelict land value only.
Obviously, it would not be proper for me to comment on individual cases, but in correspondence my hon. Friend has explained a situation which is causing particular concern in Clinton road, Redruth, where a number of shallow workings close to the surface have suffered subsidence from time to time. I have not been approached by Kerrier district council for derelict land grant support either to investigate the problems in the area or to deal with individual collapses. If I were, I should consider the request with care. However, it will be clear from what I have already said that the treatment of collapses affecting individual properties is generally regarded as a matter for owners and their insurers. If there is a wider problem, the investigation and treatment of the shallow workings could be a possible candidate for derelict land grant funding. Should an application be received, I will ensure that it is carefully considered in the light of the availability of funds and competing demands.
We recognise the problem of historic mining, which affects my hon. Friend's constituents and other Cornwall constituencies. Although we do not consider that a publicly funded compensation scheme is justified, we are working actively to reduce the problems both nationally and in Cornwall by carrying out appropriate research, developing advice to enable the problems to be avoided where possible and making available derelict land grant funds to deal with the problems where the costs can be justified by the risk to public safety or to substantial existing development.
Obviously, I shall continue to keep the matter under review and to take a keen interest in the representatives made by my hon. Friend and other Cornwall Members.
Question put and agreed to.
Adjourned accordingly at nine minutes past Eleven o'clock.