HC Deb 25 May 1995 vol 260 cc932-5
Q1. Ms Hoey

To ask the Prime Minister if he will list his official engagements for Thursday 25 May. [24650]

The Prime Minister (Mr. John Major)

This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Ms Hoey

Has the Prime Minister any understanding of the deep anger that will be felt in the country at the way in which the directors of the privatised National Grid have used tax avoidance measures to ensure that their wives will have hundreds of thousands of bonus shares? What message does that send to pensioners in my constituency who are struggling to make ends meet?

The Prime Minister

The hon. Lady may not be wholly aware of what has happened. I have made inquiries to clarify the position.

I understand that the only share options granted by the National Grid have been granted to its own directors and staff; but, having exercised those options and purchased the shares, directors have then given them to their wives. As the hon. Lady may know, it is a fundamental principle that transfers of property between husband and wife are free of tax, as they have been for a long time.

If the hon. Lady and the deputy leader of the Labour party wish to change the position, are they saying that they want to make transfers of property between husband and wife taxable? Are they saying that the independent taxation of men and women should be abolished? Are they saying that widows should no longer be able to inherit property from their husbands free of tax? [HON MEMBERS: "Answer".] That is the inevitable principle that follows from the point put by the hon. Lady. Once again, Opposition Members are trying to use a particular issue for their own advantage without understanding the implications of what they say.

Rev. Ian Paisley

I am sure that the Prime Minister has heard of the result of yesterday's meeting in America between his right hon. and learned Friend the Secretary of State for Northern Ireland and the leader of IRA-Sinn Fein. I am sure that he has noted what the leader of IRA-Sinn Fein said: that there can be no progress towards decommissioning until there is complete demilitarisation of everyone—that is, the surrender of arms by Army, police and those who have guns to protect themselves—and that all prisoners must be released. Are the Government prepared to negotiate with the leader of Sinn Fein on those terms?

The Prime Minister

As the hon. Gentleman knows, my right hon. and learned Friend met the leader of Sinn Fein yesterday to make a point that was very important for both the hon. Gentleman's constituents and others in Northern Ireland: that the best contribution that Sinn Fein could make to the conference and to Northern Ireland's prosperity would be to promote peace, and therefore to secure the decommissioning of the IRA's arms and explosives. That remains the Government's position.

Until, in these exploratory talks, there have been practical movements forward in the decommissioning of arms, it will not be possible for Sinn Fein to move to full-scale political talks either with the Government or, I suspect, the hon. Gentleman's party or any other political party in Northern Ireland. That is the point that we have made repeatedly to Sinn Fein, and it remains our position. As the hon. Gentleman knows, our objective is to move towards taking the gun entirely out of the politics of Northern Ireland. In that, I believe that we have the support of all the mainstream political parties in Northern Ireland and all the people of Northern Ireland.

Mr. Blair

To return to National Grid, is the Prime Minister aware—[HON. MEMBERS: "Oh."] They wanted us to answer the point and now they do not want us to raise it. Is the Prime Minister aware that the issue is not independent taxation between men and women, but remuneration being paid by way of share options so as to avoid income tax? That is what is actually happening in this case. Is the Prime Minister prepared to say that that abuse is wrong and is he prepared to put a stop to it?

The Prime Minister

Let me say to the right hon. Gentleman that I favour employee share options and I favour executive share options. I hope that the right hon. Gentleman does too, because that is a direct quote from his hon. Friend the shadow Chancellor. There is no dispute between the right hon. Gentleman and I or between the two major parties about the desirability of share options.

In this instance, the hon. Member for Vauxhall (Ms Hoey) has raised a point that has been the subject of publicity today. Having exercised the share options and purchased shares, a husband passed his own property—the shares—to his wife. The leader of the Labour party seems to be saying that if, having done something of which the leader of the Labour party approves—accepted share options—the husband then does what has been done for many years and passes them to his wife, that should now be taxable. That is quite unlike anything that has happened in the past. If that is Labour's policy, let the Leader of the Opposition please make it clear.

Mr. Blair

No, that is not the policy. The only reason why the directors transfer shares to their spouses is that the remuneration is paid by way of share options in order to avoid income tax. That is why they do it. That is the issue: it is not whether share options are wrong or right, it is whether they are taxed as income or as capital gains. Is the Prime Minister prepared to say that, where remuneration is effectively given by way of share options to avoid income tax and only pay capital gains tax, he will put a stop to it?

The Prime Minister

Capital gains are taxed at the marginal rate when the capital gain is realised. The right hon. Gentleman is effectively saying that he does not wish husbands to pass those rights on to their wives. The transfer of property between husbands and wives—be it shares, property or capital—is tax free.

Although the right hon. Gentleman is now wriggling because his hon. Friend the shadow Chancellor changed his position mid morning because he realised what he had said and what he had done, the truth is revealed yet again by what the right hon. Gentleman has said: Labour hates privatisation and it hates profit. It cannot stand share ownership. Old Labour lurks there as clearly as it ever did. Labour Members cannot stand the fact that some people receive share options and exercise share options as part of their employment remuneration.

Mr. Blair

Perhaps the Prime Minister does not realise that the National Grid has admitted that it used share options to avoid paying income tax. Why does not the Prime Minister stop defending the greed of a privileged few and stand up for the vast majority of decent British people?

The Prime Minister

The right hon. Gentleman had better decide whether he is really in favour of share options. The glaring divide between the shadow Chancellor and the leader of the Labour party becomes more apparent day by day. They may sit close together, but clearly they never speak.

Mr. Lidington

Will my right hon. Friend join me in welcoming today's announcement of further measures to target taxpayers' money on making state schools more effective and improving standards? Will he confirm that the Government's objective is to ensure that all parents are entitled to a good-quality, high-standard state education for their children, not only if they happen to live a couple of boroughs away from a convenient grant-maintained school?

The Prime Minister

I can certainly confirm that point. I believe that the proposals announced by my right hon. Friend the Secretary of State for Education will be widely welcomed up and down the country.

Mr. Ashdown

Does the Prime Minister agree that the deadlines in Sarajevo represent a critical moment for the authority of the United Nations and its commanders in Bosnia? Will he ensure that, if our commanders on the ground in Bosnia conclude that decisive action must be taken, they will receive the full and unswerving backing of not only the Government but the United Nations in New York?

The Prime Minister

I share the right hon. Gentleman's view about the importance of the present situation. I am happy to tell him that we have already given that assurance to our commanders on the ground. We made that clear in New York last night and they are aware of our position. The United Nations has also reiterated its full support—by that I mean our commanders will have support for whatever action they may consider necessary in the light of the events of the past day or so.

Let me add to that point in view of the present situation. We very much wish the United Nations protection forces to continue performing their role. They have saved many lives delivering aid and containing the fighting. I believe the reason for maintaining a force on the ground remains as compelling today as it has been in the past, but all the parties need to be aware that if they continue ground fighting and accelerate it, they may render it impossible for the United Nations protection forces satisfactorily to carry out the mandate that they have been given. I hope that point is fully understood. At present, General Smith and the United Nations forces are very much in our thoughts. They most assuredly have our total support.