HC Deb 27 March 1996 vol 274 cc1027-8
13. Mr. John Greenway

To ask the Secretary of State for Scotland what discussions he has had with potential inward investors about taxation rates; and if he will make a statement. [21332]

Mr. Michael Forsyth

Taxation rates regularly feature in our discussions with potential investors.

Mr. Greenway

Does my right hon. Friend agree that Scottish life assurance companies are world leaders in their markets and are responsible for substantial life assurance business throughout the United Kingdom and, increasingly, Europe? Has he discussed with the boards and chief executives of those successful companies the implications for business of a different rate of income tax in Scotland?

Mrs. Ewing

Boring.

Mr. Forsyth

The hon. Member for Perth and Kinross (Ms Cunningham), I think, suggested from a sedentary position that this was boring.

Mrs. Ewing

No, it was me.

Mr. Forsyth

On this occasion, I must disagree with the hon. Member for Moray (Mrs. Ewing). Nothing could be more central to Scotland's interests than the impact of different rates of income tax north and south of the border, as proposed by the Opposition parties which support a tax-raising parliament.

Mr. Donohoe

He is clutching at straws.

Mr. Forsyth

The hon. Gentleman suggests that we are clutching at straws, but my hon. Friend the Member for Ryedale (Mr. Greenway) asked a serious question. If the marginal rate of tax on savings is 23p north of the border and 20p south of the border, Scottish financial institutions will be put at an enormous disadvantage in their efforts to attract savings. Scotland's pensioners would also be put at an enormous disadvantage, as the return on their savings would be less. It is high time that Opposition Members faced up to the consequences of their disastrous policy proposals for Scotland, and their effect on jobs in Scotland.

Mr. Graham

Is the Secretary of State aware that Scotland is losing too many factories and too much potential business to other countries—especially Ireland—because the Government have not provided sufficient capital to attract investment? My constituency recently lost a company to Ireland. If the Government had got off their mark, that company could have provided 400 or 500 new jobs. Should not the Secretary of State be trying to get jobs into Scotland?

Mr. Forsyth

If the hon. Gentleman is worried about losing business in his constituency, he had better come across to this side of the House. He is a member of a party that is committed to policies that would add to the costs of business in Scotland through the minimum wage, the social chapter and the tartan tax. If those policies were introduced, the hon. Gentleman would find not only that jobs were not coming to Scotland, but that existing jobs would be going south of the border. That would be the consequence of Labour's policies. The sooner he gets his party leaders to wake up to that, the better for everyone concerned.

Mr. Gallie

Will my right hon. Friend welcome the investment into Ailsa Perth in my constituency by Cathelco, which has taken Ailsa Perth out of receivership? The company has good order books but has been short of cash recently, and the investment augurs well for my constituents, for jobs in my constituency and for the local authority.

Mr. Forsyth

I warmly welcome my hon. Friend's news, which I am sure the House will welcome also. The people of Ayr are extremely lucky to have him as their Member of Parliament. He is a doughty fighter on behalf of their interests, and I am sure that everyone in Ayrshire is well aware of that.

Sir James Molyneaux

Will the Secretary of State consider discussing with his Treasury colleagues the possibility of making the enterprise investment scheme much more effective, perhaps by doubling the taxation relief?

Mr. Forsyth

I shall certainly give the right hon. Gentleman's suggestion careful thought. I always consider very carefully having any conversations with my Treasury colleagues because one does not always end up with what one expected at the beginning, but I shall consider the right hon. Gentleman's proposal and I would be grateful if he would fill me in on some of the details of what lies behind it after Question Time.