HC Deb 13 February 1997 vol 290 cc448-50
2. Mr. Bellingham

To ask the Chancellor of the Exchequer what steps he is taking to promote wider share ownership; and if he will make a statement. [14170]

The Financial Secretary to the Treasury (Mr. Michael Jack)

In addition to the recent changes made to the three tax-approved employee share schemes, my right hon. Friend the Prime Minister has issued a challenging target to our largest businesses that he would like to see half their employees holding shares in their own companies by 2000.

Mr. Bellingham

Is my right hon. Friend aware that many of my constituents own shares in the companies for which they work and that many also own shares in privatised utilities that operate locally, such as Railtrack, British Telecom, British Gas and Anglian Water? Does he agree that those shareholders need confidence and that the one thing that would destroy that confidence would be a windfall tax which, apart from possibly being illegal, would amount to a straightforward confiscation of wealth from small shareholders?

Mr. Jack

My hon. Friend is right. If we follow what the shadow Chancellor said on the "Today" programme, it would be the equivalent of levying another 2p in tax. The shadow Chancellor's explanation on the radio this morning of the windfall tax was a cynical attempt to dodge the issue. He must have briefed the legal advice that he claims to justify it with all the details about the tax, so why does he not come out and tell the truth about which of the companies to which my hon. Friend referred would be affected, how much would be raised and who would pay? My hon. Friend is right to postulate uncertainty about the tax.

Mr. Corbett

As the Minister made a plea for truth, will he tell us how the Government propose to pay for their share match scheme, which we are told is intended to spread wider share ownership? Will he give the House an assurance that it will not be done by extending value added tax on food, children's clothing, public transport, and so on? If he will give that undertaking, will he say where the money will come from to pay for it?

Mr. Jack

I would be happy to give a straight answer to that question, in contrast to the efforts of the shadow Chancellor to dodge any question about the windfall tax. The share match scheme requires a change in the regulation of an already existing mechanism in the approved profit-sharing scheme, and we are considering how precisely to achieve that.

Mr. Nicholas Winterton

Does my right hon. Friend agree that a windfall tax could be considered an increase in price for the vital necessities of life, such as gas, electricity and water? Will not the increase therefore bear down most heavily on pensioners and those on low incomes?

Mr. Jack

For the shadow Chancellor to smile at the conclusion of my hon. Friend's question shows his cynical disregard for pensioners, who would have to pay for the tax—which could cost households about £100 a year—but he will not come clean on it. My hon. Friend has exposed the Opposition's cynical attempt to raise money through a utilities tax.

Mr. Darling

Is it not clear that the Conservatives are not particularly bothered about pensioners, but are keener to climb into bed with the boardroom fat cats? Does the Financial Secretary recall that it was the Tory party that pioneered the windfall tax in 1981, and that the idea was supported by the chairman of the 1922 Committee? If the Financial Secretary is in the business of giving straight answers, can he confirm—given that stability, more than anything else, affects share ownership—that the Chancellor will meet his inflation target of 2½ per cent. by the end of this Parliament?

Mr. Jack

Let me say to the hon. Gentleman, who has just put up another smokescreen to dodge answering questions about the windfall tax, that it is not only fat cats who would have to pay: many pensioners and people on low incomes would be the victims of the windfall tax. The hon. Gentleman knows what my right hon. and learned Friend's target is; he is confident of meeting it.

Sir Sydney Chapman

Will my right hon. Friend confirm that not only shareholders but pensioners would suffer from the introduction of a windfall tax, because the fundholders of pension schemes invest heavily in the privatised utilities? Will he further confirm that the costs of the utilities for consumers are bound to go up in the event of a windfall tax, simply because, if the prices were too high now, the regulators would have intervened to force them down? [Interruption.]

Mr. Jack

My hon. Friend is right. Opposition Members scoff, but Professor Littlechild, the electricity regulator, told a Commons Select Committee that he would have to take into account the windfall tax and its effect on utility prices when prices came to be set in the future. There can be no stronger endorsement of the line that my hon. Friend took. All the speculation and concern of Conservative Members are the direct result of the cynical attempt by the shadow Chancellor to dodge putting on the record the information that he gave to Mr. Beloff, who is said to have provided a legal opinion justifying his tax. He should make it public and be answerable for it.