HC Deb 19 February 1997 vol 290 cc915-7
10. Mr. Ian Bruce

To ask the President of the Board of Trade what assessment his Department has made of the amount of investment currently being made by the formerly publicly owned utilities. [15031]

Mr. Page

Since privatisation, managers have been free to set investment at the levels needed to secure long-term benefits, while responding to competitive and regulatory pressures. That is contributing to a sharp increase in efficiency, to the benefit of consumers.

Mr. Bruce

I thank my hon. Friend for that answer. Does he believe that the investment being made by the utilities is creating real British jobs in our economy? What does he think would happen if the Government of the day decided to take £10 billion out of that investment programme and put it into make-work schemes? Would that destroy those real jobs, as has happened around the world when those failed policies have been tried?

Mr. Page

The Government firmly oppose a windfall tax on the grounds that it would be very hard to establish on a fair and non-hybrid basis. I have to tell my hon. Friend and the House that this is not a windfall tax—it is not free. It is an old-fashioned smash and grab—in modern parlance, a ram raid—and it will bring only higher prices for pensioners, while at the same time bringing them lower private pensions. It will be a double whammy.

Mr. Battle

I remind the Minister that no less a body than the Institute of Directors has said that, in its view, the utilities have spare cash, and that the impact of any windfall tax would be insignificant. If he is satisfied with the levels of investment in the privatised utilities, will he explain why registered customer complaints against water companies have increased by nearly 90 per cent. and against the former British Gas by more than 100 per cent.? The Government's own former Energy Minister, within weeks of resigning, told the Select Committee on Trade and Industry that regulation needed overhauling because of high profits and lower service. What are the Government going to do about stopping service levels declining further—or can we expect only inaction as usual from the Government?

Mr. Page

The hon. Gentleman obviously has no experience of business whatsoever. I remind him that, before privatisation, the taxpayer in this country had to put his hand in his pocket to subsidise those state activities; now those same state activities give £2.6 billion in corporation tax every year to the Exchequer. A heavy windfall tax will no doubt cause a dip in those figures—it will be a treble whammy. As regards the hon. Gentleman's remarks about standards of service, I refer him to what has happened with British Telecom—for example, 95 per cent. of phone boxes are in operation, whereas only 75 per cent. were in operation when the company was run by the state.

Sir Roger Moate

Do not the shareholders of those companies include small investors, many pension funds and many foreign investors? Would not Labour's proposed windfall tax inflict serious damage not only on all those investors, but on Britain's international reputation as a place to invest and that does not normally engage in retrospective legislation or selective, politically motivated taxation?

Mr. Page

My hon. Friend makes a very important point. At present, this country is doing exceedingly well from inward investment. We are getting the lion's share of investment in the European Union—everyone is investing in this country. What a message the Labour party is sending to prospective inward investors: "Be careful if you invest in Britain, because we might impose a retrospective windfall tax upon you."