Windfall Tax (Hansard, 10 December 1998)

§ 3. Mr. Mike Gapes (Ilford, South)
If he will make a statement on the mechanisms for the allocation of the proceeds of the windfall tax. [61747]

§ 10. Ms Rosie Winterton (Doncaster, Central)
If he will make a statement on the use made of the proceeds of the windfall tax. [61754]

§ 17. Dr. Stephen Ladyman (South Thanet)
What further plans he has for the proceeds of the windfall tax on the privatised utilities. [61763]

§ The Paymaster General (Mr. Geoffrey Robinson)
The House will be pleased to know that the second instalment of the windfall tax has been paid in full, raising £5.2 billion. Some £2.6 billion of that has been allocated 465 to the welfare-to-work programme for 18 to 24-year-olds and £1.3 billion has been allocated to the new deal for schools.

§ Mr. Gapes
I am grateful for that reply. Will my hon. Friend confirm that, if the whingeing Liberals and the neanderthal Conservatives had had their way, there would have been no windfall tax, and therefore no new deal? Will he further confirm that, by April next year, 300,000 people will have benefited from the new deal, including 30,000 18 to 24-year-olds, who will be in work as a result? May I draw to his attention the regional discrepancies in take-up of the new deal? Will he try to remedy the problem of some people in London staying for a considerable period in the gateway?

§ Mr. Robinson
I can give my hon. Friend that assurance. The length of time in the gateway is one aspect that needs particular attention. The Employment Service is well aware of that. He is right to point out that the Conservatives oppose the windfall tax, the new deal for schools and the welfare-to-work programme. Of course, that is not true of all Conservatives. They might look at the wise words of the hon. Member for South-West Bedfordshire (Sir D. Madel), who made it clear on 4 December that he welcomed the new deal in his constituency, and referred to the great amount of good that it was doing for young people there.

§ Ms Winterton
Is my hon. Friend aware that, in areas such as South Yorkshire, the public utilities used to have a good track record on training, exceeding their requirements? Are the privatised utilities participating in the new deal by providing training opportunities? If not, what action will the Treasury take to encourage them to participate?

§ Mr. Robinson
In fairness, the utilities have played a full part in making the new deal possible. Beyond that, many of them have signed up and are participating in it, and providing training. Yorkshire Water has signed up and Yorkshire Electricity is already in meaningful discussions with the Employment Service. Instead of sniping from the sidelines, the Conservatives should make it clear why they are against our measures to provide jobs and training for youngsters and to make employment work.

§ Dr. Ladyman
Does my hon. Friend agree with a constituent who wrote to me this week, who certainly regards the windfall tax spending on the new deal as money well spent? It is entirely thanks to the new deal that the man, who is in his 40s, is back in full-time paid employment for the first time since 1994. Will my right hon. Friend assure me that we shall continue to extend the new deal, and that the remaining proceeds from the windfall tax will be used to improve its quality further, in particular to extend the gateway, which is key to the success of the new deal

§ Mr. Robinson
My hon. Friend is correct. We have 28 pilot projects under way for the long-term unemployed. He referred to one constituent. He will welcome the news that the pilots are showing good signs of success throughout the country. We intend to build on them.

§ Mr. Tim Boswell (Daventry)
As the hon. Gentleman has apparently remained a Treasury Minister in the 466 12 months since I ceased to shadow him, despite appearances to the contrary, will he explain, as he was unable to do 12 months ago, how it has been possible to raise £5.6 billion from British industry without any apparent impact on employment in the industries concerned or on their investment programmes—or has he merely joined the Magic Circle?

§ Mr. Robinson
To start with, the hon. Gentleman has got the figure wrong—it is £5.2 billion. All the regulators for the industries signed up to it. Instead of carping around irrelevant points, why do not Opposition Members concentrate on what is happening in their constituencies, and work with the Employment Service agencies to make the deal a success? As they have opposed the scheme so vehemently throughout, the country will expose their hypocrisy on it.

§ Mr. Nick St. Aubyn (Guildford)
One of the objections to the new deal is that it does not provide enough money to help the older unemployed—those in their 30s, 40s, 50s and perhaps even early 60s. Will more money be made available for them, including unexpectedly retired former Ministers?

§ Mr. Robinson
The Opposition really have to make up their mind. Either they are in favour of the new deal and the £500 million that we have made available for the long-term unemployed, to whom I think the hon. Gentleman was referring, or they are not. If they are not, they should make it clear, but if they are, I should tell him that we are looking at the 28 pilots. If we can build on them, and if they prove successful—and the signs are that they are—we shall extend the scheme.

§ Mr. Malcolm Bruce (Gordon)
Does the Paymaster General acknowledge that the hon. Member for Daventry (Mr. Boswell) has a significant point? The consumers who paid for the excess profits that have been taxed would have benefited had those profits been returned to them in lower prices or further investment. As he is answering this question, can he confirm that he is still in charge of the windfall tax programme and sorting out the problem faced by the poor pensioners who have suffered from the dividend changes that he introduced? He pledged to do something about it. Does he plan to do so, or has he been stripped of that responsibility?

§ Mr. Robinson
It is interesting that, typically, the Liberals voted against the windfall tax, yet continue to pretend that they are in favour of it, willing the end but not the means. That inconsistency is a hallmark of the Liberal party. For our part, we have raised £5.2 billion. We are putting it to good use, and it is recognised throughout the country that the programmes on which we have embarked are proving successful.

§ Mr. Dale Campbell-Savours (Workington)
My hon. Friend will recall that the windfall tax is actually a Tory tax. It was imposed on the banks in the 1980s. Following the news that the NatWest bank made £1 billion profit in its first six months—through ripping off some of its customers, such as The Tanning Shop franchisees—I wonder whether the banks should now be subject to a windfall tax.

§ Mr. Robinson
My hon. Friend will understand if I do not follow him own that route of speculation. However, 467 he is quite right to say that the Tories introduced the windfall tax when they taxed the profits made by the banks due to high interest rates. Of course they are embarrassed by our success in these matters, as they presided over much higher rates of unemployment, for example. When the right hon. Member for Wells (Mr. Heathcoat-Amory) was a Treasury Minister, we had interest rates above 10 per cent. for four years. That was his record. We are determined not to repeat those mistakes. Improving the basis of our training skills throughout the economy is a fundamental part of that.

§ Mr. Ian Bruce (South Dorset)
I am sure that the hon. Gentleman now knows that he is in charge of looking after taxpayers' money rather than taking it away from them. In the first year of the Labour Government, long-term unemployment was decreasing rapidly and when the new deal was first introduced long-term unemployment actually went up. The latest figures show that the long-term unemployed who disappeared from the register are not actually in jobs under the new deal, but are participating in the make-work schemes being provided under the new deal. In six months' time those people will be back on the register, and the Paymaster General will have wasted taxpayers' money again.

§ Mr. Robinson
In the months since we started the new deal for the young unemployed—the 18 to 24-year-olds—unemployment in that category has fallen by 27 per cent. We have only just got the 28 pilots for the long-term unemployed under way, but if they prove successful we shall see similar improvements in that group. Instead of carping and criticising, why do not the Opposition welcome the measures, and work with us to make them succeed?