National Insurance Surcharge (Hansard, 14 December 1982)

§ Lord Beswick
My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.

§ Lord Glenarthur
My Lords, The Purpose of the reduction in the national insurance surcharge is to stimulate the private sector of industry by reducing the cost of employing labour. By restricting the reduction to the private sector it is possible to give a higher level of assistance to industry than would otherwise be possible.

§ Lord Beswick
My Lords, I am grateful to the noble Lord for that Answer. However, can he tell me why the same arguments do not apply to the public sector? Does the noble Lord recall that in the Chancellor's Statement—I quote from the Treasury progress report—it was said: The public sector will not gain from the change but the benefit to private employers in 1983–84 will be around £700 million."? What is the basis for the argument that that sort of concession shall be made to the private sector and not to the public sector?

§ Lord Glenarthur
My Lords, it is a central theme of the Government's policies that the way to improve the position of this country is through the private sector of industry. The question of the public sector is entirely different. The effect of the Bill, which I point out to the noble Lord is to come before your Lordships' House next week, will be that the public sector, both nationalised industries and local and central Government, will not be affected.

§ Lord Nugent of Guildford
My Lords, is my noble friend aware that the private sector has to bear the risks of the market in competition with overseas competitors who command the overseas markets as well as exporting to our own market? It is because they have to bear that trading risk that it is necessary to give the private sector this assistance, whereas the nationalised industries, in the main, have protected and in many cases monopolistic positions.

§ Lord Glenarthur
My Lords, I am grateful to my noble friend for his remarks.

§ Lord Underhill
My Lords, does the Government's reply imply that the public industries have no real effect on the course of industry in this country? Secondly, is it not an anomaly that private firms will have the advantage of this reduction and yet, under the Government's recent legislation, they can be using the facilities of the nationalised industries?

§ Lord Glenarthur
My Lords, as regards the first of the noble Lord's supplementary questions, the nationalised industries and other central authorities will be affected by other means; for example, the adjustment of external financing limits and other methods of controlling their expenditure. The whole point at the moment is that private industry is the means by which Great Britain will be got out of any trouble that it is in, not the nationalised industries.

§ Lord Kaldor
My Lords, since the noble Lord's case is that the Government wish to privatise industry because private industry is so much more efficient, may I ask this: How does he justify the imposition of discriminatory taxation against public industry if private industry is in any case in a more favourable and efficient position than public industry?

§ Lord Glenarthur
My Lords, this Government did not introduce the national insurance surcharge. It was introduced by the Labour Government in 1976.

§ Lord Kaldor
My Lords, the noble Lord must answer the question. It was non-discriminatory.

§ Viscount Massereene and Ferrard
My Lords, does my noble friend agree that the private sector of industry produces the real wealth of the country while the nationalised side of industry to a great extent squanders it?

§ Lord Glenarthur
My Lords, I am very grateful to my noble friend for his remarks.

§ Lord Underhill
My Lords, the Minister has not satisfactorily answered the question that I put to him. Are we now to learn from the Government's reply that they no longer believe in the efficiency of a mixed economy, as we do on this side of the House?

§ Lord Glenarthur
My Lords, the Government do believe in a mixed economy, but perhaps it would be helpful if we debated this matter more fully next week when the National Insurance Surcharge Bill, which specifically relates to the Question, is discussed.

§ Lord Orr-Ewing
My Lords, will my noble friend accept congratulations from this side of the House because half the tax thought up by the Labour Government in 1976 has now been removed? Will my noble friend confirm that 90 per cent. of our exports come from the private sector, that an immense number of jobs are dependent on those exports and. therefore, that it is in the interests of those jobs that this tax should be removed, as has now been done?

§ Lord Glenarthur
My Lords, I am grateful to my noble friend for his helpful remarks; yes, that is the case. This country depends hugely on the efforts of the 473 private sector. That is why in this particular case the private sector will benefit from the reduction, and the changes to the nationalised industries and central Government and local authorities will be effected as and when necessary by other means.

§ Lord Blyton
My Lords, is the noble Lord aware that the Government have hampered the nationalised gas and electricity industries with increased charges? Are the Government aware that they are giving emoluments to private enterprise where production has gone down by 20 per cent? Why should we discriminate between private enterprise and nationalised industries?

§ Lord Glenarthur
My Lords, I think that that is wide of the original Question. However, as I have said, if discrimination has to be applied then the alterations due to the change in the taxation will be made in other ways through, for example, external financing limits and the other measures which I described earlier.

§ Lord Somers
My Lords, would the noble Lord not agree that the least efficient forms of industry are, with a few exceptions, the large monopolies, whether private or public?

§ Lord Glenarthur
My Lords, I am sorry; will the noble Lord repeat the first part of his question, which I did not hear?

§ Lord Somers
My Lords, would the noble Lord not agree that the least efficient forms of industry are the large monopolies whether they be privately or publicly owned?

§ Lord Glenarthur
My Lords, I do not think that it is always the case, but there tends to be a risk that that could be the case.

§ Lord Beswick
My Lords, as the noble Lord found the supplementary from the noble Lord, Lord Nugent of Guildford, so helpful, will he take time to teach the noble Lord, Lord Nugent, that the cost of the product of the particular public authority for which he was responsible goes into the cost of the private sector products? If you are taking action to bring down costs, it is important to bring down costs in the public sector and thereby indirectly help the private sector also to bring down costs.

§ Lord Glenarthur
My Lords, I am sure that my noble friend Lord Nugent will listen to what the noble Lord says. But as I said earlier, there is nothing to alter the position so far as nationalised industries and central Government are concerned because other means can be used to adjust the way in which this particular burden falls.

§ Lord Glenamara
My Lords, is not this a piece of doctrinaire, blatant discrimination against the public sector? Does the noble Lord not realise that the private sector is underpinned by the basic industries in the public sector and that there can be no healthy economy in this country without a healthy public sector as well as a private sector?

§ Lord Glenarthur
No, my Lords, I am afraid I do not accept what the noble Lord says. It does not follow that there will be any disadvantageous competitive practice. If a private sector firm uses the benefit of the surcharge reduction to reduce its borrowing, then it is in precisely the same position as a nationalised industry which does so. In any case, if a nationalised industry has a substantial change in its competitive position, for whatever reason, the Government, as I have said, can make an appropriate change in its external financing limit. I think I have now said that four times.

§ The Lord Privy Seal (Baroness Young)
My Lords, as we are in fact to debate this matter next week, may I suggest that, having spent nine minutes on this Question, we might now move on to the next Question?