HL Deb 25 July 1984 vol 455 cc295-308

3.29 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, I beg to move that this Bill be now read a second time.

The Finance Bill gives effect to the Budget introduced by my right honourable friend the Chancellor of the Exchequer on 13th March. That Budget was not just a Budget for a year, but a Budget for a Parliament. It mapped out the path ahead, not just for one year but for several years. The most important characteristic of our financial and fiscal policy over the past five years has been its consistency. We have maintained a steady course throughout all of our difficulties—throughout the recession and now into recovery. It is the consistency of policy which is the cornerstone of confidence.

The Budget had two main themes. The first was the pursuit of policies designed further to reduce inflation, thereby encouraging healthy growth in the economy, better investment and more employment. The second—closely associated with it—was reform in the tax system designed to the same broad purpose; namely, to improve the working of the economy, thereby creating both output and employment. Because it is the Finance Bill we are debating and also because we shall be having a wide-ranging debate on the economy next week, it is the latter aspects of the Budget strategy, namely, the tax reforms, that I intend to direct my remarks to.

The Finance Bill contains a major reform of business taxation. Over the years the system has become cluttered up with a complex of special reliefs and allowances. These in turn reflected a complex of circumstances. Thus stock relief was a reaction to the major inflation which occurred in the 1970s. The special reliefs on plant and machinery—particularly the 100 per cent. first year allowance—reflected both the financial problems of replacement in an era of rapidly rising prices and also what was felt to be the need to stimulate investment to improve productivity.

Inflation has now been reduced substantially and our ultimate aim is stable prices. At the same time we have increasingly realised that the substitution of investment in machinery for the employment of labour is something which should be decided on the facts as determined by the market. Once Government come in arid start giving subsidies, distortion occurs and the wrong economic decisions are taken. In a period of high unemployment it is absurd that an artificial stimulus should be given to the displacement of labour by machinery in circumstances where, but for the Government subsidy, it would be uneconomic to do so.

For all these reasons, these special reliefs are no longer appropriate. The stock relief will therefore go. The 100 per cent. first year capital allowances will be replaced, over a period of years, by a new system under which the cost will be written off at 25 per cent. per annum. The withdrawal of these special reliefs opens up the way for very substantial reductions in the rates of corporation tax. The main rate will come down from 52 per cent. in steps to 35 per cent. by 1986–87. The small companies rate comes down immediately to 30 per cent., and at this figure it is the same as the basic rate of income tax.

This removal of the bias against employment and its replacement by encouragement to profit has a further important effect. Profit is the driving force of enterprise and of the economy. It is profitability which encourages investment and expansion. Investment is already increasing in a very healthy way. Total fixed investment was up by 10 per cent. during the last 12 months. Investment in manufacturing was up by 11 per cent. in the six months to March. In the new environment we are creating, what we shall see is the growth of healthy, cost effective and profitable investment. That is the way you create genuine, long-lasting employment.

We have also removed another impediment to employment—the national insurance surcharge. Successive Labour Governments have always had an inbuilt prejudice against employing people. We had the selective employment tax introduced by a Labour Government in 1966. We swept that away in 1973. Then we had the national insurance surcharge imposed by Labour in 1977, increased to 3½ per cent. in 1978. Progressively we have reduced the rate of this tax and it will now be going altogether. The removal of this much disliked tax will reduce business costs in all by some £3 billion a year.

Just as we believe that it is better to leave the question of the proper balance between man and machine to the market place where decisions are more likely to be right than those taken by government, so too we believe that the form in which people save should be determined more by their own choice and less by fiscal distortions. We propose taking a first step in this direction by removing the investment income surcharge and terminating the life insurance relief. Effect to these proposals is given in the Bill. The surcharge discriminated specifically against those who saved themselves and invested directly.

The life insurance relief discriminated in favour of those who saved through institutions. In future there will be a better balance between the two. In the same spirit, the stamp duty on the purchase of shares is being halved to 1 per cent. This will have the added advantage of freeing the capital markets to compete on a more equal footing with capital markets overseas. The reduction in stamp duty applies also to house purchase. This will be of especial help to new home buyers and is an important measure in assisting mobility of labour.

On the personal tax side, we believe that taxes on what people earn should be reduced as an essential measure in creating a more vigorous economy. Very important steps were taken in this direction in the last Parliament by the then Chancellor of the Exchequer, my right honourable and learned friend the present Foreign Secretary, Sir Geoffrey Howe.

This good work is now being carried forward. Relief is being concentrated on the starting points of tax. The main personal allowances are each being increased by about 12½ per cent., more than double the amount required to compensate for inflation. These personal allowances now stand in real terms 16 per cent. higher than they were in 1979 when we first came into office. The benefit of this increase in personal allowances will be felt throughout the whole of the income scale. But proportionately it gives most relief to those at the bottom of the income scale where 850,000 people will be taken out of liability altogether. It gives help, too, in alleviating the poverty trap.

It is better to tax people on what they spend rather than on what they earn. Some part of the cost of the direct tax concessions is met by the extension of VAT to hot take-away food and building alterations. I realise, not least because of pressures in your Lordships' House, that this has caused considerable apprehension because of the possible impact on historic buildings. But I hope that the concessions made at Report stage in another place will go some considerable way towards allaying these anxieties. Perhaps I might also remind your Lordships of the very considerable tax reliefs we have given over the years which have benefited the Heritage. The much more favourable conditions now applying to deeds of covenant in favour of charities have also been an important stimulus to charitable giving.

The recipe for a healthy personality—mens sana in corpore sano—can equally be applied to the national economy. We need healthy institutions operating in a healthy environment. It is for the private sector to provide the institutions—the businesses, the enterprises, the individual worker and management; it is for the Government to provide the healthy environment. Our major economic policies—fiscal policies, financial policies, labour policies, competition policies, trade policies and so on—are all directed to this end. Fiscal policy has an important—a crucially important—part to play. Perhaps strangely, perhaps perversely, fiscal policy is often more important for the obstacles it imposes rather than for the positive help it gives. Sound fiscal policy therefore will always contain a large element of removing the obstacles, the road blocks to progress. This Budget, enacted in this Finance Bill, does a very great deal in that direction. And positively it does a great deal also in creating an environment more conducive, more favourable to enterprise, to expansion, to growth and ultimately to employment. It is on that basis that I commend the Bill to your Lordships.

Moved, That the Bill be now read a second time.— (Lord Cockfield.)

3.41 p.m.

Lord Bruce of Donington

My Lords, the noble Lord has addressed your Lordships' House in very low key this afternoon. He has confined his remarks essentially to an outline of the provisions of the Finance Bill, the majority of which are quite familiar to your Lordships. He did, however, with his usual confidence, take the opportunity to indicate that these measures should be taken as representing a complete, consistent policy over the last five years and that they marked a continuation in the steady progress that had been made during the last five years.

In common with a large number of your Lordships on all sides of the House, I, of course, have had some experience in industry, management and the professions. There is one thing which we are taught very early; it is the feasibility of error and it becomes a canon of management. If one has a managing director who makes seven out of every 10 decisions correctly, he is reckoned to be pretty good; if he makes about 50 per cent. correctly, he is average; if he makes a little fewer than that, then he ought to be sacked. But there is universal agreement on one point: that the person who tries to be correct all the time is the worst manager of all.

The complacency with which the noble Lord has addressed the House after five years of office is remarkable. It implies that neither he nor his colleagues have made one single error over the last five years; they are really absolutely infallible; everything has gone completely and normally to plan; any adverse factors with which they have had to contend lie, according to them, outside of government control; any favourable winds or favourable factors—and there have been remarkably few exhibiting themselves over the last five years—are, of course, the responsibility of Government. This is something that really will not do.

It might be for the advantage of the House if we took a quick photograph of the position as it is now and compared it with the position when the Government took office. One must immediately say that the annual rate of inflation when the Government took office was 10.3 per cent. with about 2 per cent. in the pipeline and with the remainder up to over 20 per cent. due precisely to the actions of the Government. It has now been reduced to 5.6 per cent., although there is some dubiety reflected in the financial press over the last week, and by most of the forecasters, as to how long this figure can be maintained, particularly in view of the movement of interest rates. Let us immediately say that Her Majesty's Government have halved the annual rate of inflation; this is an achievement which cannot be taken away from them. In anticipation of what I shall say a little later, I am bound to say that any fool can reduce inflation by half if he raises unemployment by 2 million; it does not need a genius to deflate the economy thereby effecting a diminution in the rate of inflation by causing unemployment. There is no miracle about that; no intellectual effort is required.

So, here we are five years later. The bank rate when the Government took office was 12 per cent; it is 12 per cent. today. The exchange rate of the dollar against the pound was 2 dollars in 1979 and today it is 1.32 dollars—not an improvement. The Smithsonian rate covering the basket of currencies was in 1979 87.3 and it is now down to 78.9—not a very great improvement there. The percentage of national savings to the gross domestic product in 1979 was 19.6 per cent.; at the end of 1983 it was 16.9 per cent.—and it is still lower today as the noble Lord knows. The public sector borrowing requirement, which is the darling of the noble Lord—it is one of the magic talismans with which he used to regale the House, although we have not heard very much of it recently—was in 1979 running at £8,754 million. I am given to understand that it is round about that figure today: some say that it may go to £9 million; some say it will be in accordance with the medium-term target of round about£7½ million, but since the PSBR cannot be estimated by the Treasury with any kind of accuracy to the nearest £1,000 million, let us call it a day and say that the PSBR is running at round about the same level as it was when this Government took office. Government expenditure expressed as a percentage of GDP was running in 1979 at 40.5 per cent., and today it is running at 43 per cent. I do not want to haggle about the figures and make more out of them than is implicit, but that does not seem to be any great improvement. Manufacturing output based on an index of 100 for the year 1980 was 112 when this Government took office and it is now 97.5—not much improvement there; in fact, the reverse.

New investment in manufacturing industry, at 1980 prices, was in 1979 running at £7,468 million; it is currently running at £4,457 million. This, again, does not seem very impressive. As I have already indicated, unemployment has risen by 2 million. Direct personal taxation has gone up by 9 per cent. in real terms in the past five years, and indirect taxation has gone up by 19 per cent. in those five years. I do not want to make too much of this—I have given a photograph—but it seems to me, putting it at its most moderate, that there has certainly been no improvement in the situation, in its totality, from when the Government took office. On balance, most moderately stated, there has been a deterioration. Why?

Does it not occur to the Government every now and again to wonder whether somewhere along the line they might have gone wrong, whether somewhere along the line they might have made a mistake? We all make them. There is not a noble Lord in the House or in the Government who has not made a mistake of some kind or another. To err is human. I will suggest to your Lordships one of the reasons why so many errors have been made in government policies. Some of these the Government admit to themselves, although they have never graced the lips of the noble Lord, Lord Cockfield, who, as we know, is completely infallible in these matters.

One of the reasons is a complete misconception by the Government as to the true nature and purpose of a mixed economy. I am on record as saying in this House that all personal liberty must have its economic base, and that in the realm of enterprise, therefore, where consumer choice is the most dominant factor, production for that purpose is best accomplished by private enterprise. I am on record as having said that many times. But the essence of a mixed economy is that the great organisation either making the basic materials or supplying the basic services—such as gas, electricity, telephones and so on—should be susceptible to public control. This is particularly of significance in an island such as the United Kingdom, which is dependent for a large amount of its raw materials and for a certain amount of its food on imports from overseas—and, of course, on the volume of its own exports to balance them.

To shove the United Kingdom's economy out into the harsh, chill winds of competition without any kind of guide or influence from the Government as a whole is quite ridiculous. The noble Lord's party seems to have misunderstood altogether the change that has taken place since the advent of North Sea oil. Up to that time, there were periodic crises under both Governments which arose from an adverse balance of payments and an adverse balance of trade. It happened at intervals under both Governments, owing to the balance of payments situation, that they had to withdraw and make all kinds of cuts in public expenditure. Very often they had to amend exchange rates. But taken as a whole, those years were years of growth for the United Kingdom. They were largely years of social peace in the United Kingdom; and they saw a considerable advance in the standard of living which spread its way through the whole of the social fabri—although very great disparities of income and very great disparities of fortune remained, and poverty most certainly was not eliminated during that time.

The misunderstanding which the party opposite placed upon this was that they did not realise that with the advent of North Sea oil the old balance of payments constrictions which caused past Governments so much trouble would no longer apply. They did not avail themselves of the magnificent opportunity to guide (and I use the word "guide" rather than "conduct") the economy so that the unemployment they inherited, which was decreasing and on a downward trend, could have been progressively eliminated by a moderate expansion in public expenditure. This could have been addressed to the modernisation of our infrastructure and to the conduct of all kinds of construction work, including housing, which would have progressively bitten into unemployment without in any way involving an increase in inflation and without in any way impeding the progress which in those circumstances could have been made in reducing inflation.

Instead of that, the Government adopted the dogma. The first action they took, in their first Budget, was to increase the taxation burden indirectly falling on the bulk of the population and mainly upon the ordinary people of our country, while giving considerable tax concessions to those with very high incomes. That was done in the name of encouraging enterprise, initiative and drive. We remember it well. I remember the noble Earl, Lord Gowrie, being a little sensitive at the time, when I pointed out that it was odd, if a reduction in taxation was going to produce incentives, that the Government should have concentrated those incentives on the better-off people of the country, and that it appeared that they were the people who really needed the incentives. At any rate, they did it.

The Government's second great mistake was to become obsessed with money supply. This represents one of the most ridiculous episodes in which the Government have been involved. They had not been in office for very long before, of their own volition, they shoved the bank rate up to 14 per cent. Later, in November, they increased it to 17 per cent., thereby doing a number of things. The first was to make it very difficult for our exports to compete, because the exchange rate immediately went up following the inflow of money into the country. At the same time the exchange rate, in its extraordinary rise—particularly in the case of the United States—gave very considerable an enormous effect on manufacturing industry in this country. On the one hand, it was made more difficult country. On the one hand, it was made more difficult for manufacturing industry to export; on the other hand, it was more difficult to compete with imports flooding into this country.

We all know what happened. The exchange rate went up. At one point it increased to two dollars forty cents to the pound. When it did so, the Prime Minister proudly asserted in another place that this was the result of increased confidence in the pound and was something highly desirable; that it showed how good we were. She compared it unfavourably with the exchange rate operating when a Labour Government were in office. I have given the comparative figures before, and I will not weary the House with them again.

In spite of all these efforts the money supply went up and up and up. What happened also when the money supply went up and up was that for some odd reason the inflation rate came down —precisely the opposite effect that the noble Lord and his party had expected. So, thereafter we had a parade of new standards on which we could judge: M3, M2, Mo, and various other categories that were devised in order that the credibility of the Chancellor of the time could be established by reference to one or two of those particular methods of measuring money supply.

After a while the music of that died down and the melody only lingers on today to preserve some semblance of' continuity to which the noble Lord refers. In practice, nobody in the Cabinet, in the Government or in the Tory Party believes in this monetary nonsense any more. Therefore, they abandoned that one and went on to competitiveness because here they felt on stronger ground. The whole trouble with the country was that we were not being competitive enough. So they decided to expose us, as far as they possibly could, to competition from the newly industrialised countries in the Far East into which very considerable sums of American and British money had been invested. In those years—it still persists and, in fact, it persisted this afternoon—there was reference to the necessity for bringing down unit labour costs. What of course is not realised, but any businessman in your Lordships' House immediately realises, is that investment is a function of unit labour cost. It is not only the personal endeavour and the wage paid to the operative, it is the quality, capacity and efficiency of the machine that he operates. On a number of occasions, with the leave of your Lordships, I have endeavoured to give accurate comparisons about productivity in the United Kingdom by operatives who work on identical machines to those operated by other nations, in particular the United States. So that course will not run either, and there has been increasing evidence of it.

The next line that has been taken by members of the party opposite is that somehow the whole programme of privatisation which they are now adopting is going to be the salvation of the nation. It is notable that they only privatise those industries and those concerns which have already proved a resounding success in their existing environment and add nothing to the extra productive capacity that is required in the country and does nothing to stimulate demand. So the final alibi they have for not making any progress whatever since 1979, apart from the rate of inflation, is that they believe in the creation of real jobs, or as the noble Lord said this afternoon genuine jobs—the meaning is exactly the same.

The inference that they are inviting people in the United Kingdom to accept is that they are able to create jobs and they are able to relieve unemployment, but they are concerned to create real jobs. I can think of no greater insult to the existing unemployed than to be told—because this is what they are being told—that the jobs they were in before, whether they were working on roads, on sewers, building houses, producing machinery, or whatever they were doing, were not real jobs at all and that is why they disappeared. That is a monstrous insult to those of our unemployed because the inference is that previously they did not have real jobs. Their jobs had greater relevance to society and a greater benefit to society in the production of things that people need than some of the alleged real jobs that exist in the City of London in tapping out computers and making money out of money on the latest turn of the foreign exchange.

All those are alibis. The fact is that the Government have effected no improvement whatever and since they have been in office the position has deteriorated very sharply indeed. All they have left are the alibis, which is something that the right honourable Member for Cambridgeshire, South-East, in another place, referred to in the concluding stages of his recent book: There is therefore some unease within the Conservative Party at the moment. Most of it may lie below the surface, but the same is true of the iceberg that sank the Titanic. It is not enough to rearrange the deckchairs and to ask the band to play more loudly. It is time to start noticing that people are looking for the lifeboats". There are a number of noble Lords here, even today, with whom that will strike some kind of sympathy.

In the course of the end-of-term lecture that was given by the matron to the pupils of the upper fifth, or the lower fifth, in another place, the matron referred to the battle of the Falklands and she made mention of the "enemy within". It behoves us all to beware of the enemy within because none of us is free from fault. Most of us in this House, in another place, or anywhere, always face the enternal battle between self-interest, looking after number one, and knowing what is right and what we ought to do as members of society. That is the battle. I suggest that when the right honourable Lady the Prime Minister refers to the enemy within she should bear in mind that there is a possibility that one of the most important enemies within is in No. 10 itself.

4.8 p.m.

Lord King of Wartnaby

My Lords, it is with all the humility and hesitancy of a new boy in his early days at a new school that I rise in your Lordships' House for the first time to make my maiden speech. It is not merely that I am unaccustomed to this place; it is also that I am determined to observe your Lordships' convention that in my first speech I should avoid controversy. But I can assure your Lordships that this is not to be a speech about civil aviation. Airways and aircraft will feature only, as it were, as noises off.

I understand, too, that by the evolution of our constitutional proprieties, we in this House, though we may discuss the Finance Bill, do not concern ourselves with the supply of money to the Government; nor do we vote on it. This reminds me a little of my domestic arrangements. My wife is vigorous in discussion of money matters, but I sometimes think that she shows too little interest in its supply and in this instance the absence of a vote is more of a problem.

I should like to offer a few comments on those clauses of the Finance Bill that make it easier for employees to subscribe for shares in their company, and which alter the tax treatment of share options granted by a company to its key executives. Your Lordships will perhaps not be very surprised to hear that I support these moves, and I should like to explain why.

I believe that people have the desire not merely to earn, but actually to own something. This is very deeply inbred in them. Ownership gives them both security and independence, and it also gives them pride. Owning something is proof—material proof—of achievement and of success, and it is the means by which men and women have something to pass on to their children. Bricks and mortar provide the most natural type of ownership. To possess one's home is the form of ownership which is most accessible to the average person.

But I venture to say that that is not enough. Men and women who have jobs may spend almost as many working hours at work as they do at home. For them participation in their work and sharing in the success of their enterprise could be almost as important as owning their home. Those of us who have the responsibility for management in British industry would do well to note that.

The first essential in participation is, I believe, sharing in knowledge. People like to be informed and to be able to inform others. As your Lordships will know, few commodities are more highly valued than information. But more than that, employees have a right to know what concerns them and their futures, and a right to know before the outside world. If a new plant is to open, tell the workforce first. Equally, if jobs are to be lost—perhaps that can be seen months or even years ahead—let the employees know. Do not let them read it in the newspaper.

Participation should go further. I believe that employees should share in profits. If their company does well, they all earn a bonus. Bonuses of this sort do a lot to bring the interests of the enterprise and of the employees closer together and emphasise that success for the company means reward for those who make it possible. But I am the first to recognise that bonuses, profit sharing, and so on, are not the same as ownership, and when, for instance, British Airways is privatised, the employees will be given the chance to acquire shares. Then truly it will be their company. Then the employees will be shareholders, and the earners will also be owners.

Perhaps in this way we can rid ourselves of that most damaging and misleading phrase, "the two sides of industry". There are not, and should not be, two sides of industry. The interests of the enterprise and those of its employees should be identical; where the employees are also part owners, they clearly are.

But I should like to see ownership go further, too. Men and women should not only own a part of their companies, but should participate more generally in the success of British business. At present the way to owning shares seems obscure and inaccessible to most people, even though their instincts both for owning and for taking a risk are highly developed.

For many, even walking into a bank is an unnerving experience. I remember the first time that I entered a bank—the first of many visits to borrow money. The place was daunting. Marble abounded. Columns soared upwards. Even more unnerving, the well dressed clerk was rubbing his hands as if I was about to make a substantial deposit. I felt then the same shyness as I feel today on entering the Government Whips' Office.

I feel that too many people, including those who are in a position of influence, believe that the general public understands the buying and selling of shares. This is not so. It should be properly explained and made simpler. The Government should do all that they can to reverse the downward trend in private share ownership in United Kingdom industry and commerce.

We need to take away the mystique of share ownership, to bring the means of acquiring shares to the high street. In this respect I am heartened that the Government are considering whether building societies might be able to offer shares for sale through their high street branches. Just as in the recent past we have de-mystified foreign travel and put it within the reach of millions, so I hope that share ownership can be extended in the same way. Just as now the travel agency tempts one in with a board announcing, for example, "Amsterdam: £49 return", so in future perhaps the building society will lure one with, for example, "Babcock 200 pence". Well, one can but hope.

The day that there are as many share owners in this country as there are now home owners, Britain will be a happier and more harmonious place in which to live and work.

4.17 p.m.

Lord Houghton of Sowerby

My Lords, it falls to me to be the first to congratulate the noble Lord on his most felicitous and interesting maiden speech. I envy his feeling of ease and harmony with your Lordships' House in making his first speech. I remember my own 10 years ago. Although I had had 25 years experience in another place, I still trembled when I came here.

I certainly do not recall any noble Lord previously making a maiden speech in a debate on the Finance Bill in your Lordships' House. That is probably because years ago we hesitated to debate the Finance Bill at all. We seemed to regard it as a measure coming from another place that we had to hold in respectful awe and to keep somewhat detached from our daily tasks. But now we are getting closer to it. I congratulate the noble Lord on going straight into the Finance Bill in his maiden speech. We sincerely hope that he will be able to spare the time from his many other important tasks to speak again in your Lordships' House on the matters that he has raised, all of which are of very special importance to us.

I am very glad that we are talking about the Finance Bill. I said a moment ago that in years past we have not been so bold as we are being this afternoon; nor, if I may say so, have we had the same weight in the debates on the Finance Bill. I welcome that, as I am sure do other noble Lords. After all, we are the custodians in full measure in your Lordships' House of the statute law. The size and complexity of the Finance Bill alone is worth attention. Moreover, matters of administration come very close to the contact between the bureaucracy and the public which lies at the very heart of successful legislation and efficiency in our governmental affairs. As I say, I welcome the debate that is taking place on the Finance Bill.

I would almost be bold enough to say that the fact that we are talking about the Finance Bill matters more than what we say about it. I think that we must try to overcome some of the disabilities under which your Lordships' House labours on account of the happenings of over 70 years ago. This, after all, is the anniversary—I shall not say commemoration—of the defeat of your Lordships' House in its struggle to keep the upper hand in the Upper House on matters of finance. However, one way or another, we manage fairly well to assert our independence and our authority. I am reminding some of my friends down the corridor that at the present time this is the only place where the Government can be defeated or Bills substantially amended. I think that really is an achievement for your Lordships' House in the present Session of Parliament.

It is true that while we are inhibited from discussing the details, or at least taking decisions upon the details, of direct taxation, we have the anomaly which I think is becoming increasingly obvious. We have little freedom on matters of taxation and finance but full freedom on matters relating to another form of taxation, which is the national insurance contribution. It think the two systems of taxation which are now growing up together will soon need some reconciliation. That is, to avoid the principle of progressive taxation in one stream and proportionate taxation in the other, with national insurance contributions rising both in proportion and in amounts and providing for no relief for personal circumstances; whereas in a comparable level of direct taxation reliefs are given for marriage, mothers-in-law, mortgages and the rest.

One of the big issues of the future is going to be the relationship between the social security tax and other general taxation. Also we have a responsibility for adminstration. In matters of discipline of the taxpayer, powers of coercion, the powers of the state in its relationship with members of the public should be our especial care. Just recently we have been discussing the Police and Criminal Evidence Bill, which contains many important clauses relating to powers of the police. In the past we have been discussing, in the context either of a Finance Bill or of a taxes management Bill, the powers of adminstration to undertake forcible entry, seizure of books and papers, and other evidence which might be required in connection with the pursuance of offences under the various taxation laws. Here again is another field of special interest for your Lordships in their House.

I sincerely hope that we can have an assurance that when the Government come to make recommendations following the report of the Keith Committee on tax enforcement, the proposal will be contained in a taxes management Bill which will not have the protection in your Lordships' House of a money Bill. It has been followed in the past quite extensively with a taxes management Act of years ago. However, there seems to be an impression—I do not know from where—that the Government intend to introduce the recommendations of the Keith Committee piecemeal in successive Finance Bills.

I see that this is referred to in the current issue of a magazine that I have studied for many years, called Taxation. I am quoting here from the leading article in the current issue which says this: It is most undesirable, as appears to be the declared intention, that changes of this nature should be introduced on a piecemeal basis in a succession of Finance Bills. Those changes justify inclusion in a special Management Bill". I hope that that will be so because in years past we have seen this mixture of the money side of a Finance Bill and the administration side of revenue departments all under the umbrella of the certificate of Mr. Speaker, of a money Bill. I remember the noble Lord, Lord Harmar-Nicholls, and myself protesting very strongly one year on the Finance Bill that matters relating to administration and management were in the Finance Bill and apparently protected from any attempt to safeguard their proposals on the Floor of this House. So I think that is an important matter about which we ought to satisfy ourselves.

I do not want to comment on the Keith Committee recommendations because we had a debate on that some time ago in which I made a fairly lengthy speech. However, I hope that we can have those proposals subject to the full treatment of your Lordships' House when the Government have decided that they can bring them forward.

I think another point of interest on the Bill is how far are the complexities of the present tax law to go. The cumulative effect, an abundance of complexity built up by the succession of Finance Bills, has now made a most formidable library of tax law. It is extraordinarily difficult for any person of diverse sources of income or moderate activities of one kind or another to find his way through the complexities of his tax affairs. Far too many people of moderate means feel bound to employ professional advice or an accountant to sort out their tax affairs. That is an additional tax in order that people may feel satisfied that their tax affairs are in proper order. I know that this search for simplicity in tax affairs has been embarked upon time and again with very little success.

In this country, we have a passion for equity. Not only on tax affairs, but on social security and social relationships we have a very strong passion for fairness. That is the enemy of simplicity in almost all administration. You cannot have simple procedures, simple principles, applied in a simple way and meet all the variable circumstances of individual experience or condition. Yet I think that the attempt will have to be made, even at the expense of some readjustment of the burden of taxation which might be unwelcome in certain quarters. One of the drawbacks to tax reform has been the feeling of the Government and probably successive governments that they cannot do something which is going to cost money to the Exchequer until they can afford to do it without corresponding increases in the burden of taxation elsewhere.

I come to the question of women. The women's movement is flagging under this Government. It is regrettable that this should be so. After all, we have a woman Prime Minister but there is not another woman in the Cabinet. For example, we have little progress being made in the position of the taxation of married women. The humiliations of married women in relation to taxation are quite intolerable for the length of time that they have gone on and for their derivation from marital relations long past. In these days of less stable marriages, it is more than ever necessary that women should safeguard their own resources and establish so far as possible their economic independence.

It is a marvel how many women are still ready to surrender their independence, their freedom, their economic future and almost everything in life to be married to a man. There should be something better, not perhaps in the relationship, but certainly in economic provision for it. It is quite absurd that the income from a married woman's investment, for example, should be taxed at whatever rate is applicable to the husband, with whatever trouble that may cause in the husband trying to recover the higher rate of tax on his wife's investment income from her housekeeping. I do not know what relationships are in individual cases, but I can imagine that there is some disharmony somewhere on that matter.

Those are a few comments on the Finance Bill. They will probably have to do. There are other noble Lords who wish to speak on matters that will be of importance on the Finance Bill. I conclude by saying this. The time is coming when a fresh look will have to be taken in considerable depth over a longish period at our system of taxation. Governments have not the time. They are under too many pressures to take a deep look at systems as complex as our system of taxation. Another thing is that Chancellors of the Exchequer are usually not there long enough to accomplish even modest hopes of tax reform. Just recently, I have been amusing myself in recalling 60 years of Chancellors of the Exchequer. I have known 23 of them personally, from Philip Snowden to Geoffrey Howe. What is surprising is how little any Chancellor of the Exchequer can accomplish in the field of taxation changes in a period of two or three years. You need four or five years to make any impact on the taxation system. For one thing, it takes the consistency of one man's mind, mostly, to be able to pursue the reforms. Have we not seen how complete changes have taken place in taxation policy between one Chancellor and another, and certainly between one Government and another? Terrific expenditure has been wasted on making preparations for major tax reforms by a change of government and a change of course.

Politics and Parliament are not all that good at times for a rational and efficient taxation system. From time to time one needs the aid of a body that can study it away from the pressures and the anxieties of the day. I leave those reflections with the noble Lord, Lord Cockfield, whose own experience years ago at the Inland Revenue makes him very familiar with the problems I am talking about. I hope sincerely that we can have assurances on the Keith Report recommendations; and we shall listen to any hopes he has of a review of the position of women in taxation and also of a further study of the relationship between the proportionate taxation system on social security and the progressive system of taxation in general, and of the reform of taxation in its major impact on the economy and on the personal lives of people.