HL Deb 25 July 1984 vol 455 cc314-35

5.1 p.m.

Second Reading debate resumed.

Lord Bruce-Gardyne

My Lords, reverting to the matter of the Finance Bill, I should like to start my remarks by echoing strongly the congratulations of the noble Lord, Lord Houghton of Sowerby, to my noble friend Lord King. Of course, I fully realise that any congratulations that I offer from my junior position in your Lordships' House cannot possibly carry a fraction of the weight of those offered to my noble friend by the noble Lord, Lord Houghton, but I certainly felt that all our expectations, which were high enough, of the contribution which my noble friend would make to the debates of your Lordships' House based on his unrivalled experience in industry and in management were borne out by the splendid contribution that he made to us this afternoon.

In particular I think that all he had to say about the importance of motivation management and, in that context, of the spread of share ownership will have found a wide echo in your Lordships' House. I am sure that we would all echo what the noble Lord, Lord Houghton, said about the pleasure which we shall have in hearing my noble friend, we hope, many times in the future.

Listening to the noble Lord, Lord Bruce of Donington, when he complained that the Government's privatisation programme seemed to be designed to move out of the public sector only those industries which had been glittering examples of success in the public sector, it occurred to me that the industry over which my noble friend Lord King presides was not perhaps entirely in that category until my noble friend took it in hand. Since then we have indeed seen a remarkable change. I think all of us listening to my noble friend would not be surprised at the achievement that he has had at British Airways. We shall look forward to hearing him on another occasion discussing subjects which would not be a thousand miles removed from the area of civil aviation.

Having heard the remarks of the noble Lords, Lord Bruce and Lord Houghton, I began to wonder whether it would be considered rather eccentric to say a word or two this afternoon about the Finance Bill. I hope not. I should just like to say to the noble Lord, Lord Bruce, that if he imagines that the inheritance of this Government in terms of inflation was a mere 2 per cent. over the 10 per cent. figure which was on the books in May 1979, then I imagine that by reciprocation he would accept also that, shall we say, 2 per cent. of the 27 per cent. inflation which occurred under the Government of his noble friends in 1976 was entirely attributable to the then Labour Government. For my part, I have always believed that the preceding Conservative Government were not entirely unconnected with that remarkable performance. I think the idea that an inflation trend is suddenly transformed with the change of Government is a little out-dated, to put it mildly.

May I say to the noble Lord, Lord Houghton, that one of the anxieties that he expressed this afternoon about the rough justice meted out to ladies in the tax treatment of their investments may have been largely resolved by the Finance Bill before your Lordships this afternoon with the abolition of the investment income surcharge, about which I should like to say a brief word in a moment.

For my part, I wholeheartedly welcome this Bill. I should like, if I may, to pick two small nits and get them out of my hair first. The first concerns Schedule 12 and Part II thereof. This relates to the transitional provisions to do with the abolition of initial allowances. I personally am wholeheartedly in favour of the phasing out of initial allowances for very much the reasons that my noble friend Lord Cockfield advanced to your Lordships this afternoon. But I must confess that I have some reservations about these transitional arrangements.

I should like to remind your Lordships of what my right honourable friend the Chancellor said in his Budget Statement about these provisions: There will be transitional tax arrangements for certain investment projects in the development areas and special development areas. When a project in those areas has had an offer of Industry Act selective financial assistance and also attracts regional development grants, the existing capital allowances will continue to apply to the expenditure to which the selective assistance is related".—[Official Report, Commons, 13/3/84; col. 296.] What could be more innocent than that? But I have been meaning to look at it a little closer. Why do we need special transitional arrangements for a change which is, in itself, a transitional one over a period of three years? Why, more specifically, are these transitional arrangements only for projects in development areas? Why is it only for those in receipt of selective assistance?

I am afraid I believe that the answer is contained in one word, and one word alone, and that word is Nissan. I have no doubt that my right honourable friend would be able to tell us of plenty of other worthy recipients of selective assistance who will qualify for the treatment under the transitional arrangements. I should like to have details of what they precisely amount to. I believe that this is overwhelmingly a wheeze for Nissan.

In our desperate anxiety to suborn these esteemed Japanese car makers into setting up in competition with the investments we have already made in British Leyland and Talbot, £100 million plus of subsidies was deemed not enough. On top of that they have been given an open-ended promise of existing rates of regional development grant when all around are losing theirs—and that we shall discuss on Monday—and in Schedule 12, Part II, they are given an open-ended promise of current rates of initial allowances long after everybody else will have lost them. By the early 1990s, when Nissan embark—if they ever do—upon phase 2 of their assembly plant in Cleveland. the initial allowances will have faded into distant memory. But not for Nissan they will not.

To my mind tailoring of the fiscal system for the benefit of one taxpaper, and a foreign taxpayer at that, is not easily defended. I notice that Mr. Kawamata, Nissan's chairman, apparently commented last winter that since we in Britain were so desperate to have his executives set up in Britain to teach the natives wisdom, we should pay their return fare, expenses during their stay in Britain, and what he described as "a very big salary". Well, we will,Mr. Kawamata, we most certainly will—and I rather think we are mad to do so.

My second nit, if I may put it that way, concerns Clause 27. This is the clause dealing with the extension of the composite rate to the banks and the building societies. At this point I should declare an interest as a director of the Central Trustee Savings Bank which, as my noble friend will be well aware, is particularly concerned about this matter. I accept again in this case that it was right that the Government should move to a position of tax equality between the building societies and the banks. I must frankly confess that I personally would have preferred to see that tax neutrality achieved in the other way by withdrawing the composite rate system from the building societies.

I fully understand why that was not done. The adminstrative costs of doing that would have been enormous and unacceptable. I can also understand that the savings which will result in Inland Revenue staffing from applying the composite rate system to the banks will come in most useful, not least because I suspect that there will be some additional manpower required this year in Customs and Excise to deal with the consequences of applying VAT to imports on arrival. But if we are to make this transition it seems to me somewhat indefensible that we should leave one particular institution, National Savings, and in particular the National Savings Bank, in a situation of unique privilege.

When these clauses were discussed in another place the proposal was put forward that there should be provision made for a special deposit account into which the first £70 of interest from banks or building societies could be paid free of tax—which is precisely the position, as my noble friend is aware, that prevails with the National Savings Bank. This was resisted by my good friend and successor as Economic Secretary in another place on the grounds that it would cost £350 million in revenue forgone.

I must say that I find that figure incomprehensible, because it is open to any of your Lordships or to any citizen to open an account with the National Savings Bank to claim this —70 of interest free of tax. All that would result from the change proposed in another place would be to widen the choice of vehicles to be used for that purpose. I accept that in practice that would be likely to be subject to a bigger take-up of this particular concession, so I accept that there would be some loss of revenue involved. But the figure of £350 million seems to be light years removed from any degree of possibility whatsoever.

I cannot help feeling that the essential calculation is that the conferring of a unique privilege on National Savings will facilitate it in the contribution it makes to Government funding. The Economic Secretary said in another place that National Savings has a specific target and that that target was not being changed. But a target is not a limit. I find it a little hard to believe that, if as a result of this special privileged position the Department of National Savings overshot its target, it would suddenly be moved to turn off the taps and dismiss the staff.

I hope that my noble friend will seriously consider this again. In the case of the Trustee Savings Banks, it is calculated that 20 per cent. of depositors are below the tax threshold. It would make a substantial difference and a leavening of equity in this situation if the clearing banks, including the TSB, had extended to them the same privilege that the National Savings Bank has enjoyed and which it will continue to enjoy.

I do not want to delay your Lordships for more than a moment, having got those two nits out of my hair. Apart from that, I should like to extend a warm welcome to this Budget, not least for the reasons advanced by my noble friend Lord King. I believe that it will do a substantial amount to facilitate precisely the process that he talked about: the extension of individual private share ownership. That is profoundly to be welcomed. I was delighted to see that my noble friend had taken the wise step of finally getting rid of that monument to the green-eyed goddess jealousy, the investment income surcharge, which has never served any economic purpose at all.

It may be that the Budget had a bias of supply-side-ship. It may be that as a consequence the PSBR is what the Chancellor described as front-end loading. I confess that I sometimes wonder whether the degree of front-end loading will be such as to enable us to come back on par for the achievement of a £7.25 billion PSBR by the end of the year, but perhaps it is too early to see about that.

It is clear that this Budget marks a major step forward along the road to fiscal neutrality —a move which is long overdue and which is highly to be welcomed. I believe it gives us a foundation on which I am sure the Chancellor will build in his successive Budgets in the years ahead.

5.15 p.m.

Lord Weinstock

My Lords, I must first apologise to the noble Lord, Lord Cockfield, that I was not in the Chamber to hear his opening speech. This was due to a malfunction of information services which caused me to believe that the Statement would be made before the beginning of the debate, and not during it. I am glad to add my congratulations to those of other noble Lords on the speech made by the noble Lord, Lord King of Wartnaby, of whom it can be truly said that he has got off to a flying start in your Lordships' House.

I do not intend to follow noble Lords in this debate along the paths of their chosen economic or political preferences. I want principally to commend to your Lordships the Chancellor's willingness in this Finance Bill to tackle at last the complicated system of allowances and reliefs which has for so long dominated and distorted our corporate fiscal legislation. During several decades, instead of managerial investment and commercial decisions being made against the criterion of production efficiency, they have been too often influenced by considerations of tax efficiency. Substantial corporate and individual earners have been able to shelter behind allowances and reliefs, so as to pay little tax or none at all. This system has not created more productive investment or more efficient investment: what it has done is to spawn a tax-avoidance industry. For over 40 years the combination of penal rates of taxation and the availability of allowances and reliefs has given, understandably, irresistible opportunities for the ingenuity of the tax avoiders.

The Chancellor's measures to reduce capital allowances and abolish stock reliefs represent a radical departure which I hope will lead to the total abolition of the complication of allowances and reliefs in corporate taxation, heralding the day when all companies will be taxed at the same rates—and at a reasonably low rate, may I add.

As to personal income tax, the burden has already been notably reduced. I suggest that it would be wrong not to recognise that the first priority now, in this respect, is to remove large numbers of low-paid workers from the tax net altogether. In recent decades our people have lived in an environment of oppressive taxation and without any real possibility of access to a worthwhile stake in the companies in which they work. No wonder that so many bright youngsters left our shores for the more progressive regimes of North America, where they have made a massive contribution to the industrial development of their host countries! We have certainly missed them here in the United Kingdom.

The success of British industry is largely dependent on the ability to attract, and keep in this country, a cadre of top quality managers, technologists and engineers. It helps if they are allowed a share in the success of the businesses in which they work. In common with the noble Lord, Lord King of Wartnaby, I therefore applaud the Chancellor's new rules in relation to company share option schemes.

The present Finance Bill will not bring about vast changes in our economy in a matter of weeks or months. It will take years to change the post-war ethos of egalitarianism which has done so much to debilitate the initiative and productive capability of our country. I share the misgivings expressed by the noble Lord, Lord Bruce-Gardyne, about the madness of subsidising extensions of foreign firms in the United Kingdom. But I believe that we have a Chancellor set on a course of fiscal reform directed to creating the right conditions to improve the competitiveness and effectiveness of British industry, and that is something very much to be welcomed.

5.20 p.m.

Lord Boardman

My Lords, may I first join with other noble Lords in my congratulations to my noble friend Lord King of Wartnaby and particularly so, if I may say so, having known him for many years, in his managing to be non-controversial on this occasion. We look forward to hearing him on other occasions when that inhibition will not be applied. I would also say that this debate has gone on rather longer than I scheduled and if, unfortunately, I am not able to remain until the end of the debate I hope that noble Lords will accept my apologies. It is a practice which I have never pursued before and I hope that I shall be able to avoid it on this occasion. Like my noble friend Lord Cockfield, I propose to keep my remarks to the taxation provisions in the Finance Bill and I do so with the declared interest of being the chairman of the company most affected under the Finance Bill in that the company which I chair will have to provide an extra £650 million of tax because of the contents of the Bill. The clearing banks as a whole will have to provide something like £2 billion as a consequence of the Bill.

Naturally, noble Lords could expect me to feel some little resentment at the massive imposition of tax on a sector of our economy which contributes so much both to our invisible earnings, indeed the main provider of the invisible earnings of this country, and also to providing the finance for the recovery of British industry. I will try to avoid special pleading and address my remarks to the strategy of the taxation provisions within the Finance Bill. Like my noble friend Lord Bruce-Gardyne and like the noble Lord, Lord Weinstock, I believe that the Chancellor is right to encourage investment decisions to be made on the quality of the investment rather than on some particular, artificial tax regime. That has my fullest support.

I question the fairness of raising (as did his predecessor in 1981) a special windfall tax on the banks for the so-called advantages that they then had under their leasing schemes and then, in effect, in this Finance Bill to tax them again on those same so-called advantages. It smacks to me very much of double taxation. The banks, of course, will survive it on this occasion but I remind my noble friend that there is a limit to the amount that the Government can extract from the geese that lay the golden eggs without doing permanent damage to the economy. And this does not apply just to the banks; it applies to a number of other very profitable and very large exporting industries here that face international competition and face it successfully for the benefit of our nation as a whole.

As I have said, the strategy of the Budget is one which I support although I deplore some parts of its impact. I share the criticism that my noble friend Lord Bruce-Gardyne has made on the composite rate tax. I wonder whether the Chancellor has not departed from Conservative principles in that form of tax. It can only be described as a tax on the poor to relieve the rich in so far as it means imposing on non-taxpayers the payment of a tax which they cannot recover and it means that taxpayers who normally would be paying the standard rate of tax or above will be paying less than that. I do not believe that that is in keeping with Conservative principles.

I realise that the Chancellor of the Exchequer aims to save 1,000 staff in the process and that therefore it is a highly commendable objective. But it will inevitably add significantly to the staff costs in the private sector of industry to an extent on which I would not like to speculate, but there will certainly be a real offsetting cost through to the customer because of that change; and it must also inevitably lead to some increase in the cost of money, albeit marginal. To that extent, I think that it is an unfortunate aspect of the Finance Bill. Much as I support the reduction in the public sector and the reduction in the Civil Service, I urge my noble friend to be mindful of the results of some of these apparent savings. In the case of the composite rate, my noble friend Lord Bruce-Gardyne has referred already to its giving to the Government a monopoly on gross funds. To my mind it seems peculiar for a Conservative Government dedicated to competition to give a monopoly to the Government in the way to which my noble friend referred. It will also add substantially to the administrative costs and it is regressive.

Having made those criticisms of the Finance Bill, I could refer to the many good things that there are in it. Its general thrust is one which I support entirely. I will not detain the House by outlining the good things; they are. I am sure, well known to my noble friends on this side of the House and, I believe, probably equally well known to noble Lords opposite. Therefore, I give my full support to the Bill.

5.27 p.m.

Lord Montagu of Beaulieu

My Lords, I intervene briefly in this debate to comment on an aspect of this Bill which, since the Budget, has been causing considerable worry to those concerned with the conservation of our built environment. I refer to the question of VAT and historic buildings. Before I do so, perhaps I should declare an interest because, as chairman of the Historic Buildings and Monuments Commission. I, as well as commissioners and staff of the commission, have been active in trying to secure concessions to the original proposals to charge VAT on alterations to listed buildings. We and others sharing the same concern have helped. I hope, constructively, in persuading the Government to make concessions which potentially will ensure that our historic buildings are cared for in a way which is consistent with the Government's expressed policy.

First, I think that it is right and proper for me to thank the Government for listening to our arguments which have been put forward and for making concessions. I appreciate that VAT is intended to be a broadly-based tax and that successive Governments have argued that it is not an instrument for carrying through socially -based or particular policies. However, in the opinion of many, it would have been an utter travesty of the Government's policies towards historic buildings if the original proposals had been adopted. Indeed, they would have done great harm to the ongoing efforts to preserve historic buildings and would have made something of a mockery of the efforts of individuals, of commerce and industry, of building preservation trusts and other bodies, to maintain or to find acceptable alternative uses for buildings which should be preserved.

However, it is widely recognised that the undertakings which have been given by the Government marked a breakthrough in the recognition that historic, listed buildings merit special treatment within the VAT code. I believe that the Government were right to acknowledge that such special treatment was necessary and I thank them for it on behalf of many interested parties—and I noted what the noble Lord, Lord Cockfield, said earlier on in the debate.

My second comment is that those undertakings which were given will only be effective if they are framed and administered in a way which does not detract from the spirit of the undertaking. I appreciate that those who frame and administer tax laws have an extremely difficult task. They must avoid loopholes which can lead to abuses. However, there is a great danger that regulations or working rules can sometimes be devised in a way which circumscribes an undertaking so much that the encircling rules become a noose. I realise that in such a complex field it takes time to work out the details correctly. As will be clear to those who have already seen the draft VAT leaflet which represents the first shot at details of the concession, there is much confusion and misunderstanding to resolve. However, the good faith of the Minister and of the officers is not in question, and discussions have already taken place between those officers and the Commission's representatives and others since the Report stage in another place. Those discussions certainly encourage me to believe that certain matters may still be sorted out by way of a Treasury order and the issue of a new and more realistic VAT leaflet, so that the concession can become more workable. I was pleased to read the remarks of the Treasury Minister in another place in which he gave assurances that the operation and the effect of the concession would be carefully monitored and looked at, and, if necessary, changes would be made.

I submit that the only sensible way forward is to tie the VAT zero rating to all items covered by each listed building consent. I am glad to see that the Treasury Ministers are moving in that direction. The Government can quite rightly take pride in what they have done for the heritage in the past, but I believe there ought to be no wart on the face they present to the heritage world because of perhaps penny-pinching and an ungenerous interpretation being placed on undertakings given. Members of my commission are assisting and co-operating with the Customs and Excise in framing workable regulations in that spirit.

Finally, the fact remains that although limited concessions have been given in this Finance Bill, much more needs to be done in the future. The concession on alterations is very limited indeed in relation to what needs to be done if our historic buildings are to be properly preserved. Unfortunately, there continues to be a bias against repairs which is built into the VAT system. Our concept of what is worth preserving now extends beyond individually important buildings in historic towns and villages, and I feel that the Government ought to he thinking, as we are, about how best to preserve all buildings in conservation areas. There should, too, be greater thought given by the Government to how to pursue long-term caring policies towards ancient monuments, historic buildings and conservation areas within the framework of the VAT system which is still so broadly based in its simplicity, or, some might say, its crudity, that it puts at risk other policies which all Governments have subscribed to over the past years.

Is it perhaps not time now to look at the wider scene, at the effect of VAT on conservation? It seems to me it remains an anomaly that VAT is charged on the prime essentials to good conservation—I refer to repair and maintenance work—while it is not charged on demolition and new building. VAT quite simply discourages good housekeeping because it matters greatly if maintenance of and repairs to our listed buildings are allowed to slip. I must warn the Government that we shall continue constructively to try to persuade them to zero rate repairs on all listed buildings in the future, and it might he a good example to point out that the VAT which is expected to be paid on the repair of York Minster will be over £500,000. That is hardly the kind of purpose that people who are at the moment subscribing so generously towards it expect their money to be used for.

So I feel it is time to rethink our VAT policies more comprehensively; to consider, for instance, that if desirable reforms are needed and they run counter to the harmonisation of VAT practices in the EEC, should we not seek to persuade Brussels to make a VAT concession on conservation for the whole of Europe? I should like to see Britain take a lead in this matter. If we do, I believe it would be of great benefit to the whole of the European heritage.

5.34 p.m.

Baroness Seear

My Lords, on this occasion from these Benches the customary congratulations on the maiden speech of the noble Lord, Lord King, are far from formal. The noble Lord must have been brought up on the 1929 Liberal yellow book and he will, I hope, accept it as a compliment—as it is intended—if I say to him that his kind of speech not only could have been, but in fact has been, heard at every Liberal assembly in the last 50 years. Plainly, the noble Lord has taken his seat on the wrong Benches. We hope very much that we shall have even greater support from him in the future for the policies of profit sharing, employee share ownership, and wider share ownership generally, which we have advocated over so many decades.

While I am on the subject of wider share ownership, perhaps I may say that I very much welcome the share option clauses in the Finance Bill. But I hope that the Government will move further and faster and will make it easier for ordinary employees, if only on a small scale, to share in the ownership of their undertakings. I should like to take up a point which I think the noble Lord, Lord King, referred to about making it easier also for people without a great deal of money to invest in, to share in, the wider success of industry as a whole, especially if, as we hope and the Government anticipate, there is to be a great deal more of that wider success in which to share. We from these Benches have often advocated consideration of the Loi Monori of France, which gives much encouragement to people to take ordinary shares in companies outside those in which they are employed, as well as in companies in which they are employed. We hope the Government will look again and consider ways in which such investment could be given positive encouragement. The Government, I know, profess not to wish to influence the way in which people invest and to leave it to market forces. But I note that when the Government have a project that they greatly wish to encourage, they find it not too difficult on occasions to forget that principle.

I should like to thank the noble Lord, Lord Cockfield, for confining this debate to the Finance Bill, particularly in view of the debate which will be launched from these Benches next Wednesday. I wondered whether the noble Lord, Lord Bruce of Donington, had in fact the same considerations in mind. Indeed, halfway through the speech of the noble Lord, Lord Bruce, I had a feeling that I had fallen asleep and woken up next Wednesday, an occurrence which, in view of the extent and nature of this Session, would not, I think, have been totally unforgivable.

I very much welcome some of the changes in the Finance Bill, in particular those which will improve the employment position, which is, so sadly, still needed. The abolition of the national insurance surcharge—long overdue—is very welcome; so is the recognition that it is not always wise to encourage capital investment and that there are many occasions on which it is more economic today to employ more labour than to put money into still further investment which cuts employment but does not improve economic performance. The reflection of that discovery in the Finance Bill is very welcome indeed.

I turn to personal taxation. Some of the changes we of course welcome; in particular, the fact that 850,000 persons (I think that is the figure) have been taken out of taxation altogether. But this does not go half far enough. As the noble Lord, Lord Weinstock, has already said, in this country we tax ridiculously heavily the lowest paid workers. It is quite ridiculous that when you take into account income tax and national insurance, the marginal level of tax is very nearly 40 per cent. for the lowest paid workers. It is an absurd level to charge.

If there were to be tax reforms, as there have been, in this Budget surely the whole emphasis should have been on seeing that it was possible to reduce the lowest level of tax and to take more people out of taxation. Is it really impossible to have a lower tax rate, a lower band? We had a lower band on one occasion for a period of years, until we abandoned it. To go straight into the level of 30 per cent. seems a ridiculous discouragement and it does very little—though I agree that something has been done—to reduce the poverty trap. Nothing like enough has so far been done to eliminate the problem of the poverty trap.

I recognise, of course, that this is a question of finding the funds; but there is a bias still built into these taxation reforms in favour of the better-off rather than making the position easier for the least well-off and getting rid of this absurd lower-level starting rate. Was it really necessary to get rid of the investment surcharge? After all, at present, investment income up to £7,000 a year is free of the investment surcharge; and so this change only benefits those who have very considerable investment income. I myself, and we on these Benches, were not among those who opposed the initial reduction of tax on the highest income from 83 per cent., although we ourselves would not have gone so far as to reduce it to 60 per cent. But, that having been done early under the former Conservative Government, it was surely enough in the way of improving the position of the best-off and any additional money available surely should have been devoted to ensuring that we improved the position at the lower end.

I have already referred to one way in which this could have been done. The other way, if there was money to spare, would have been—and this would have been very helpful in relation to the poverty trap—to improve child benefits with the distribution of the reduction in taxation of which we are critical, although of course we welcome the extent to which it has taken place. We just wish that it could have gone further.

5.41 p.m.

Lord Barnett

My Lords, I should like to begin, as others have done, by extending my hearty congratulations on the quite excellent maiden speech delivered by the noble Lord, Lord King of Wartnaby. We are members of different political parties but it is quite clear from his speech that we agree very much on the need to see a successful and strong British economy and British industry. I believe that the House listened to him with enormous interest.

He spoke from a wealth of experience in two major companies. Some of us would have liked to hear him speak today on one of those. That was not possible, but when he spoke about the employees' right to know, I think we understood what he meant and what underlay that particular statement because he has implemented that in both of the companies in which he has played so successful a part. Speaking for myself—I know that he could not himself speak on the topic—I find it as incomprehensible as some others from all sides of your Lordships' House may do that any Government, when a man has made such a success of a major British company, could even contemplate for one moment breaking it up in any way. I hope they will listen very carefully, not only to the noble Lord's speech today but to other things that he has been saying elsewhere, and will consider what he might have liked to say today.

May I now turn to some of the other things that have been said in the debate today, including what was said by the noble Lord himself? Indeed. we have had a speech from another highly successful industrialist, the noble Lord, Lord Weinstock. The noble Baroness, Lady Seear, also touched on one topic as well—that is, the question of share options. I wonder whether all the noble Lords and the noble Baroness quite appreciate the illogical things they were saying. On the one hand, they said—and I agree with it very much—that there was a considerable case for going for fiscal neutrality in the corporate sector: removing capital allowances, reducing corporation tax and going for fiscal neutrality. But at one and the same time they then advocated in the strongest possible terms a lack of fiscal neutrality for individuals so as to give them the maximum tax advantage to buy shares in their own companies.

I am not averse to their buying shares in their own companies, but I really do ask the noble Lords and the noble Baroness—the noble Lord, Lord Bruce-Gardyne, made the same point—to consider the logic of what they were saying. Are they really advocating the true logic in the tax system that there should be no tax incentives, or are they not? I think it was the noble Lord, Lord Weinstock, himself who welcomed what the Chancellor was doing, among other things, on moving along the path of fiscal neutrality. But the logical extension of what the Chancellor was doing when he removed all tax reliefs on insurance policies would have been to do the same for mortgage relief. That would have been the absolutely logical thing to do, and I see the noble Lord, Lord Bruce-Gardyne, nodding; but he knows very well why that was not done and he knows why no Government has yet been able to grasp the nettle—even one with a Chancellor in favour of fiscal neutrality.

That brings me to another point which was made by the noble Lord, Lord Bruce-Gardyne, and indeed also by the noble Lord, Lord Boardman. Here perhaps I may say that this debate appears to have been somewhat monopolised by former Treasury Ministers. The point made by the noble Lord, Lord Bruce-Gardyne, related to the composite rate of tax and the way that the Chancellor has dealt with it between the banks and the building societies. I very much agree with both noble Lords. I would much have preferred the Chancellor to have scrapped the composite rate. Apart from anything else, what the composite rate does—and so unfairly—is to ensure that pensioners with very modest, very low incomes, not liable to tax, should be subsidising mortgage payers. That is precisely what it does, and that is why we have a composite rate that is lower than the basic rate of tax. But I have a feeling that maybe the Chancellor's desire for fiscal neutrality in this field, too, did not quite move along the path of increasing mortgage interest rates even further. Otherwise, again, the perfectly logical thing to have done, as I am sure the noble Lord, Lord Boardman, would say, and as the noble Lord, Lord Bruce-Gardyne, said, would have been to abolish the composite rate and to have had the same fiscal neutrality as between the clearing banks and the building societies. It will be interesting to see whether we ever get a move in that direction but, for the reasons I have indicated, and as I see the noble Lord, Lord Bruce-Gardyne, shaking his head, as a more recent Treasury Minister, I suspect that we shall not see it.

As one would expect, we had an excellent speech from my noble friend Lord Houghton of Sowerby. I am sure I do not need to say to my noble friend how fond I am of him, but I must say that when he said he saw professional fees as a form of tax, I was beginning to become a little less fond of him. However, the House will generally have listened to him with great interest, as always.

If I may say just a word about the speech of the noble Lord, Lord Montagu of Beaulieu, I congratulate him not only on his speech but on all that he has done for the national heritage and all that he is still doing. I remember with considerable interest the days when I introduced a modestly complex tax called a capital transfer tax, and he saw me on a number of occasions. I think that on those occasions I was able to help just a little. I would only say to the Government that I hope they will also note his plea for the national heritage, and for historic buildings in particular, and see whether they can help. However, I hasten to say to the noble Lord, Lord Cockfield, that I perfectly well understand the arguments on VAT, having advanced them myself on numerous occasions in another place, and I do not expect him to change his stance on that, at least not tonight.

Effectively, as the noble Baroness said, we are to have a sort of economic debate next Wednesday. It seems rather a shame that we could not have it all in one go, but there is is. The 1st August is obviously an attractive day for the Alliance and they like to come back in that month; we shall have a debate on Wednesday, so I will be brief today on economic matters. But the—

Baroness Seear

My Lords, may I say that the date was not of our choosing.

Lord Barnett

My Lords, I perfectly understand. I am obliged to the noble Baroness. I am sure they would rather have had an opportunity to tell the Government what they thought of them on an earlier occasion, but it will come equally well on 1st August.

The Minister spoke mainly about tax matters, and I do not propose to follow him any further except to point out that the logic of the reforms, as I mentioned earlier, does not seem to be pursued in the way that we would perhaps have expected. Can I say this to the noble Lord the Minister about value-added tax? We saw in the Budget and in the Finance Bill that value added tax was extended to take-away foods—again, a somewhat illogical move that is causing considerable difficulties in those areas. But what causes me, and many people, much more concern is whether the logic of the Chancellor's fiscal reforms will be pursued along this path to make the current change more logical; that is to say, to introduce VAT on food generally. I should like an assurance from the noble Lord, and I am sure that the House should like an assurance, that there is no intention on the part of the Government to extend value added tax to either food or—I hope he can give us an equal assurance—for example, books and literature generally. These are areas which are giving a great deal of concern and I hope we can have an assurance in regard to both.

But the Minister's speech must be seen against the background of the facts and they do not bear out—as I am sure, on a more relaxed occasion, he would be the first to agree—his somewhat rose-tinted view of the situation. As my noble friend Lord Bruce pointed out, the situation is nothing like as good or as stable as the Chancellor likes to say, or as we have been led to believe. As the Minister has pointed out, this Finance Bill is based on the Budget itself. It has often been said that a Chancellor's Budget in March, well received by his supporters, is frequently somewhat less well received—indeed, received with perhaps a rather more jaundiced view—in July. Certainly, I must say to the noble Lord, Lord Cockfield, that that must apply today, because I see that on 13th March the Chancellor, in starting his Budget speech, said: I start with the economic background. Since 1980, inflation has risen steadily from a peak of over 20 per cent.". Of course, we note the interesting date he chose of 1980, and not 1979, because that is when it was 20 per cent., having been increased to that by a massive rise in VAT. He went on: For last year as a whole it was down to about 4½ per cent., the lowest figure since the 1960s. And with lower inflation have come lower interest rates. This in turn has led to an economic recovery whose underlying strength is now beyond dispute. Whereas in some previous cycles recovery has come from a self-defeating stimulus to monetary demand, this time it has sprung from sound finance and honest money. Lower inflation and lower interest rates benefit industry, business and consumer confidence alike".—[Official Report, Commons; Col. 286.] I do not agree with everything in that statement, but I would certainly agree that lower interest rates and lower inflation are of benefit to industry. But we now have much higher interest rates and all the evidence is that we are going to have higher inflation, too. So in those circumstances I assume that the situation is less stable and less optimistic for industry than it was in March.

But apart from inflation and interest rates, other economic facts give a very different picture from that presented by the Chancellor in March and by the Minister today. Let me give your Lordships one or two examples. Industrial output is better than it has been, which is not surprising because it has been fairly awful. But that being said, even at present levels, it is insufficient to provide the vitally needed resources in the public sector and, indeed, to improve living standards, particularly in those areas to which the noble Baroness, Lady Seear, referred.

But apart from anything else, most outside and independent observers—not members of my own party, but independent observers—are now forecasting that we shall not have a continuation of that level of growth, and I think that if he told us what he honestly believes about it, the Minister would say exactly the same thing. So those resources, which can be provided only through increased industrial output, will not be made available to aid, for example, those hard-hit local authorities in urban areas with the funds they need to help the people who are some of the worst off in our community. Instead, there is the confrontation that we have seen in recent weeks and months.

On the public expenditure front generally, let me say at once that I should be the first to admit the need for control. Indeed, having been Chief Secretary for five-and-a-quarter long years as man and boy, I should be very foolish if I were to deny the need for control. But the Chancellor's whole policy depends upon many unlikely assumptions; the first is that public expenditure will remain at the same levels over the next few years. We all know—I think that I see the noble Lord, Lord Bruce-Gardyne, smiling, and he must know—that the original idea was to keep public expenditure at the same level in real terms, while gross domestic product rose through an increase in industrial output and in national income, thereby reducing public expenditure as a percentage of the total GDP, to get it down to the kind of level it was at when I left it.

But the Government have not yet achieved that and, with the forecasts of lower GDP and the clear increase in inflation and in interest rates beyond that which the Chancellor had assumed in his Budget speech, it is almost certain that he will have to come back and ask for greater public expenditure cuts than he has already made. There can be little doubt that that is what he will have to do, if he is to stick rigidly and obstinately to the kind of policy which he is stuck with, and which he proudly claims to be sticking to—

Lord Bruce-Gardyne

My Lords, may I intervene?

Lord Barnett

Let us pretend that we are in the other place.

Lord Bruce-Gardyne

My Lords, with reference to the inflation expectations, is the noble Lord not conceivably discounting the likely impact of the very striking weakness of commodity prices at the same time? Surely that will have a significant impact in holding down the inflation figure, and are not some of the latest figures that are being bandied about inclined to overlook that factor in the equation?

Lord Barnett

My Lords, I do not overlook that. I agree with the noble Lord. One must recognise that as a straight fact. Commodity prices have been held very low, but the Chancellor was aware of that, too, when he made his economic forecast. It has not been just in the last week or two that commodity prices have reached their present levels. They are low, and one is aware of that. What I am saying is that with some of the things that have happened to exchange rates and interest rates, and other factors in the economy, it is almost inevitable that inflation will be somewhat higher. I am not for a moment suggesting that it will rise back to some of the very high levels that we have known in the past, but certainly it is bound to be higher than the Chancellor's forecast, on which he based his assumptions. That is a serious matter for the economy, which we have to consider.

But the main further point I want to make is that all this will have one serious effect particularly for those who, like many noble Lords who have spoken in this debate, want to see major tax cuts. Your Lordships will know that the current jargon about making money available for tax cuts in the two years before a general election comprises two simple words—fiscal adjustment. We all now know what that means. The fiscal adjustment for the last two years before the next general election is supposed to be £10 billion. Speaking for myself, I hope that there can be £10 billion available, whatever effect it might have on the election. But I hope that it will be available, and available for tax cuts in the two years before a general election comprises two simple words—fiscal adjustment. We all now know what that means. The fiscal adjustment for the last two years before the next general election is supposed to be £10 billion. be wrong.

The plain fact is that the only reason why the Budget itself was so well received was that there was a one-off piece of good fortune for somebody in the Customs and Excise or the Treasury. Somebody told him something that, I am sorry to say, nobody told me—that there was £1¼billion on which to give some tax relief. I do not suppose that he thought it up himself. I imagine somebody told him about it. I should feel rather annoyed if that person was there when I was there. That was the only way in which he managed to make those tax reductions.

While I am on that point, I have heard that already there are indications that there will be considerable difficulties at the ports arising out of this measure, which I certainly do not oppose; I welcome the fiscal neutrality between the United Kingdom and the other countries in the EEC. If, however, there are to be very considerable difficulties at the ports, we should be told what the Government intend to do in order to avoid them.

Therefore, the Budget optimism in March—that living standards would rise and that everything would be marvellous—begins to look rather different in July, even for those in work, who find their modest tax reliefs substantially eroded, if not overtaken by rising inflation and mortgage increases. It is much worse for those out of work who have little or no prospect of finding a job. If the Minister could give us his internal forecasts by simply handing over to us the briefs, the internal forecasts would indicate quite clearly that unemployment, given existing policies, must inevitably rise. Therefore, the plain fact is that the Chancellor's optimism in March is already well over in July.

Constitutionally we cannot defeat the Bill today; we shall just have to leave it. But I am sure that the strategy underlying the Bill and the Budget will be defeated by events.

6.1 p.m.

Lord Cockfield

My Lords, first may I join so many of your Lordships in congratulating my noble friend Lord King of Wartnaby on an outstanding maiden speech which combined both wit and wisdom. He speaks from very wide experience in both the private sector and, for the time being, at any rate, the public sector. He has produced a transformation in British Airways which is an outstanding example of what can be done by the application of great qualities of leadership and of wide managerial experience to the running of a business of that kind. The views which my noble friend expressed on wider share ownership and on the involvement of employees generally found an echo in many parts of your Lordships' House. He was supported by my noble friend Lord Bruce-Gardyne, by the noble Lord, Lord Weinstock, and by the noble Baroness, Lady Seear.

The Government share his general approach to these matters. We have done a great deal, not only in the current Bill but also in the 1980, 1982 and 1983 Budgets. As the noble Lord knows, special arrangements for employee participation have been made in previous privatisation schemes. So far as British Airways are concerned, discussions on the detailed arrangements are now under way. I am sure that all of us, on both sides of the House, will look forward to hearing again from my noble friend on many future occasions.

May I now come to the contribution made by the noble Lord, Lord Bruce of Donington. I can well understand his disappointment that I should suggest that it would be more appropriate if the broad-ranging debate on the economy were to take place next week, on the Motion standing in the name of the noble Lord, Lord Diamond. I can also well understand his chagrin. However, the noble Lord will have the opportunity to repeat on that occasion the speech he has made tonight—and on many previous occasions as well. But before he does so verbatim, there are one or two points to which I would draw his attention. He quoted a number of figures which were designed to show that the performance of the Government fell far short of the standard that he, the noble Lord, Lord Bruce of Donington, would have set.

If we take, for example, the PSBR, the appropriate thing to do is to look at it as a percentage of the gross domestic product. I merely put these figures to the noble Lord. I attach no argument to them. I leave it to the noble Lord to draw his own conclusions. He is a man of vivid imagination. In 1975–76 the PSBR, as a percentage of the GDP, was 9.6 per cent. In 1978–79, as a result of the intervention of the IMF, it came down to 5.4 per cent. This year we are planning on a PSBR of 2.25 per cent. This represents considerable progress.

In the case of public expenditure, again expressed as a percentage of the GDP, the figure in 1975–76—I leave it to the noble Lord to guess which Government were then in power—was 45.8 per cent. In 1978–79, it was 40.7 per cent. As a result of the higher expenditure on social services, due to the recession and the relative fall in tax receipts, the figure rose to 44.2 per cent. It is now down to 42.0 per cent. I share entirely the noble Lord's objective that we ought to reduce even further Government expenditure as a proportion of the gross domestic product. I look forward to his support, and that of the noble Lord, Lord Barnett, in achieving this objective.

The noble Lord, Lord Houghton of Sowerby, whose experience in these matters goes back very many years when both he and I were associated with the Inland Revenue, more than 40 years ago, used to feature in a programme on the radio called "Can I Help You?" The noble Lord has continued in that spirit ever since. I am sure that we greatly welcome the contribution he has made to our debate this evening. But, of course, one can have too much of a good thing. When I contemplate the 262 pages of the present Finance Bill and think of what might happen if your Lordships were given an entirely free hand to table amendments upon it, I can only envisage a state of apoplexy overcoming "the usual channels".

If I may take the specific points which the noble Lord raised, I am very much afraid that I cannot give him an assurance that the recommendations of the Keith Committee will be included in a taxes management Bill. The Government have announced that they will be considering representations already received and that there will be further consultations before legislation is prepared.

The noble Lord also raised the question of the taxation of husband and wife. As my noble friend Lord Bruce-Gardyne has said, the removal of the investment income surcharge has made an important contribution towards achieving greater equity in the taxation of married couples. The noble Lord will be aware of the fact that a Green Paper on this subject was published and that a very wide range of views has been expressed upon it. The Government are still considering those views.

My noble friend Lord Bruce-Gardyne clearly misses the opportunities which used to be open to him when he occupied the Treasury Bench in another place. The great qualities of imagination which he shows in your Lordships' House unfortunately had too short a time to be entirely reflected when he occupied that particular position. He raised two, what he described as "nits"—that is his phrase; it is not one which I should have applied; he was referring, I gather, to the provisions and not to anything else—and referred in particular to the transitional arrangements provided by Schedule 12 to the Bill. These relate, of course, to the abolition of the special reliefs on capital expenditure. He claimed that they had been introduced for the benefit of Nissan. It is true, of course, that Nissan will benefit from this provision provided that the company go ahead with the project. However, many other projects will benefit as well.

The Government thought it right to provide this protection for some projects in the poorest areas of the country. These projects had received selective assistance offers pitched at the minimum level necessary to allow the project to go ahead. The assessment of the minimum assistance for these projects was made when the previous capital allowances were in existence, and implicitly, therefore, assumed their continuation. Their removal without redress would have jeopardised the stability or viability of many of these projects. The Government therefore decided to continue the previous regime in order to allow these companies to complete projects towards which the Government had undertaken contractual commitments.

My noble friend Lord Bruce-Gardyne also raised the question—as, indeed, did my noble friend Lord Boardman—of the composite rate being extended to bank deposits. He suggested, as did my noble friend Lord Boardman, that the £70 exemption should be extended to all deposit accounts. The cost figure which has been quoted is not absurd, as my noble friend suggests; as long as the relief is limited to one type of account, it can be controlled fairly closely. If it were extended to all deposit takers, it would open up scope for manipulation and widespread avoidance of tax by means of fragmentation of investments to innumerable separate accounts which would benefit from the exemption. Thus, the £350 million figure is not an unreasonable estimate of the cost which might be involved. There is always an element of speculation in any figure which depends on the reaction of people in the future to particular changes in the tax regime; but past experience does suggest that if a relief of this kind were made available it would be used as the basis of people securing a much greater measure of relief than was intended.

Lord Diamond

My Lords, would the noble Lord be good enough to give way? I have listened most attentively to everything that he has said, and this is the first part I have not been able to follow. Why does he suggest that the Inland Revenue is incapable of giving one allowance against the total of bank interest?

Lord Cockfield

My Lords, the relief is not given by way of an allowance against the bank interest. The present £70 exemption for the National Savings Bank is given effect to, of course, by no tax being deducted from the interest. It is only when that interest is then returned for tax (if it is ever returned) that effect is then given to the £70 exemption. If you are going to attempt to reproduce the same kind of regime for all deposit takers—and that, of course, is the technical term for these people—it would open up a widespread avenue for avoidance of this kind. You would also find yourself in the position—and this is a perfectly legitimate point that I am making—that if the relief were extended from the National Savings Bank to the commercial banks you would then have a claim which would be extended to the building societies; and the next thing would be a claim that it should be extended to income in all forms, either by way of interest or by way of dividends on shares.

But the figure of £350 million was challenged. The explanation for the figure is the one that I have given. I accept entirely that you cannot give a figure which is absolutely correct in relation to what would happen under a proposal where the effect depends on the way that people react to it.

Lord Barnett

My Lords, the noble Lord makes a very interesting point, but in the interests of fiscal neutrality would it not have been simpler to scrap this allowance?

Lord Cockfield

My Lords, if the noble Lord is suggesting on behalf of the Labour Party that we remove the present exemption of £70 on deposits in the National Savings Bank, I fear that he will end up by being even less popular than he is at present.

May I thank the noble Lord, Lord Weinstock, for his welcome for the Budget proposals in so far as they relate to the reconstruction of business taxation. I entirely agree with the view which he has expressed, that the effect of so many of these special reliefs and allowances is to divert energy and resources to minimising tax liability rather than directing them to the efficient and commercial management of the business concerned.

He also referred—as, indeed, did the noble Baroness, Lady Seear—to the fact that large numbers of low-paid people are liable to income tax, and he pressed very strongly that they should be relieved of that liability. As to the principle, there is nothing between any of us. We should like to see large numbers of people at the bottom end of the scale relieved of liability. My right honourable friend the Chancellor of the Exchequer has indicated that this has a high degree of priority. I fear, however, that we are unlikely ever to get back to the position which existed before the war, let alone that which existed in the days of the Liberal Party yellow book of 1929, which I remember so well, because the level of public expenditure in those days was very low in real terms compared with today. However much one looks back with nostalgia to those years long ago, they do in fact represent a different world from the one in which we now have to live. Nevertheless, we share the objective of the noble Lord and of the noble Baroness, and this is why the principal relief which was given in this Budget consisted of an increase of some 12½ per cent. in the main income tax allowances, which is well over twice the figure required to keep pace with inflation. These allowances now stand 16 per cent. higher in real terms than they did in 1979. Of course, in terms of the percentage of income taken, the reliefs are weighted at the bottom end of the scale and not at the top. I think it is important to make the point that while the main personal allowances were increased by substantially more than the rate of inflation, the tax bands further up were simply indexed and not increased by a figure greater than the amount of indexation.

My noble friend Lord Montagu of Beaulieu very rightly raised the question of the impact of the extension of VAT to building alterations on historic buildings. He paid tribute to the flexibility which the Government have shown in dealing with this matter—and very important changes were made at the Report stage of this Bill in another place. He referred also to the assurance which had been given by my honourable friend the Minister of State at the Treasury, Mr. Barney Hayhoe, in relation to the 75 per cent. test which is applied. My honourable friend said: if I am persuaded that some lower figure than 75 per cent. is required to provide that broad equivalent that I promised to the House when I announced the detailed concessions, I shall return to the House by means of a Treasury order, subject to the negative procedure, to change the 75 per cent. figure. I stand by what I said—that the now 75 per cent. test should be broadly equivalent to the old test. If it is not, a change will be made".—[Official Report, Commons, 11/7/84; col. 1293.] That is the end of the specific quotation.

He went on to say that if an order were found to be necessary, it could be brought into effect during the parliamentary Recess. He further undertook that the Customs and Excise leaflet on the relief which had been criticised would be looked at again after full consultation with the heritage movement and with local authority associations. I understand—as indeed my noble friend said—that the officials of Customs and Excise are already in touch with interested parties, including the Historic Buildings and Monuments Commission, on these matters. I hope very much that the matter will be resolved in a satisfactory manner.

I have already commented on most of the points raised by the noble Baroness, Lady Seear. There are many matters on which we are in agreement. I greatly appreciated her welcome of the abolition of the national insurance surcharge. She commented also that while she welcomed the fact that 850,000 people were being taken out of liability to income tax, she would have liked to see many more taken out. As I have said, so would we—but this is a very expensive operation and it is necessary to balance total government revenue, total government expenditure and—as the noble Lord, Lord Bruce of Donington, said—the amount of the PSBR. The speed at which progress can be made is necessarily determined by those particular factors.

The noble Lord, Lord Barnett, made a most interesting if somewhat pessimistic speech—and it is clear that his long years at the Treasury have left their mark on him. While his demeanour is invariably cheerful, the sentiments he utters do not always reflect the same optimism for the future.

Lord Barnett

Just look at the economy, my Lords.

Lord Cockfield

My Lords, I would simply say this to him. Total output in the United Kingdom is now higher than it was in 1979—

Lord Barnett

That was five years ago, my Lords.

Lord Cockfield

My Lords, it is now growing—and the noble Lord singles out a particular sector of the economy and says that it has not done so well; but, as he very well knows, the pattern and balance of an economy change over time, and we are looking through a period when important changes are taking place. The important point—and I am sure there is no difference between us on this—is to take full advantage of those changes and those opportunities when they occur.

Currently the economy is growing at the rate of 3 per cent. per annum. On a historical comparison, that is not a bad rate of growth. Clearly we should like to see a higher rate of growth but the key lies in the competitiveness of the British economy. I have quoted these figures so often that it would be wearisome if I quoted them again. But I do not believe there is basically any difference between us here.

The objective we all want to secure is a rising level of national income. That will bring with it a rising level of employment. Unemployment in this country is of course a tragedy for the people concerned, and I do not in any way dispute that—but in this country we do have a high percentage of people employed compared with most industrial countries of the world, and there has been a significant rise this year in the total number of people in work.

The key to all this is an improvement in the level of productivity in this country and an improvement in our competitive position vis-à-vis the other main industrial countries with whom we are in competition in world markets. We can leave further elaboration of these points until we reach the debate next Wednesday. On this basis, I commend the Bill once more to your Lordships.

Lord Bruce of Donington

My Lords, I wonder whether the noble Lord will clarify just one aspect; I was careful not to interrupt him at any point during the speech he has just given. My question concerns the understanding that is reached between the two Front Benches in this House, and which I may have to take up with the Leader of the House.

It was my understanding, conveyed directly to me by my own Chief Whip, that the debate on the Finance Bill today would take place on the economic aspects of the matter. If I had been informed that it was going to take place on the Finance Bill itself and the taxation aspects, I would have come suitably prepared in order to participate in that debate. I am quite sure that the noble Lord is in no way responsible for shifting the emphasis of the debate away from that which has apparently been agreed through the usual channels. I will be glad if the noble Lord can clarify this point and say what his understanding from his Chief Whip was as to the subject matter of the debate.

Lord Cockfield

My Lords, we are treading on rather dangerous territory. I have no knowledge of any conversations that may have taken place between the noble Lord and his own Chief Whip. Nor do I think it appropriate that I should inquire into them. I made no complaint of any kind about the noble Lord's speech. I merely made the point right at the outset that I felt—and this was echoed by many parts of your Lordships' House—that it would be more appropriate to have a wide-ranging debate next Wednesday on the economy as a whole, and I felt that there was a great deal in the Finance Bill itself that would interest your Lordships. I can say no more than that, other than that I look forward with great interest if not fascination to the noble Lord's speech next Wednesday.

On Question, Bill read a second time; Committee negatived.

Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 23rd July), Bill read a third time, and passed.