Increase of Value Added Tax

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 3 July 1979.

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Photo of Barry Sheerman Barry Sheerman , Huddersfield East 12:00, 3 July 1979

Rising for the first time in the Chamber, I am conscious that hon. Members have heard many maiden speeches in the past few weeks, and I have no intention of being the straw that breaks the camel's back. Having glanced over a number of eminent first contributions in the House over the past 100 years, I am also aware that a standard has been set which I have little hope of achieving. However, my first few weeks as an hon. Member have convinced me of one thing, if nothing else, and that is that the House tends to be kind in respect of the performance of novices.

It is both my good fortune and a daunting task to follow in the footsteps of the former Member for Huddersfield, East, J. P. W. Mallalieu, whom so many hon. Members will know as a friend and former colleague. Many will know him affectionately as "Bill" or "Curly". That physical attribute seems to be a necessary condition of being the hon. Member for Huddersfield, East.

As a Member "Curly" was assiduous in safeguarding the interests of Huddersfield, and since his adoption by the Labour Party as early as 1936 and his election in 1945 he won the respect and affection of the folk of the town and was close to their hearts. As a Member, sailor, author and journalist and as a Minister, he carried out his duty in serving his constituency, his party and his country well. I was pleased to see recently that his contribution in all these areas of activity has been suitably rewarded.

Having been the recipient of great kindness from my predecessor, I read with a feeling of pride his first speech to the House, delivered in October 1945. Coming to the Chamber fresh from the war, he began by proposing stricter taxes on inheritances and he said: I cannot expect hon. Members opposite to approve of that, for it is curious that they who in their public speeches, demand that people shall stand upon their own feet, that they shall not be spoon-fed, seem to be the very first people who demand that their children shall be silver-spoon fed."—[Official Report, 24 October 1945; Vol. 414, c. 2042.] That is an appropriate sentiment in the context of the present Finance Bill and in the wake of the recent Budget and the VAT increases that are before us today. It is a view that strikes a chord with my constituents in Huddersfield and Kirk-burton.

The town that I am privileged to represent in this House is a classic example of what can be achieved when the natural beauty and resources of this country are married to an intelligent and enlightened attitude and a belief in planning. As we know to our cost, many of the most beautiful parts of Britain were turned by market forces of Victorian capitalism into ugly, insanitary towns notorious for their overcrowding, squalor and disease. However, Huddersfield, in the foothills of the Pennines, was described by—among others—Friedrich Engels in the nineteenth century as the most beautiful of all the factory towns in Yorkshire and Lancashire Unlike those towns, dominated in their infancy by market forces, Huddersfield was an example of what an industrial town could be if a little enlightenment, thought and planning were involved in its creation.

Today, my constituency appears fairly prosperous, with an economy resting on four pillars: textile mills producing fine worsteds; engineering of diverse types; chemicals of increasing sophistication; and, like so many other towns, the ever-expanding service sector. However, Huddersfield, like most of the towns in West Yorkshire, faces serious and fundamental problems. As my hon. Friend the Member for Batley and Morley (Mr. Woolmer) pointed out in the debate on the Gracious Speech, the textile industry has been in long-term decline and is a much smaller employer than in the past. If it had not been for the Labour Government's programme on industrial and regional aid in the shape of the temporary employment subsidies and the like, many more jobs would have vanished and been lost to an industry which makes a vital contribution to the export trade.

Engineering is also in need of reinvestment and diversification if it is to prosper. Although chemicals as an industry is increasingly capital-intensive, it employs expensive capital equipment and many computers but fewer and fewer men. The service industries have provided jobs to replace many lost in the traditional sectors, but this Budget and Finance Bill do little to ensure that this will be an expanding area of employment in the future.

In my constituency we have the problems of the United Kingdom in microcosm—a desperate need for the massive reinvestment which private capital has been notoriously unwilling to undertake. Indeed, the evidence goes to show that textiles and engineering have suffered from the failure of private owners to reinvest in their businesses even when profits were consistently high.

When I hear the economic doctrines expounded by the right hon. Member for Leeds, North-East (Sir K. Joseph), I find it difficult to believe that he can have any real knowledge of the facts of industrial and economic life in his constituency, an area that is not so far from mine. Both of us represent regions that have all the potential for continuing vigorous industrial enterprise—a highly skilled work force, superb industrial relations and excellent communications. Yet private capital is still reluctant to invest in its future and the tax changes which are now before us will do nothing to change that situation.

Frankly, I do not believe that the proposals in the Finance Bill as a whole, in the Budget or in the overall Conservative strategy—if one can dignify it by that name—will produce one pennyworth of new investment in the region that I represent. Indeed, on the contrary, the grey or intermediate areas are to be penalised in the Budget and are to lose most of the pitifully few aids and incentives that exist to attract industry. I have long had doubts about the wisdom of regional industrial policy and development under successive Governments, but at least the Labour Government in latter years have tried to do something about the intermediate areas and the black areas.

In my opinion, it is clear that the present criteria for determining aid to an area—relating to rates of unemployment—are far too unsophisticated and blunt in assessing needs. Because of this, the intermediate regions have long suffered. Surely the crucial task of economic industrial aid is to prevent the disease of industrial decline and decay before that process has gone too far. One hopes that the intention is to cure the disease rather than to treat the symptons. Much of Yorkshire needs help and investment now, not when unemployment statistics equal those on Merseyside and the North-East. Unless Governments recognise this fact and move to prevent it, there will be many more Merseysides in the near future.

The task of anticipating decline and at moving to prevent it early enough is clearly recognised in the new ideas emanating from the EEC. If Conservative Members had seized their opportunity, they might have had the chance of designing a new and more flexible policy for regional development. Yet I fear, that with their well-known political blinkers, they would prefer to leave us, as the world economic crisis deepens, to sink or swim in the market forces. Alas, I fear that many of their constituents and mine will be in grave peril of drowning.

I speak of economic aid to the regions in no sense as one who believes that there is a God-given right for one region to benefit at the expense of another. However, as a member of the third largest party in this House, the Co-operative Party, I have an unshakable faith in the principle of investing wealth created in the community back into that community. So often the wealth created by our people in our towns flows out of them never to return in the form of new jobs and new industries vital for their future.

It is a fact that the wealth of the country is created by the working people of the country, and in my opinion it is their right to ensure that the wealth that they create remains in their community and under their control. However, the Budget, and the Finance Bill if passed, will accelerate the process whereby our people's wealth will be redistributed more unfairly than before. That is what this VAT provision and the shift from direct to indirect taxation mean. That shift means simply that the well off benefit at the expense of the poor and the less well off. Furthermore, it will be very much more easy for the wealth of this country to flow abroad into investment and jobs abroad—for example, office sites in Brussels.

The Secretary of State for Trade could see nothing wrong with that. In the view of that right hon. Gentleman and the Prime Minister, capital will be allowed to flow where it will and to where it can reap the fastest profit regardless of the national interest—or perhaps they believe that the two are always coterminous.

Looking back on Budgets and Finance Bills in previous years, I believe that what marks this one off and why it stands out is the way in which the philosophical element has played such a large part in all our debates. Even when we are discussing, as today, the increase in value added tax from 8 per cent. to 15 per cent. it is the underlying philosophical differences between Government and Opposition to which reference is constantly made.

I conclude by saying that I think I discern on the Conservative Benches two major concerns at the deeper level. One is with freedom or liberty, which is a proper concern for any Member of this House. In the late twentieth century I share with Conservative Members the feeling that liberties of the individual—namely, our basic freedoms—are threatened. Unlike the right hon. Member for Oswestry (Mr. Biffen) I do not see that liberty menaced by the immense power of the centralised Western industrial State.

5 p.m.

The right hon. Member for Oswestry and the right hon. Member for Down, South (Mr. Powell) are forever on their guard against the State. They see it as a threat to liberty. However, in my opinion that liberty is being filched by organisations that were unknown to the political and economic theorists of the eighteenth and nineteenth centuries. Today, liberty in the Western world is under threat not from Governments who accrue too much power but rather from Governments who have not the courage to use that power to protect their citizens from the international corporations whose size, growth and power are a growing menace to liberty.

Secondly, I recognise among Conservative Members a desire to halt the long-term economic decline from which the country has suffered for over 100 years. I believe that it is a genuine desire. However, since 1945 we have been guilty of a tendency to search for and seize upon cure-alls and panaceas that will stop the rot once and for all and put the country right. As a student of ideas. I have detected a series of such fashions, cure-alls and fake remedies for the salvation of our nation since the end of the Second World War. They range from a naïve belief in the efficacy of centralised planning—sometimes Labour Members are guilty of that, too—through an enthusiasm for business efficiency and business schools to the revolutionary changes that we thought could be brought about by an expansion in higher education. In the 1960s there was a general commitment to the wonders that might be wrought by the benefit of large-scale enterprise, whether in public or private industry, local government or the National Health Service. None of these solutions worked and we then threw ourselves into the greatest cure-all or panacea of the century—the European Common Market.

I am afraid that Conservative Members are now totally committed to the latest panacea, the latest fake medicine—the return to the incentives of the market economy and the real competition that we knew in the Victorian period. This represents the worship of inequality, and the move from direct to indirect taxation is at the heart of that move. I am afraid that it has as much relevance to the problems that the country faces at the end of the 1970s as do any of the other panaceas that I have listed.

All the solutions put off the day when we must begin the task of rebuilding the British economic and social structure on a democratic, equal and efficient basis—and the three go together. I hope that I shall be able to contribute a small part to that process.