Capital Transfer Tax

Part of Budget Resolutions and Economic Situation – in the House of Commons at 12:00 am on 12 November 1974.

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Photo of George Young George Young , Ealing Acton 12:00, 12 November 1974

Many of us on the Tory benches will wish that the views of the hon. Member for Berwick and East Lothian (Mr. Mackintosh) were more widely shared on the Labour benches. The only fault in what I thought was a truly excellent speech was that he paid no tribute to his predecessor, Mr. Michael Ancram, who represented the constituency for eight months, until the last election. I am sure that the hon. Member will put that right when he next speaks. Obviously the hon. Member was not anticipating winning the last election because he had arranged an extensive lecture tour to take place immediately after it.

Many of us felt that the debate on the Gracious Speech was somewhat unreal because it took place against no financial framework. What the Chancellor has told us today has pulled the rug out from under the Gracious Speech. In the debate on the Address we had Minister after Minister, including the Prime Minister, hoisting up the sails and unfurling them. Now we have had the Chancellor from his vantage point in the crow's nest saying that there are storm clouds overseas and the sails have to come down again.

The Chancellor has totally undermined the credibility of the Gracious Speech which we debated last week. Many of us will disagree with the underlying philosophy of what the Chancellor said. He started on the basis that the social contract was working, whereas many of us believe that it is not. I go along with what the hon. Member for Berwick and East Lothian has said, that we must define the social contract a lot more clearly so that we know whether it is working.

The situation we have at the moment is a complete nonsense, with half the House saying that something is within the social contract and the other half saying that it is without it. We have to resolve that position as soon as possible. I hope that the clear warning which the Chancellor of the Exchequer gave in his speech of what would happen if the social contract failed will accelerate that process of definition.

The Chancellor appealed for national unity. It seems that no speech in this House is complete without such an appeal. One might have hoped that, given that appeal, he would have buried all partisan legislation. In fact he did exactly the reverse. He exhumed a particularly evil-smelling bone from the Labour Party's political cemetery and deposited it on the Floor of the House. I refer to the £10 million refund to the trade unions. It is an affront to the people of the country that this measure should be reintroduced.

The Labour Party had the grace to leave it out of its manifesto in February. I do not know whether it was in the more recent one. It is an affront to the common sense of the people that this £10 million should be repaid. Those sections of the community who might legitimately have expected something from the Budget, single-parent families, single child families, the disabled who are campaigning for an allowance of their own, will see that the Labour Party is giving £10 million hack to the unions but is ignoring them. People will draw their own conclusions about where the priorities of Labour Members really lie.

have three questions to put which I hope will be dealt with later in the debate. First, why is there no incentive to save in the Budget? There was nothing in what the Chancellor said to encourage people to save. In times past the money which industry has needed for investment has come from the private savings of individuals. Those have been eroded and investment now has to come from the public sector with complicated safeguards. We have to rekindle the incentive to save. There was nothing in the right hon. Gentleman's speech to do that.

Secondly, there was nothing to convince the overseas depositor, the institutions such as the IMF and countries in the Middle East, that we intend to conduct our affairs in a responsible fashion. It was the previous Chancellor, now the present Foreign Secretary, who in the last Labour Government had to admit that they were blown off course because of storm clouds overseas, because he forfeited the confidence of people outside the country whose funds we need if we are to survive. If that confidence is not won, the Chancellor will be back at that Dispatch Box within weeks with another Budget to deal with the run on the pound.

My third question, or series of questions, arises from what the Chancellor said about the nationalised industries. We on the Tory benches would like to know what, for example, would be the cost of postage if the nationalised industries are to be put on a viable footing. What will be the cost of a telephone call if the Post Office telecommunications sector has to pay its own way? What will be the cost of rail fares, for example London to Ealing Broadway, if British Rail is made profitable? What will happen to electricity and gas tariffs if the subsidies to nationalised industries are removed?

We can judge the effect of the Budget on the retail price index and on pensioners only if we have that information. I hope that the information I have requested, which I am sure is available somewhere, will be forthcoming during the debate. If the Chancellor thinks that he has tackled inflation, I suggest that his salary should be related inversely to the cost of living index.

The British people seem to have two partly conflicting characteristics. On the one hand, people respond generously and partriotically to a crisis and make deep personal sacrifices for the common good. On the other hand, if people perceive that certain sections of the community are not bearing their share of the burden they feel understanably resentful. What the Chancellor said will add to the feeling in the country that certain sections of the community will not have to bear the burden. The social contract is to remain unamended. Certain sections of the community will be free to secure large wage increases in the coming months, and other sections of the community will not have that power. That will contribute to a feeling of injustice, which is not the right atmosphere within which to tackle the economic crisis.

Many people would have been prepared to make greater sacrifices than were called for. As has been said, a tax on alcohol and increased betting levies would have been a fair way to get purchasing money out of the economy. Then we could have done something more for the sections of the community which I mentioned. Without the feeling that everyone is bearing an equal burden, I do not think that the Chancellor's measures have a chance.