Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1976.

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Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham 12:00 am, 3rd May 1976

I shall return in a moment to the question already raised by Members on both sides of the House about the additional search powers sought by the Treasury, but, briefly, I want to mention two points raised by the spokesman for the Opposition, the right hon. and learned Member for Surrey, East (Sir G. Howe), about the "Socialist elite" which has been created. The right hon. and learned Gentleman himself has to decide which horse in the race he will back. He has to make a decision about his own approach in the relationship between the Government and the trade unions or between the Government and the CBI, for instance. In all these discussions there is, by necessity, bound to be a degree of elitism, but the alternative is much worse than that. That is the real question which spokesmen on the Opposition side of the House have to recognise.

A voluntary wage agreement can be established only by the Government themselves meeting trade union leaders and involving themselves in discussions that ultimately, they hope, will result in a voluntary agreement. The essential attribute of a voluntary agrement is that both sides come together, discuss the matter, arrive at a conclusion and agree voluntarily to pursue that policy. If the right hon. and learned Gentleman is saying that it is wrong for the Government to do that, he can only be arguing for a statutory policy.

The only way in which Parliament can assert itself independently of those outside with whom the Government are at present negotiating is by saying that we shall have a statutory policy, that this will be the maximum wage agreement, and that whether the trade unions or management like it or not, those are the parameters set down by the Government and, therefore, there is no need to discuss it. Which of these two arguments is the right hon. and learned Gentleman talking about? I take it from his silence that he has no answer to them and that he has not made up his mind whether the Opposition want a statutory policy or a voluntary agreement that could arise from the sort of discussions going on at the moment.

My own personal view—I believe that it is the majority opinion on the Government side of the House—is in favour of a voluntary agreement being reached. People like myself have had a lot to say about this business of negotiations elsewhere and the diminution of the power of Back Bench Members in the House, but in the kind of arrangement in which there is a voluntary national wage agreement topped up by tax concessions from the Exchequer, plus, perhaps, a nationally negotiated reduction in prices—a very complicated package—Parliament must assert itself in negotiations of the social wage rather than the wage inside the wage packet. That is our responsibility in this situation—to make minimum demands on the Government to maintain the social wage and their obligation towards the extension of the public sector to do that, and also to be concerned about taxation in this country.

We can argue that it is an extension of democratic right when the Government go outside Parliament to negotiate directly with the trade unions in order to reach a voluntary agreement. I submit that this is an extension of democratic practice rather than a restriction of it, because of all the factors I have attempted to set out. However, the Government should now be absolutely honest. I do not think they can escape the consequences of lowered living standards unless they are absolutely honest at the outset. There is a tendency on the part of all Governments to move around in their stocking feet, hoping that no one will really hear them when they talk about lowered living standards. We should now be saying clearly to what extent we expect living standards to drop as a result of the policies, and it will be substantially higher than any of the figures that have been mentioned so far. By the time we get to August 1977 there will be a substantial reduction in the purchasing power of workers' wages in this country tar in excess of any figure mentioned at the moment. The Government have an obligation to be absolutely honest and set out the picture, as they see it, in terms of the percentages.

On the question of tax evasion there are two ways, as the Chancellor said. There is PAYE and "pay as you declare". Presumably, the Chancellor is seeking powers to do something about the latter point, but he is looking in the wrong place. He is looking in an area in which he will shed no light, despite the powers he will have. It is all done by cash. The deals that the Chancellor is concerned about are not, in the main, on paper. There are already ways in which the Government can search for documents in various companies if they are looking for massive company evasion of taxation. Indeed, the Price Commission could give a lot of information if it were working according to the statute.

There are ways in which the Government can overcome the evasion of company taxation, but there is an area much more lucrative than that—the whole business of moonlighting, and work done outside normal hours. It is estimated—I have no reason to doubt it—that each year about £3,000 million is earned but not declared for tax purposes. That must be the case, if one considers the very nature of the jobs done by professionals or skilled men working in various building trades, and other areas. I am not only talking about "lump" labour I am talking about the wide area of odd-jobbing and self-employment of one sort and another outside normal working hours. There must be between £3,000 million and £3,500 million worth of work being done, at a minimum estimate. This is a very large area, which is not taxed at the moment because it is all paid in cash. The only way in which the Government can overcome the problem of massive tax evasion in the City and elsewhere is by insisting that any payment over £50, or whichever figure is selected, is made not in cash but by cheque.

People may say the consequences of that are too severe for a democracy and that it will not work. If that is the case, then we will have to put up with the evasion. There are other countries in the world, from the United States to Hong Kong, which have failed to catch the tax dodger because the money is paid in cash. If the price of stopping them is too great a strain for democracy, so be it, but we must recognise that the only way it can be done is by saying that no sum of more than £50 will be allowed in cash, and that it must be paid by cheque. Then the Government will have access to the information it needs about tax evasion.