It is certainly encouraging to have such a full House at such a late hour on the Third Reading of the Bill after the long hours we have spent on it in Standing Committee and on Report. In many ways it has been a historic Finance Bill, not merely because it is the last such Bill of a dying Parliament and of a dying. Government but because this is a Bill which began with the basic rate of income tax at 34 per cent. and in which it now stands at 33 per cent.
Never before have an Opposition succeeded in bringing down the basic rate of income tax. In addition to that profound and unprecedented change, it is worth recalling that we also succeeded in raising the thresholds of the higher rates of tax by £1,000 in deference not merely to the needs of the country and the wishes of the people but to the expressed desire of the Chancellor of the Duchy of Lancaster, who had pointed out how grossly exorbit ant were our high rates of tax and how they needed to be reduced at the earliest opportunity. We took that opportunity.
Those important and unprecedented changes followed the changes which the Opposition forced in last year's Finance Bill, when we substantially raised, and indexed, the thresholds—another historic event. The two Finance Bills together have undergone changes which I think no Finance Bills have undergone before.
There have also, this year, been a large number of minor changes of significance, in addition to the two major ones I have mentioned. Two Opposition amendments were accepted by the Government in Committee, and one Opposition new clause and two amendments were accepted on Report—one of them in the debate which has just ended. One Government new clause was added in Committee and 13 on Report, of which 11 were in response to points we pressed in Committee. No fewer than 87 Government amendments were introduced on Repoirt, of which the overwhelming majority were in fulfilment of commitments made to the Opposition in Committee.
That, of course, is why we have Committee stages, but it is a remarkable fact, and very rare, that over 100 clauses and amendments have been added and made to the Bill in response to pressure from the Opposition. Thus we have succeeded in improving the Bill far beyond what is appreciated outside the House.
We have also seen, as we have become accustomed to seeing in the summer months in recent years, the eruption of a major financial crisis, with bank rate hoisted to 10 per cent. and a savage curb on bank lending—all the usual paraphernalia of the credit squeeze in response to a financial crisis caused by the Government's improvidence. This crisis came at a time which, with curious accuracy, punctured the myth that all is well with the economy.
Indeed, the Prime Minister still likes to tell his audiences at home that all is well but he tells a different story in Bremen and other places abroad. There he says that the British economy is so weak that we cannot join with our Community partners unless they give us handouts. He goes with a begging bowl, complaining about the weakness of the same British economy whose strength he seeks to parade in this Chamber. Regrettably, it is the account the right hon. Gentleman gives overseas which is the truthful picture.
Today marks the end of an era—an era of four years, 14 Budgets and six Finance Bills, which together have done untold damage to the economy, to industry, to commerce, to firms, to farms and, above all perhaps, to the individual's will to work, on which so much else depends.
We have been able to mitigate some of the worst evils of tht past two years, but to set the country on the right fiscal course something more than a new clause will be needed: it will need a new Government. Fortunately, we shall not now have long to wait. Fortunately, it is to that new Government that responsibility for next years' Finance Bill will fall.
The Finance Bill 1978, shortly to become the Finance Act 1978, is the least damaging of all the Finance Bills and Finance Acts which have been produced since March 1974. The country may well be wondering why it is infinitely less damaging to the country than all its five predecessors. There should be an unseen attender at these debates. As I almost hear by hon. Friend the Member for Blaby (Mr. Lawson) saying sotto voce, it is to Dr. Johannes Witteveen that we owe a great deal of the credit for the comparative mildness of this Finance Bill.
The International Monetary Fund imposed last year, and is imposing this year, a limit on our borrowing requirement of £8,500 million. It is a limit which I regard as dangerously high, but just think, Mr. Deputy Speaker, what the Financial Secretary would have done if it had not been for Dr. Johannes Witteveen. Beside the right hon. Gentleman's bed, underneath the pillow of the Chancellor of the Exchequer, there should be a mini-photograph of the good doctor. It is to that doctor that the British people tonight should be giving a vote of thanks.
But it is not only to the good doctor. He has the main honours, but there is another reason why this Finance Bill is the least damaging of all those that have appeared from the Treasury Bench. The harsh logic of parliamentary arithmetic has compelled the Government to introduce this year a Finance Bill less damaging than all the others.
Perhaps we may rehearse some of the concessions which have been wrung from the Government by the arguments of my right hon. and hon. Friends upon our Front Bench. Only three of them it is true, but three of the most distinguished, are upon our Front Bench tonight. The concessions are due to the arguments and the skill of my hon. Friend the Member for Blaby, my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) and my hon. Friend the Member for Horncastle (Mr. Tapsell). We must, of course, also include my hon. Friend the Member for Norfolk, South (Mr. MacGregor), without whose encouragement, skill and disciplinary powers upstairs in Committee we would not have wrung all the other concessions from the Treasury Bench. It is perhaps to him that a special tribute is due.
Whom do we find confronting us? If you glance upon the Government Front Bench, Mr. Deputy Speaker, whom will you see? You see an hon. Member who is not yet a Lord Commissioner of the Treasury. He is an unpaid Whip. [HON. MEMBERS: "He is paid."] I apologise.
Is not this an occasion? For the first time from the Government Front Bench we have heard the Whip addressing the House. Not upstairs in Committee but now, on Third Reading, we have an intervention—and upon what subject? He says that he is underpaid. He is not alone in that.
One of the extraordinary paradoxes we have seen in past months is that the Labour Party and Her Majesty's Ministers have been arguing that we should be holding down wages. That is why the Whip is underpaid. It is why others are underpaid. During the four years when the Financial Secretary has been at Treasury Chambers we have found that an increasing number of our citizens have been underpaid. When the Government Whip intervened and claimed that he was being underpaid, he was merely echoing the view held by an increasing number of our fellow citizens.
If you behold the Financial Secretary, Mr. Deputy Speaker, you will understand the concessions which have been wrung as a result of the arguments deployed by my right hon. and hon. Friends. We have had a series of confessions that that which the Government produced in 1974, 1975, 1976 and 1977 was wrong. In this Finance Bill we have had a profound and unprecedented confession of past errors.
What have we seen? We have seen relief for bad debts for the purposes of value added tax, for which my right hon. and hon. Friends have been pressing. We have seen the Government acquiescent in a reduction in the basic rate of tax from 34 per cent. to 33 per cent., for which my right bon. and hon. Friends have been pressing. We have seen maintenance payments for wives or ex-wives treated no longer as unearned income but as earned income, for which my right hon. and hon. Friends have been pressing. We have seen taxation relief for farmers, for which my right hon. and hon. Friends have been pressing. We have seen capital tax allowances for hotels, for which my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) has been pressing. We have seen reductions and reliefs in capital gains tax, for which my right hon. and hon. Friends have been pressing. We have seen reliefs from capital transfer tax, for which my right hon. and hon. Friends have been pressing.
All this has come about because over the past four years the Treasury Bench, reluctantly and without any enthusiasm, has been persuaded by the arguments of my right hon. and hon. Friends. That is why, as we come to the final chapter of this Bill, those of us upon the Opposition Back Benches are entitled to take pride in those who sit momentarily upon the Opposition Front Bench but who, in a few months' time, will be seated upon the Treasury Bench.
As the speech of my hon. Friend the Member for Eastbourne (Mr. Gow) has shown, at this stage in the process of a Bill we are apt to look at the Bill through rose-tinted spectacles because we have suffered through the Committee and Report stages. The lenses of those rose-tinted spectacles are, on one side, the affliction of legislation which we have gone through with Treasury Ministers, so much so that one feels a sense of brotherly affection for them. Through that lens of the spectacles, I thank the Treasury Ministers for the patience and courtesy shown to us on the Opposition Back Benches whenever we have sought to intervene.
The other rose-tinted lens is represented by the innumerable concessions, listed so well by my hon. Friend the Member for Eastbourne (Mr. Gow), which have been given to the Opposition throughout the Bill—the innumerable amendments for the good which have been made to the Bill through pressure from the Opposition.
But, no matter about these rose-tinted spectacles which are apt to make the Bill look a rather nice one, it is a terrible Bill, Mr. Deputy Speaker, and for one reason. It has set a precedent for retrospective legislation which has never before been seen in this Parliament—not just retrospective legislation to the date when an intention has been announced by a Government but going back to a date long before a Government have announced their intentions, so that the subject could not possibly know that he is doing wrong.
If this is to be a precedent for future legislation, should any Socialist Government come back to office for any length of time—which heaven forbid!—the Bill will go down as the most disastrous piece of legislation that we have allowed to go through this Parliament. To force through Parliament retrospection of that sort is an act of arrogant government and stinks of unconstitutional dictatorship.
I rise rather sadly tonight, Mr. Deputy Speaker, as my maiden speech in this House was during the first debates on the Budget, back in April. At that time I was rather heartened by the fact that the Government looked upon the youth of the country and upon small business men as people whom they believed should and could be helped in the present situation.
In the last few weeks we have seen the youth of this country, many of whom will leave school very soon, denied employment because of the 1½ per cent. increase in the employers' contribution. Many young people who will be seeking employment in the next few weeks may well be denied that employment because of what has happened in the Budget.
The Government have said that they will help the small employer, but yet again we have seen that the employers' contribution is likely to put further small employers out of business. It must never be forgotten that they are still the largest group of employers of labour within our nation today.
As a newly elected and younger Member of the House I find this very sad, because I believe that this country, with its youth, has a great future. I believe that, if encouraged and given the right incentive, the youth can play a part in the future of this nation.
There is one point that I want to make, Mr. Deputy Speaker upon the Bill. The national debt, as I understand it, was created in the year 1694. Two hundred and eighty years later, in 1974, after two and a half centuries of war and two world wars, it had reached £40,000 million. But it took only four years of this god-forsaken, dreadful Government to double it. It is now £80,000 million.
Tell that to the country. Tell it to the individuals with whom the Socialists are allegedly so concerned. I happen to represent, applying the arithmetic to my constituents, one-thousandth of the people of this country, because there are 35 million voters and I have 35,000 people in my constituency who are entitled to vote
Indeed, a parish council. But I also happen to represent those who live in an area of 8,000 square miles, which is one and a half times the size of Northern Ireland. Before Labour Members make silly remarks let them reflect on that.
But thank God that I represent those people. I represent one-thousandth of the people of this country. So we can say to ourselves a very simple thing when we look at the debts which this Government have accumulated. The public sector borrowing requirement is £23 million a day—£1 million an hour with a lunch break. For my constituency, that represents £1,000 a hour. Last year, with all their genius and excellence, and with all that they arranged for the Jubilee event, the Government managed by charity to accumulate £14,000. On the extravagance of this god-forsaken Government, we would have run out of money at 3 o'clock on 1st January.
That is the extent of the ill health of the financial situation of the country. The Government have doubled the debt. That will be on our children and our grandchildren. It means £1,000 an hour for my constituency, £1 million an hour for the country—let every man, women and child remember that—in addition to tax and unemployment. Let anyone who votes for the Third Reading of the Bill condemn the fruitfulness of those who have achieved such a silly state in our finances.
I shall be brief. I have listened to a great deal of the debate which has taken place on this important Finance Bill. We have heard the Government claim credit for many of the things which have been done to bring a better life for industry and for the ordinary man and woman. What we have not heard until tonight—from my hon. Friends the Members for Blaby (Mr. Lawson) and for Eastbourne (Mr. Gow)—is that some of the good things which have been produced in this Finance Bill have not been at the desire or the wish of the Government of the country—a Socialist Government—but have been brought about by the tenacious debating skill of the Conservative shadow Treasury team, and a very talented team it is.
We hear a lot from "Sunny Jim" about the achievements of this Government. Perhaps they will at last tell the nation the truth. The only things which have come out of this Government and which are any good have been produced by the skill and the tenacious debating ability of the Conservative Opposition.
No Liberal Member is here tonight to debate this Third Reading, yet the media have said time and again that it was because of the Liberals that the national insurance surcharge was reduced from 2½ per cent. to 1½ per cent. There are only 13 Liberal Members, and there will be a lot fewer after the next General Election. But there are 280-plus Conservative Members. It was the vote of the Conservative majority which produced that reduction. Of course there should have been no increase at all, because, as my hon. Friend the Member for Ilford, North (Mr. Bendall) pointed out, this will be a deterrent to employment. This Government are responsible for the worst level of unemployment for about 40 years. That is the truth of Socialism.
My goodness, I think that the Financial Secretary must have been wrung into his seat on the Treasury Bench by the amendments which have been won by the Conservative Opposition and the concessions that have been made. I hope that he will admit the ability of the Conservative Opposition and the concessions which the Government have been forced to make. But will he also talk about the highest level of unemployment and the doubling of food prices, because that is the record of Socialism? I hope that he will offer a word of apology to the House and, through it, to the people for the purgatory which his Government have produced, because Socialism does not work.
This Finance Bill is not what the Opposition would have wished, but it is a lot better than many people hoped. If, however, the people thing that they have had a glimmer of hope from this Finance Bill, they have a great deal to look forward to when they have a Conservative Government later this year. We shall give the people the freedom and the encouragement that they want. We shall return, under a Conservative Government and with Conservative philosophies, to a free, prosperous and responsible nation.
The right hon. Member for Crosby (Mr. Page) talked about the affection that spreads through all parts of the House as a result of our experiences in Finance Bill Committee. Right hon. and hon. Members who have shared these sleepness nights share this affection. But I always find it surprising to see how many right hon. and hon. Members queue up for the rack year after year. There never seems to be any shortage of volunteers.
The hon. Member for Blaby (Mr. Lawson) called this a historic Finance Bill. One of my interests during recesses is reading bits of history. I do not think that this part of history is one to which I should turn readily, and those who come after us will have rather peculiar tastes if they look to our debates on Finance Bills for their entertainment.
The reduction in the basic rate of income tax from 34 per cent to 33 per cent., which, after all, was the major change in the Finance Bill as it went through the Committee and the House, and the increase in the higher rates of thresholds were the achievements of the Opposition, although they paid a heavy price for them. The price they paid was the national insurance surcharge, which is by no means as good a method of raising revenue as the income tax, and there are some hon. Members of Conservative persuasion who are beginning to believe that.
But a number of Opposition amendments succeeded. I know that it is the standard practice of all Oppositions at all times to claim many and important successes, and that at all times it is the attitude of the Government to take a rather relaxed view about these exaggerated claims. Governments understand all too well in our democratic House the necessary and frequent frustrations of Oppositions, and those who have shared the frustrations should be tolerant in understanding the problems.
I note the changes which we have been happy to agree, but I also note the shape of the Bill as it has emerged, compared with what it was originally. One has only to analyse the changes which have been made to get matters into perspective.
The hon. Member for Blaby talked about crises. It is the stock in trade of any Opposition to do that. However, gilt sales are well ahead for the year. Inflation is falling pleasantly. The growth in the economy is moderate, but I would not want to see it more than moderate because I believe that it must never be allowed to get out of hand. Production is rising, again moderately. We see small, steady improvements. We seem to he doing better than the forecasts in the Financial Statement and Budget Report for which I am responsible. We see the Finance Bill against the background of the country's generally improving financial position.
Opposition Members have had the pleasure of examining our proposals and making the changes which we have been happy to accept in the main. I should like to refer to what we have done for small businesses and to the increases in child benefit and their consequentials for child tax allowances, which I believe are valuable improvements. There was also the concession on taxation of maintenance payments, which I particularly welcome because I have always felt that there was a really genuine grievance not in the grievance not in the theory of the scheme but in the way it worked in practice. I was very happy to be associated with that change. I should also like to mention the tax reliefs for profit-sharing schemes. Those who witnessed the long discussions that took place on that matter will realise that the scheme we finally came up with provides a useful framework for a fascinating experiment. It will be very interesting to see how industry uses these schemes. They could be very important or just a passing phase. It is up to industry to decide for itself. Those, like me, who believe that the major problems of industry must be solved by industry itself will look forward very much to seeing what happens.
I must say that among the many indicators that I look at regularly in order to see how the economy and industry are faring, this is not the major one that concerns me. Therefore, I do not happen to have the figures with me, and on this occasion I do not think it is worth troubling my assistants for the answer.
There are a number of things that one can say about the passage of this Finance Bill. Generally, however, we have had good-tempered debates. If hon. Members visit Somerset House, they will find copies of all the Finance Bills and also a mass of descriptions and explanatory notes on these Acts. If hon. Members look at the Finance Bill files they will see that the last century occupies only half of these. It is only when one looks at the last 10 or 15 years—not just the last four years—that one realises that the way in which we organise these matters may not be ideal.
This Bill should have had a more difficult passage than it received. This is not because of its content—I believe that is admirable—but because of the parliamentary situation. In bringing this legislation to its satisfactory conclusion, we should therefore record our debt to our Whips. We should also record a debt to the Opposition Whips. Both of these hon. Gentleman achieved the highest reputation among the members of the Committee, and I take pleasure in recording this.
The measures that we have brought forward are valuable, and I ask all hon. Members present to give the Bill an enthusiastic and unanimous Third Reading.