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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 3:56 pm on 6th July 1983.

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Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs) 3:56 pm, 6th July 1983

I welcome the right hon. and learned Member for Dover (Mr. Rees) back to the Treasury Bench, and congratulate him on his elevation to the Cabinet after his exile to the Department of Trade. We look forward to many exchanges with him, and we hope that he will become a wiser, if not a better, man during his interlude at the Department of Trade. On behalf of my right hon. and hon. Friends, I also thank him for his kind words about our friend Joel Barnett, the former Member for Heywood and Royton, who will be sadly missed in the House.

This is a slim Bill. It is one of the shortest Finance Bills ever presented to the House. As the Chief Secretary to the Treasury pointed out, it is a fag end from the last Parliament, containing the clauses which Labour Members refused to allow through when the Prime Minister, in her dash for an early election, scuppered the chance of proper consideration of the legislative provisions in the March Budget.

The fact that the Bill is short and the fact that it is left over from the last Parliament should not obscure from the House the significance of the measures or the context in which they are presented. The Bill is modest, to use the Chief Secretary's words, but it is modest only in length. It is far from modest in its economic and social effect, and it provides a searching commentary on the Government's economic policy.

In our judgment, the Bill raises one central issue of great importance. At a time when the Government have already made many cuts in public spending and propose to make many more, is it just, fair or equitable for the House to agree to spend £60 million on additional mortgage tax relief, £50 million on additional cuts in capital transfer tax, and £280 million on tax handouts to the most wealthy members of our society? Such handouts are not only unjust, unfair and inequitable. When made by a Government who have presided ever the greatest increase in poverty and deprivation since the war, they are obscene and immoral.

On almost every day since 9 June, there have been announcements of bad news about the economy, bad news about the Government's policies to deal with that bad news, and forecasts of further bad news to come. Since 9 June, 21 major firms and employers have announced the loss of a total of 79,153 jobs. The latest unemployment figures, released last week, show that the trend in unemployment is remorselessly continuing on its ever-upward path. Despite wild claims about recovery, the level of manufacturing output is as depressed as it was a year ago. There has been the sharpest fall in our overseas trade yet witnessed in the post-war period. After a £4 billion surplus last year there was no surplus at all this year, even allowing for North sea oil and the earnings of the City. There has been the first-ever deficit on trade in manufactured goods since the Tudors. Prices—including petrol prices, as I discovered this morning—are going up. The mortgage rate has been pushed up by 1·25 per cent., leading to an immediate £11 a month increase in repayments for those with a £20,000 mortgage.

Yesterday we had the announcement that the money supply as measured by M3 was now way over the top of the Government's 7 per cent. to 11 per cent. target, with a 1·75 per cent. increase this month bringing the annual rate to 16 per cent. This is a matter of great significance now, if only because of the misplaced importance which the Chancellor attaches to these worthless, clairvoyant signs—these tea leaves of economic indicators—which, the country has learned in the past four years, the money supply figures have become.

They are important, however, because the Government and the City are attaching such significance to them; and, as we have seen from this morning's newspapers, their misguided attachment to the figures is likely to lead them to even more misguided decisions which will force up interest rates—the markets have already started to move —and cut public spending even more.