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It falls to me to congratulate the hon. Member for Wells (Mr. Heathcoat-Amory) on a notable contribution to the debate. He fulfils well the tradition set by his uncle who was Chancellor of the Exchequer from 1958 to 1960. I am sure that many Conservative Members—perhaps a minority now, but ultimately and inevitably a majority—will join him and express very similar views in the coming years as conditions deteriorate.
I also congratulate my hon. Friend the Member for Sedgefield (Mr. Blair) on his illuminating contribution. Labour Members in the region are proud that he has joined the northern group of Labour Members to which he will undoubtedly make a substantial contribution.
The Bill is very nasty, for just one reason. It further entrenches the social and economic divisions in our society. We have grown used to such legislation in recent years. It is a two-nation Bill, introduced by a two-nation party which believes in division and seeks in every way to perpetuate the deep divisions in society. It comes after a general election campaign which failed to face the issues that should have been put before the British people—the great economic issues of our time. Debate was allowed to concentrate on defence, especially Polaris, which was used by the Conservatives as a side issue to deflect attention from the real issues. In so doing, they managed to destroy what might otherwise have been a campaign based on informed debate. The issues were not discussed. That was the case with capital transfer tax which today, as in the past few years, is being reduced. It divides society and ensures that a small minority are able to enjoy even greater rewards.
Would the Minister care to interpret the intention behind clause 12 before next week's Committee stage? Does it really mean what it appears 1:o mean—that the Government are arranging measures to ensure that some people who live in the Isle of Man but who formerly lived in the United Kingdom will be relieved of a tax liability that would otherwise have been due to .the Government? I hope that the Minister will make a point of answering that question in his winding-up speech.
During the general election campaign, there was no discussion of the tax reliefs for the higher paid that were shelved before the general election but have since been reintroduced. Although the Conservative party mentioned housing policy briefly, there was little debate in our region about the implications of raising mortgage interest relief from £25,000 to £30,000.
As the writ for the by-election at Penrith and The Border was moved today, the debate gives me an opportunity to draw the attention my constituents and the people of Cumbria, especially those in the Penrith and The Border constituency, to the Liberal party's performance on mortgage interest relief. It appears that, although Liberal Members interrupted several speeches during the debate of 30 June, they opposed raising the threshold of mortgage interest relief from £25,000 to £30,000 in the Division Lobbies. They are perfectly entitled to do that—I joined them in the Lobbies—but they are not entitled to go around Penrith and The Border, Cumbria and the rest of the United Kingdom before a general election telling people that the threshold for mortgage interest relief should be raised to £30,000 and, as soon as they are returned to the House, vote against that proposal while maintaining that they are consistent. That issue should be debated openly during the Penrith and The Border by-election.
The Labour party's stance will be clear. We oppose the raising of the threshold and believe that the resources should be spent in other forms of mortgage subsidy and, perhaps, in other areas of housing. The Liberal party must come clean. It must explain why Liberal Members oppose raising the threshold, whereas Liberal candidates support the increase. The electorate in Penrith and The Border will demand consistency from candidates who seek election to the House.
Perhaps one of the main reasons why these issues were not discussed during the election campaign is the fact that only 4 per cent, of the population are affected by them. Conservative Members should equip themselves to deal with the accusation that their constituents will level at them — that they have stuck out to protect only the better-off minority. Moreover, we must ask ourelves how it is possible for a Chancellor to present a Bill which affects so few people when 96 per cent. of the population will suffer from the reduced public expenditure proposed by the Treasury in the House and on television.
In the past few days, we have repeatedly heard statements that there will be more reductions in public expenditure. The Chancellor said so a week last Sunday on television and yet a Bill that will cost the British people £400 million is being pushed through by Conservative Whips who are determined to secure better returns for a small minority.
Yesterday, the Government announced another £300 million of penalties on local authorities. That is equivalent to the value of the Bill's concessions to the high paid. There is an inconsistency there. We are giving parliamentary approval to the Government's taking from local councils the precious money that they need to provide eduction, housing and services for the handicapped and giving it to a small minority of people. When people in Cumbria ask their local authority why the council has to close rural schools and services and the local authority says that it is being required to do that so that the Government have the money in the kitty, the people should also be told that the money that is being retained will find its way through the system to pay for the major concessions to the higher paid.
As my hon. Friend the Member for Blackburn (Mr. Straw) said in a notable speech, a married couple earning £20,000 a year will be £9 a week better off as a result of the new income tax arrangements and a married couple earning £40,000 a year will be £21 a week better off. There are not many people in my part of the world who are so fortunate. Moreover, those concessions will not benefit people in my county as they will tend to go to the south where people are often better off.
When we ask the Government why they persist with that strategy, they say that it is all to do with generating the necessary incentives to achieve industrial renewal. That is not true and we all know it. There is no evidence to suggest that income tax cuts for the better off are feeding a new industrial revolution. We know that, in 1982, 12,000 companies went bankrupt, mainly because of the Government's deflationary strategy. Perhaps many of those who are fortunate enough to listen to our speeches tonight, and to listen to future debates on the economy, will fall under the blunt knife of a Government who are clearly unable to introduce policies that will benefit the wider British public.
The only way to increase incentives in such conditions is to boost demand. The opportunity of increased business is the real incentive needed by industrialists, and the Government know it. However, to protect the ideological routing of the monetarist strategy, they persist in deflecting that fact, which they know to be true. Yet at the same time they are worried about the expansion of the money supply and a general expansion of financial resources, because, through painful experience since 1979, they have seen a massive outflow of funds from the United Kingdom, which now totals £34 billion. In 1982 alone, the grand total of £10 billion was dispatched from our shores to be invested in industry abroad. The Government know that such capital outflow cannot be defended in public, and the expansion of demand worries them because of its implications in increasing the sums of money to which I referred.
I hope that the review of monetary policy that is continuing in the Treasury will lead, in sanity, to the reintroduction of exchange controls, which many people, including, many Conservatives, know is necessary if we are to prevent the massive outflow of funds.
The Bill was born in a Treasury controlled by a Government who are committed to two nations — a nation that has, and one that has not. One day, we shall have the opportunity to remove them from power. I hope that the next time that the British people are presented with the challenge of ending this monstrous arrangement they will take the opportunity to elect a Government who understand that one nation is the priority of all Governments.