Mitigation of Corporation Tax Liability of Industrial and Provident Societies and Housing Associations

Part of Orders of the Day — Finance Bill – in the House of Commons at 4:45 pm on 10th July 1985.

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Photo of Mr Roger Freeman Mr Roger Freeman , Kettering 4:45 pm, 10th July 1985

As the hon. Gentleman knows, that is an entirely separate issue which has been debated on its merits: whether there should be specific fiscal incentives for capital investment. I am very much in favour of encouraging correct capital investment, but it must be capital investment in either the public or the private sector that will make an adequate return on outlay. The right way to do that is not by the continuation of our very generous capital allowance system but by proper management systems for the review of capital investment projects and other projects to which I have referred in previous debates on the Budget and the Finance Bill and to which I intend to return later.

5 pm

The right hon. Member for Sparkbrook made a speech at the meeting of the Crosland Society at Trinity college on 7 June 1985. I draw the House's attention to the speech because it explains what sort of entities would benefit from the new clause, and what the right hon. Gentleman has in mind as examples of co-operatives. Towards the end of the speech, the right hon. Gentleman said: We have to realise that if we are committed to a more equal distribution of power as well as of wealth, the old Morrisonian model of centrally controlled public utility does not meet our needs. The right hon. Gentleman made it clear that old-style nationalisation is no longer relevant to the future of the Labour party or our economy. Some enlightenment from the right hon. Gentleman would be helpful because it is confusing that later in the same speech he spoke about institutions that have been privatised by the Government. The right hon. Gentleman referred to the time when a privatised utility is returned to public ownership and spelt out the type of control there would be if Labour renationalises British Telecom, British Aerospace — although that is not a public utility — and British Gas which Conservative Members hope that the Government will succeed in privatisating next Session. What does the right hon. Gentleman mean when he refers to the renationalisation of utilities such as British Telecom and British Gas? What type of control will there be? Will they be genuine workers' co-operatives? The right hon. Gentleman ruled out the Morrisonian nationalized industries. Does the right hon. Gentleman imagine that if British Telecom is returned to public ownership it will be a gigantic workers' co-operative? That is the only conclusion one can draw from his speech.

I can understand the thinking behind the new clause, if the right hon. Gentleman is serious about his intention regarding the 30 per cent. rate of corporation tax for those entities. Perhaps the real reason is to benefit the utilities that the Labour party would renationalise as workers' co-operatives if, heaven forbid, it is returned to power, because they would be subject to this rate of corporation tax. I hope that the right hon. Gentleman will enlighten the House.