National Resources

Part of Orders of the Day — Debate on the Address – in the House of Commons at 6:52 pm on 2 July 1987.

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Photo of Mr Terence Higgins Mr Terence Higgins , Worthing 6:52, 2 July 1987

I am glad to congratulate the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) on his maiden speech. He spoke with feeling about his predecessor, Mr. Bob Brown, who was a good friend of many in the House, and with considerable passion about the problems of his constituency. The hon. Gentleman may have gone close to breaching the convention that maiden speeches should not be controversial, but perhaps that is because that convention is increasingly breached.

I particularly congratulate and welcome my hon. Friend the Member for Harrow, West (Mr. Hughes) who made an excellent maiden speech. He has arrived here the hard way, in view of the previous elections he has fought. Given the constituency that he represents, he spoke relevantly about education and with considerable expertise on the subject of housing. As a graduate of the Harrow college of technology he will undoubtedly bring to the House, on matters technological, expertise that perhaps is not as widespread on the Benches as it should be. My hon. Friend spoke with a convincing and cogent style, and I have no doubt that in the future we shall listen to him with great pleasure, as I am sure the entire House did this evening.

The subject of the debate is the allocation of resources. I congratulate the Chief Secretary to the Treasury, who has been on the Government Bench throughout much of the debate. He has an extremely difficult task ahead of him. Over time, the Government policy has changed from one of reducing public expenditure in real terms, to maintaining it in real terms, to simply reducing it as a percentage of GNP. Given the tremendous claims on public resources that are now before us, after the election and contained in the Gracious Speech, the Chief Secretary's task will not be easy. However, it is vitally important that we maintain control over public expenditure.

Within the total determined, the allocation between Departments is in many ways the real battleground. In that context, the changes made to our parliamentary procedures since 1979 have done something to redress the balance between the Executive and Parliament with the establishment of the Estimates Day procedure and the departmentally related Select Committees. Those innovations are helpful in assessing the priorities between different spending Departments, because the departmental Committees have the task of monitoring Departments and assessing what their claims on the Treasury ought to be.

I therefore hope that those Committees will be established with the least possible delay. In its first report in the 1984–85 Session, the Liaison Committee drew attention to the delay that occurred after the last general election. It pointed out that between 15 June 1983 and the time when the Committees were established, there was a considerable delay. In fact, those Committees were not set up until mid-December. The Liaison Committee believed that that delay was excessive, because for some six months the House was deprived of the valuable imput that those Committees can make. I therefore very much welcome the statement by the Leader of the House during business questions today that he intends to help in the establishment of those Committees at the earliest possible moment.

Of course I understand that there may be problems about appointment to those Committees, but I am glad that the Committee of Selection has already been established. It is clearly difficult to go ahead with such selection until we know what happens within the Labour party, but I understand that elections to the Shadow Cabinet will take place soon. It should therefore be possible to reach a decision on the composition of those Committees and get them into operation before the summer recess. It is important to do so, since otherwise the delay will be considerable and the Committees will be unable to work out their programmes and complete some of the important reports that were initiated in the last Parliament. I hope that every effort will he made to establish them as quickly as possible. Certainly as many as possible should he established before the recess. Any problem that may arise with the minor parties about composition ought not to delay that. No doubt difficult negotiations will take place, but it is important that they should be quick.

There is a clear case where the establishment of a Select Committee is necessary. I refer to the events of the last 48 hours. The Treasury and Civil Service Committee, which I had the honour of chairing in the last Parliament, produced a series of reports on the way in which the financial arrangements between this country and the European Community were developing. Those reports were not only helpful to the House but to the Government as well, because these matters are extremely complex and it is not possible to ascertain precisely what is going on by questioning across the Floor of the Chamber.

On this subject, perhaps above all, it is necessary for Select Committees to have the opportunity of cross-examining Ministers in depth to discover the exact position. In the last Parliament the report on the Fontainebleau agreement and a series of others highlighted the real problems that arise in relation to budgetary discipline. Yesterday the Prime Minister recognised that the arrangements that have been made were not sufficiently watertight to ensure that effective budgetary discipline was imposed.

Having said that, two aspects of what the Prime Minister said give considerable cause for concern. She seemed to be saying that she would contemplate a further increase in the EEC's resources if there were a guarantee of budgetary discipline. The House should recall that it was persuaded to agree to the increase in own resources from 1 per cent. of the VAT to 1·4 per cent. on the grounds that there would be effective budgetary discipline. It would be quite wrong to pay the price twice to achieve the same objective simply because the agreement was not watertight in the first place and was not made legally enforceable, as the Select Committee at the time said it ought to be. That is a very important aspect of the allocation of our resources.

No case has been made for any increase in agricultural support through the CAP. No such case has been put to us. This should be looked at carefully, and that is an important reason why these Committees should be established as soon as possible.

My right hon. Friend the Prime Minister has taken a sensible and realistic line on the EEC, but it is extremely difficult for her, with complete justification, to continue saying no meeting after meeting. The danger is that — this happened when the Fontainebleau agreement was set out—sooner or later the issue is fudged. Anything that the House can do to reinforce my right hon. Friend in sticking to her guns and ensuring a sensible outcome to the negotiations is of considerable importance.

I welcome the point that the Chancellor of the Exchequer made with regard to Third world debt. In the election campaign, those people who told church meetings and meetings of those who were concerned with Third world problems that the Conservative party did not care should have listened more carefully to what was being said before and during the election. Particularly, they should have listened this afternoon to the Chancellor's attitude to the Third world debt problem. The Treasury Committee reported in depth on this matter, not least with regard to the provision that should be made by commercial banks. That report was prescient in many ways, but it did not receive sufficient attention.

Therefore, I stress to the Chancellor of the Exchequer the importance of looking at some of the detailed arguments that we put forward, particularly with regard to the way in which, and the extent to which, the additional provisions that are taken by the commercial banks can be used against tax allowances. It seems that there is a random, arbitary way in which those provisions are allowed for tax and the scope of the allowances. I think that he will need to look at that matter.

Local government finance and expenditure accounts for about a quarter of total Government expenditure and is a matter of great importance. In the course of the election campaign I sought to spell out the community charge in considerable detail to my constituents. Subsequently, this matter has generated an increasing amount of controversy.

My view has long been that the rating system is incapable of reform. It is fundamentally flawed and I believe that we were right in previous elections to say that we would get rid of it. We are right to say that we shall get rid of it now. It is worth remembering that about half of the total of local government expenditure comes from the central Exchequer, and of the remainder about half—some 25 per cent.—comes from industry. The domestic rate covers about a quarter of total expenditure. One could argue that one should simply abolish the rating system and transfer the cost to the central Exchequer. It may be said that that is removing the basis of local democracy, but that has already been eroded to the extent of some 75 per cent., and many of the measures that have been necessary to prevent the profligate expenditure of some local authorities have eroded local government autonomy.

The main argument against that might be the amount of unemployment that it would create with regard to the valuation, collection and rebating of rates. But that is not the solution that the Government have come up with. They have come up with a proposal for a community charge, which is a sensible development.

The Leader of the Opposition, in opening the debate, stressed the importance of no taxation without representation. I think that the House would unanimously go along with that view. One must recognise that at a local level there are considerable dangers in representation without taxation. At the moment, many people are voting for policies and candidates that will involve vast increases in local expenditure, knowing full well that it will not cost them a penny. That is not sensible, it is a recipe for gross extravagance. We must recall that of the 35 million people who form the local electorate about 17 million do not pay rates.