Permitted Excess of the Fund

Part of New Clause 3 – in the House of Commons at 7:52 pm on 20th July 1987.

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Photo of Mr John Browne Mr John Browne , Winchester 7:52 pm, 20th July 1987

I listened to a number of speeches in Committee by the hon. Member for Sedgefield (Mr. Blair). They were extremely good and delivered in an erudite manner. I might say that they were charming and elusive. I must remind the hon. Gentleman that at times he strayed into the realms of the general economy during debates on specific clauses in the Bill. I take your point, Mr. Deputy Speaker, and I shall get into the main part of my brief speech.

As the Bill well documents, the Government have transferred power from the producer to the consumer. I shall give one example. In personal pension schemes the measures taken by the Government are oriented towards the consumer, the beneficiary of the pension. The measures will make the competition much tougher for the pension institutions. This will result in much more competition in the market place for pension schemes and that will benefit the consumer. As a result of this general philosophy, Britain is much more competitive now than it was eight years ago.

We have restored democracy to the trade unions and that has made Britain work as a team. This team spirit will be reflected in the profit-related pay measures designed specifically to keep the team together. They will motivate the whole team, not just the directors or the shareholders. People working on the shop floor can be directly involved in the profits of their company. The Government have always tried to push, quite rightly, for incentives so that enterprise will take place and Britain will be a success. What more incentive could someone on the shop floor wish to have? What could be more directly related to their contribution than profit-related pay? A bonus has an element of subjective merit that is recognised by the management rather than by the customer, but PRP reflects recognition by the customer. The subjective judgment of management does not apply to PRP. We have already seen the British economic disease become the British economic miracle, and I urge Opposition Members to bear that in mind when they criticise various elements of the Bill.

The hon. Member for Sedgefield has said that PRP will cost too much. Four or five days ago he claimed that it would cost between £50 million and £1,000 million. If it were to cost £1,000 million, that would be a mark of its success. If the work force were able to claim to the tune of £1,000 million, think of the increased profits that would have to be won by the companies employing those enjoying tax deductions. A large tax reduction will be a good thing for the economy, because we know that lower taxation rates lead to an increase in aggregate tax revenues. That means that more revenue is available to the Government to spend on education, defence and social welfare, for example. The result is the same if a company can give its employees more take-home pay as a result of measures such as PRP.

By introducing PRP the Government have struck a good balance because the range of companies that will come within the scheme is well chosen. The Government have shown a great understanding of management and of motivation of those on the shop floor. The scheme reflects the urge to be identified with something that is small and the concept that small is beautiful. The Government are demonstrating that profit centres are to be encouraged, and their flexibility is to be applauded.

The personal pension scheme provisions will improve and encourage motivation, enterprise, mobility and freedom of choice. There will be more incentive and consequently better results and a fairer and better system. In other words, there will be a cheaper system for the consumer and, therefore, a greater incentive for the consumer or employee. That will lead to greater success for Britain.

I ask the Opposition to accept that some of the Government's policies are seen to be working. Satisfied customers throughout the world are creating jobs in our economy. Real jobs are being created at a fast rate. There have been 12 months of successive falls in unemployment and about 1·25 million jobs have been created in the past 18 months, not as a result of a Government spending gimmick. Real jobs have been created by the consumer, not false jobs by the Government, and this has been achieved on an international basis.

It has been said that PRP will be too costly, but we have seen Government revenues rise despite cuts in tax rates. Government revenues are rising along with private incomes. Therefore, the Government can give more effective care to the inner cities, for example.

I strongly support the Government in introducing the Bill, which is the second part of the legislative backing to be given to the Budget. I applaud particularly the PRP measures and the provisions that have been made for personal pension schemes. I applaud also the Government's constructive attitude in their negotiations with Lloyd's, which have been based on the provisions in clause 70. It appeared that the negotiations would be sticky, but I believe that people on both sides of the fence have been pleased with the Government's attitude. I commend the Government and I welcome and support the Bill.