Thank you, Mr. Deputy Speaker. In fact, I was addressing very directly the likely consequences of an important provision of the Bill, because it is a crucial element in the strength of the economy and the absence of a balance of payments crisis that we now have the supply side improvements that profit-related pay will do everything to encourage. That is why I drew attention to the fact that the balance of payments crisis about which we heard so much from the Opposition before the election —a crisis so confidently predicted, so earnestly hoped for and so fervently prayed for — has not occurred. It has been postponed, and I believe that it can he postponed indefinitely if improvements in efficiency and productivity can be maintained. It is in achieving those aims that profit-related pay has a part to play.
Nothing that I have heard from the Opposition has suggested that they have a better approach. I listened in vain to the hon. Member for Sedgefield (Mr. Blair) in case he had some better key to improvements in the supply side to put forward as an alternative. I listened in vain to the municipal Socialists who talk about Socialism in one borough. The only practical consequences of their policies for business are higher rates and politically inspired constraints written into commercial contracts.
I listened in vain, too, to speeches from SDP and Liberal Members. I read their manifesto with interest, but all that they had to offer was a proposal of so-called industrial investment boards to be scattered around the countryside. No doubt those will now be abandoned as part of democratic fusion. However, alliance Members fail utterly to address the central weakness of the British economy, which has never been a lack of demand but a lack of effective supply.
That is why I congratulate my right hon. Friend the Chancellor and his team for an imaginative proposal that directly and effectively addresses our past weakness. Profit-related pay represents a bold and worthwhile attempt to tackle the continuing problem of inflexibility in the labour market. However, there is still a word of warning to be sounded. Nominal wages are still rising at twice the rate of inflation and I believe that inflationary dangers could lie ahead. That is why profit-related pay deserves a welcome and a chance. If we can achieve greater awareness in the minds of employees about the links between investment, profitability and jobs, and bring to the labour market the greater flexibility to which I alluded, we shall have found the best way of keeping inflation down while promoting industrial efficiency and effectiveness.
One of the tax regimes in the Bill has not been discussed at length, either on Second Reading or in Committee. It relates to the close companies referred to in clause 61, which was not discussed or voted upon, and I do not intend to criticise the clause. Perhaps I should explain for the benefit of the House and the less technically inclined that a close company is one that is controlled or owned by fewer than a certain number of individuals or trusts.