Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 6:54 pm on 10th March 1992.

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Photo of Mr Anthony Grant Mr Anthony Grant , Cambridge South West 6:54 pm, 10th March 1992

I am always glad to follow the hon. Member for Middlesbrough (Mr. Bell) because he is one of the few Opposition Back Benchers who understand financial matters. However, he was below form today. Indeed, I formed the impression that he had prepared his speech before hearing the Budget. I suspect that it was a draft election address and, if so, I shall give him a little advice—it was too long.

The hon. Gentleman certainly knows more about finance than does the Leader of the Opposition. The task of responding to the Budget statement, no matter who has that task, is one of the most difficult roles in the House. Over the years, I have seen many hon. Members having to do it and I know that it is extraordinarily difficult. I like the Leader of the Opposition—anyone who likes rugby cannot be all bad—but his performance today reminded me of Twickenham: England 24, Wales nil. He did not contribute much to the debate.

May I make a personal remark to you, Mr. Deputy Speaker, and, through you, to Mr. Speaker? This seems to be an evening of swan songs, although I hasten to assure you that it is not mine. This will be the last occasion on which I speak in the House under your Deputy Speakership and the Speakership of Mr. Speaker. The three of us entered the House at the same election and I shall miss both of you enormously because your contributions to parliamentary democracy over many years in this House have been remarkable. I hope that you will accept my remarks and convey them to Mr. Speaker.

I was interested in the speech—another swan song—of the right hon. Member for Plymouth, Devonport (Dr. Owen), whom I often follow in Budget debates and with whom I nearly always agree. I particularly liked his point about an overriding need for this to be a prudent Budget. I was anxious lest there should be any risk that the Budget damaged the pound and created a danger of interest rates being increased. The danger has not gone, however, because we live in a world where the German and other economies affect us. But I am extremely relieved, as was the right hon. Member for Devonport, that the Budget is sufficiently prudent to reassure the markets and avoid the dangers of increasing interest rates. One of the greatest curses from which we have suffered has been high interest rates. I have said time and again in interventions and speeches that, above all, we must get interest rates down and not let them increase further. Another danger is the prospect of a Labour Government because it is acknowledged that there would be an immediate increase in interest rates, which would be catastrophic to a country trying to get out of recession.

I have always advocated strongly the need to resist protectionism, so I am glad that my right hon. Friend the Chancellor made that clear. If there were a wave of world protectionism, we would suffer as much as anyone. Some countries—perhaps the United States—could sustain it, but countries like Britain and other European countries could not do so. That is why we should ram home to our French partners the need for a sensible resolution to the talks on the general agreement on tariffs and trade.

I shall not go through the whole of the Budget but, ever since I have been in the House, I have been interested in two aspects of financial debates and Budgets. The first is small firms, which have always been near to my heart, and the second is the cause of wider share ownership. I used to think that I was the first Minister responsible for small firms until I discovered that my right hon. Friend the Member for Cirencester and Tewksbury (Mr. Ridley) held that post for a short period. Ever since I had those responsibilities, I have believed that small firms and their success are the essence of a free economy and that they are vital to the future of our nation.

My right hon. Friend the Chancellor was right to identify three ogres that terrify small firms: the uniform business rate; the horrors of the VAT man and the VAT regime; and the problems of credit control and the recovery of debts. He has dealt with all those problems. His proposals on UBR will be particularly well received by the small firms in my constituency. Likewise, easing the tyrannical and over-rigid VAT policy and his proposals for recovering debts will be welcomed. When I was Minister responsible for small firms, there were substantial complaints about debt recovery and the way in which large firms played the credit game. They played it with enormous skill—[Interruption.] It would not be fair to name such a firm. GEC was oppressive on its small contractors and had an enormous team of people stringing out the payment of debts until the last possible moment, which was intolerable to small firms.

I welcome what the Chancellor has done about Government contracts, but it is not enough; he may have to consider draconian legislative measures to ensure that the credit game is not played by larger firms on their smaller sub-contractors.

As for my second interest—wider share ownership—I was a founder member, together with the late Maurice Macmillan and my right hon. Friend the Member for Croydon, South (Sir W. Clark), of the Wider Share Ownership Council. For years we bumped along. Then we had the 1965 Budget, introduced by Lord Callaghan, which was catatrophic and highly damaging to the whole idea. It was not until recent years that wider share ownership became fashionable and popular. I therefore strongly supported the personal equity plan system introduced by this Government, and their other improvements, which I hope represent only the start of further developments which will encourage wider share ownership.

I particularly rejoice at one event under the regime of this Government. For the first time since the war, there are more individual shareholders than there are members of trade unions. That is healthy for a free society.

I was also pleased by the announcement that the autumn statement is to be abolished—or rather, that the spending statement is to be combined with the tax-raising Budget. The present system has always seemed to me absurd and it is not understood by the public. The long lapse between announcing what will be spent and how it will be raised has meant that by the time we get to the Budget people have forgotten the enormous commitments that the Government made the previous autumn to expenditure on health, education and other desirable things. At the time of the Budget people ask why we are lowering taxes and why we do not spend more on health and education, forgetting entirely that tax-raising and spending are quite separate exercises. Bringing them together in this way is thoroughly sensible.

I should like to respond to a point made by the hon. Member for Middlesbrough about taxation. Before the Government came to office I believed and argued that there should be a shift from direct to indirect taxation, because direct taxation is a tax on work, which is largely involuntary, whereas indirect taxation is a tax on spending, which is, to a much greater degreee, voluntary. That is what the Government have done, and they have no reason to be ashamed of it. It is in line with the policies on which they were originally elected.

I am glad—contrary to what the Opposition hoped—that there is to be no increase in VAT, and that the Chancellor still managed to reduce direct taxation. A philosophical word about taxation: one comes across an extraordinary number of simple souls who say that they would not mind paying a little more tax to have a better health service or a better education service. Such people are usually talking about other people's taxes, not their own. When I attend meetings of teachers or health service workers in my constituency, they ask why we cannot pay our nurses and teachers more. I ask how that is to be done —by increased taxation? That seems a simple solution, but these people do not want the money taken from their taxation, because if it is they will need yet more money to pay the higher taxes, and so the crazy circle continues.

This is a dilemma with which the Opposition must wrestle, and it is clear from their proposed £37 billion extra expenditure that they have not thought it through properly. They must consider who will bear the burden. They appear unwilling to consider that, so I am afraid that the chickens will come home to roost.