Orders of the Day — Car Tax (Abolition) Bill

Part of the debate – in the House of Commons at 7:53 pm on 25th November 1992.

Alert me about debates like this

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West 7:53 pm, 25th November 1992

The abolition of any tax is a happy development, and the abolition of car tax is no exception. We should be smiling and throwing our hats in the air—if we were wearing them, that is. The proposal proves, if proof were needed, that the Government and the Conservative party are dedicated to the lowest possible taxation.

Manufacturing industry is enjoying the best of both worlds. The Chancellor has introduced the new investment allowances, albeit on a temporary basis; I believe that we also have the lowest corporation tax in the world. That will enable companies to keep their profits and use them to expand—and the only way in which small and medium-sized firms can expand is generally through the use of their own internally generated profits. The motor industry—not just the distribution side, but the components side—contains many successful small and medium-sized businesses. I wish that there were more, and I think that we should try to encourage such a development.

As I think most hon. Members would agree, a few years ago the components industry was not very competitive; it was fairly flabby. One of the best things that Japanese inward investment has done for this country is to compel the component firms to pull their socks up and become really competitive. Japanese motor representatives have told me that some of our best component manufacturers are among the best in the world. We can be proud of what has been achieved; but there is a long way to go. As the hon. Member for Oxford, East (Mr. Smith) pointed out, this is an international industry: throughout Europe, buyers will look to different sources, and we need to win our share of the market.

As my hon. Friend the Economic Secretary will recall, some years ago we were in the depths of gloom about the state of our motor industry. The British-owned industry had shrunk as a result of various disasters and incompetences—and, dare I say, intervention by a Labour Government, who had not helped by forming the botched-up company that later became British Leyland. That is all history, but they were depressing days. We had American investment, but no investment from Japan.

Since then, there has been a twofold transformation. First, the British-owned industry—what used to be called British Leyland, and is now Rover—has been successfully returned to the private sector, where it should always have been, and is thriving within the British Aerospace empire. Secondly, there has been massive inward investment by Japanese firms. I think that hon. Members on both sides of the House will agree that that investment has virtually no negative aspects. Not only has it brought much-needed employment to areas where unemployment has been, and still is, high; it has provided a spur for efficiency in our motor car and component firms.

I hope that the House will pass the Bill with enthusiasm. I consider it another sign of the Government's commitment to British manufacturing industry: it is an industry that, with the right encouragement—which the Government are now providing—can beat all comers. The British motor industry has much of which we can be proud, both in British-owned concerns such as Rover and Rolls-Royce and in the smaller component firms and the foreign-owned businesses. Its success is already having a dramatic effect on our balance of payments: exports, for example, rose by 50 per cent. between 1990 and 1991. That will lead Japanese firms to gear up and sell into Europe.

I congratulate the Government on the Bill. I hope that we shall never bring back the car tax, which was art aberration. Admittedly, it was introduced by a Conservative Government, but even Conservative Governments make mistakes occasionally, and we hope. that that mistake will never be repeated. I rejoice, and throw my hat in the air.