Lloyd's Underwriters: Special Reserve Funds

Part of Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 7:50 pm on 13 July 1993.

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Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 7:50, 13 July 1993

I will not attempt to answer many of the questions that the hon. Member for Rutland and Melton (Mr. Duncan) put to the hon. Member for Peckham (Ms Harman), because I would be ruled out of order. We are supposed to be discussing what is in the Finance Bill.

The Chief Secretary sketched in the economic background, which it was reasonable for him to do, and I do not quarrel with the main elements he quoted as favourable and positive in the current economic climate, although he was inclined to leave out some unfavourable elements.

For example, the construction industry is still not showing the signs of recovery that are vital in that crucial sector of the economy. The unemployment news cannot give the Government ease and comfort. We have very high levels of unemployment, and most commentators expect them to persist, even if there are some offsetting job improvements through gains achieved by British exporters in world markets.

Hon. Members point out that many countries are going deeper into recession as we are coming out of it. They talk about that as good news, whereas it is really bad news for exporters, who must sell into markets which are in recession. Other countries being in recession acts as an inhibition on our recovery. We should not be pleased about their plight. No more should we be pleased about the continued high import penetration of our domestic economy, which remains a worry for industry.

I was tempted to intervene in the speech of the hon. Member for Slough (Mr. Watts) to say that he was pouring petrol over the Government but not putting a match to it. On the other hand, the hon. Member for Corby (Mr. Powell) last night poured domestic fuel over the Government and put a match to it by pointing out—[Interruption.] I am not sure whether political self-immolation was a necessary part of that—that the Christchurch by-election, and, by implication, any other by-elections that may occur in the near future, is likely to go against the Conservatives because of the provisions in this measure.

The Bill includes the hated and feared VAT on domestic fuel, imposed without adequate compensation or channelling of revenues into measures that will help people to pay for it by making their homes more energy-efficient. That alone is sufficient reason to oppose the Bill.

The Budget, of which the Bill is a part, contains in effect an income tax increase, even though it is not to be found in the Bill in that form. The 1 p increase in national insurance contributions represents an income tax increase for the low-paid, because all higher levels of income are not subject to the 1p charge. Perks, which are subject to income tax but not to national insurance contributions, escape. In other words, it is a back-door income tax increase, and we were not able to discuss it at earlier stages of the Bill because it is being done through the national insurance system.

The Bill imposes substantial additional burdens on charities, through VAT and changes in advance corporation tax, both of which will hit them hard. Hon. Members are still receiving extensive representations on the issue from charities.

The Bill's petroleum revenue tax regime is costing thousands of jobs. That cannot be denied, because, whatever is happening at Shell, thousands of jobs will be lost in the oil industry and in many others which that industry supports and from which it buys. I was struck by a revised Shell statement, quoted in the Financial Times today, which bears the hallmark of some careful drafting. A company spokesman is reported as having said: The PRT changes have underlined, and given focus to, what we were already looking at in the North Sea". Those were carefully crafted words. They put into sharp relief the fact that one of the only two companies which welcomed the new PRT regime is shedding a vast number of jobs. The other company is also shedding many jobs.