Lloyd's Underwriters: Special Reserve Funds

Part of Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 8:30 pm on 13th July 1993.

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Photo of Quentin Davies Quentin Davies , Stamford and Spalding 8:30 pm, 13th July 1993

For the second time this afternoon I should remind the House of my interests which are declared in the Register of Members' Interests, in particular of my connection with NatWest Securities, Dewe Rogerson and the Institute of Taxation.

We had a characteristic performance this afternoon by the hon. Member for Peckham (Ms Harman). It was certainly long on charm and on what my right hon. Friend the Chief Secretary rightly called fragrance. On substance, however, it was short, I fear, to the point of superficiality. [Interruption.] As the hon. Member for Hartlepool (Mr. Mandelson) says from a sedentary position, that is what I always say. Yes, that is what I always say, precisely because it is always justified.

The Labour party's economic policy consists of saying, in the most mindless fashion, that the answer to unemployment is to spend money and that everything else will follow on from that. It is far from clear that that would happen. No coherent argument has been advanced by the Opposition showing why the sudden expenditure of public money would reduce unemployment. Very much the reverse would occur.

Even if we were to suppose that the spending of public money was the way automatically to reduce unemployment, the Opposition ought, if there were any economic rigour about their thinking or any reality at all about their plans, to tell us by how much they are prepared to increase taxation, or by how much they are prepared to see the public sector borrowing requirement increase in the short term in order to bring about the so-called reduction in unemployment over the medium or longer term that the model that they hawk about predicts. To that we are never given an answer. A so-called alternative Government who are not prepared to face the costs of their own policies deprives them automatically of the right to be taken seriously. The performance of the hon. Member for Peckham has done nothing even to begin to fill the enormous credibility gap that the Labour party has consistently opened up.

I pay sincere tribute to the Government's determination to reduce the PSBR. A year ago, I admit, I was less concerned about the rigour of fiscal policy. We were then part of the exchange rate mechanism. We are no longer part of it. Things have changed considerably. No country can with impunity afford for long to have a reduction in interest rates, a relaxation of monetary policy and a devaluation as well as an increase in the deficit, or a relaxation of fiscal policy. In present circumstances, therefore, it is particularly important that we should make a vigorous and, if necessary, a ruthless attempt to cut public expenditure and reduce the PSBR.

I pay tribute to the courage of my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) and the rest of the Treasury Bench in putting together this Budget which has laid the basis for increases in public revenues next year and the year after that. I thoroughly agree with the revenue-raising measures that have been selected: the increase in the taxation of company cars and the application of tax to allowances at the 20 per cent. rate, which seems to me to be right and proper. I thoroughly agree, too, as I said earlier this afternoon, with the extension of VAT to domestic fuel.

When the combined Budget and public expenditure statement is made in November, I hope that those measures will be accompanied by a demonstrable effort on the part of the Government to cut their own spending—I hope to below the level of the control totals that were published last year for this year, next year and the year after. It is a necessary move. Therefore, I hope that it takes place.

As for VAT, I know that the Government will not be discouraged by the fundamentally synthetic agitation of the Opposition, none of which was accompanied by an explicit commitment by the Labour party to abolish VAT on domestic fuel should the Labour party, by some mischance, be returned to power. [Interruption.] Well, we shall see, but we are used to the Labour party accusing the Government of spending too little, of taxing too much and of having too large a PSBR.