Windfall Tax

Part of the debate – in the House of Commons at 4:22 pm on 21 November 1996.

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Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister 4:22, 21 November 1996

It is a classic situation. The Labour party did everything in its power to undercut the value of nationalised industries at the time of their flotation. Every political smear was used to keep prices down. Now we have made a success of them, it is undermining their success in the marketplace. As my hon. Friend says, that means that, if there were to be a takeover bid, the acquisition price would be lower. The Labour party has played politics with vital British assets.

If we are to make this economy the most successful in Europe, as we want to, we must attract inward investment into Britain. I wonder whether the Labour party has thought through exactly what it is doing. What will happen when overseas companies, having acquired British companies, are threatened retrospectively with a tax? What does Labour think will happen in the rest of the world when British companies seek to develop there? Does it think that such a tax, retrospectively and arbitrarily imposed on overseas companies in Britain, would be quietly accepted by overseas Governments? Of course it would not. There would be retaliation and pressures. The Labour party lives in a naive world if it thinks that British interests would not be damaged by the tax that it is contemplating.