Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 5:20 pm on 7th July 1997.

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Photo of Stephen Dorrell Stephen Dorrell Shadow Secretary of State for Education 5:20 pm, 7th July 1997

I know what the hon. Gentleman wants to ask me. I have already dealt with that. Other hon. Members on both sides want to speak in the debate, and they do not want me to spend the whole of my speech discussing that subject.

The second objective that the Chancellor set himself was to promote investment in the British economy. At that point, the Chancellor of the Exchequer simply became a joke. How do we take seriously a Chancellor who says that he wants to promote investment and, in the next breath, goes on to introduce a windfall tax on some of the biggest investing companies in the British economy? The Government will claim that that is in the manifesto. The mere fact that it is in the manifesto does not mean that it makes sense or that the policy is consistent with the Chancellor's stated objective.

Elsewhere in his Budget, the Chancellor says that other companies distribute too much of their resource through dividends—too much money leaves those companies. However, when we are dealing with the utilities—the companies that invest in water, gas and electricity—somehow we are able to spirit £5 billion out of them and make no difference to investment in the British economy.

In the course of the Budget speech, the Chancellor of the Exchequer let slip a sentence that must be a candidate for the most implausible statement ever to be included in a Budget speech. That is a high burden of proof, I confess. I shall read out the sentence and invite the House to express an opinion on whether I am justified. The Chancellor said: After consulting the regulators, it is my judgment that the tax can be paid without any impact on prices, investment, or the quality of service to customers; or, in my view, on employment. So £5 billion is just lying around: it can be spirited away from those companies and it will make no difference. Whom does the Chancellor think that he is kidding? The truth is that the windfall tax is one of several steps in the Budget that will undermine investment in the British economy, our future competitiveness and job creation.