Orders of the Day — Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 6:26 pm on 7th July 1997.

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Photo of Mr Robert Sheldon Mr Robert Sheldon Chair, Standards and Privileges Committee 6:26 pm, 7th July 1997

I did not have any doubt at any time. The hon. Gentleman will remember that Sir Peter Hordern argued again and again that the assets should be sold off in tranches to get the best possible price. The Committee supported him again and again. The hon. Gentleman supported that view as well—all the reports were unanimous. The Government failed to get the best price. There is no question about that.

The argument used again and again was that if one sold the assets in tranches and the price on the initial sale were too low, the price and the receipts from subsequent sales could be improved. The failure to get a better and a proper price for the nation's assets is a serious indictment of the previous Government. It cost the country billions of pounds.

That failure to get a fair deal for the taxpayer provides the complete justification for the Chancellor's introduction of the windfall tax. I understand why the Conservative Opposition do not like the idea of that tax. It shows up their failure to guard the public finances, but it is right that some corrections should be made in the way in which those bargain sales were conducted.

On the expenditure of the windfall money, I am sure that the priority that the Chancellor attaches to unemployment is right. Like many hon. Members I meet from time to time the chief of police in my area. It comes as no surprise that at those meetings he singles out young men from 18 to 25 as his major problem. He points that out again and again. After numerous attempts to get employment, they give up. Their relationship with their parents deteriorates and after numerous rows they leave home and join up with other young men. In a consumer society, it is hard not to feel angry when one is not consuming. Eventually, many young men will form into groups, stealing and sometimes drug taking, and become the dangers to our society that we recognise too well.

We should welcome the source of those funds and the use to which they are being put. This Chancellor of the Exchequer is the first for 18 years to be serious about unemployment. The previous Government talked about unemployment for years, but their actions created it. They said that it was a price worth paying. The true price has been the damage done to our society. We now have to give unemployment the high priority that the previous Government claimed they gave it, but did not provide.

I was particularly pleased at the measures on investment and I welcome the doubling of capital allowances. The 25 per cent. allowance was clearly inadequate—it was a disincentive. There are few capital items that do not depreciate in value by more than 25 per cent. in their first year. Twelve months ago, for example, I bought a computer for £2,000. The Inland Revenue says that it is now worth £1,500—a nonsense. I would willingly sell it for that. That item can be written off in three years, but with the pace of industrial innovation many items can be valueless after only a short use.

I understand the limitation on the concession to one year and have no objections. It will encourage companies to bring forward their investment and it is sensible to find out how the pattern of investment changes and then, perhaps, introduce more permanent arrangements.

I also welcome the reduction in mortgage relief. For many years, one of the basic arguments in my Budget speeches has been the need to deal with that matter. One of the many nonsenses of Margaret Thatcher's Government was the way in which people were encouraged to look to their homes as investments. Advantage upon advantage was given to the purchase of houses. Schedule A, which was a way of taxing the notional rent of the house, has been abolished. Capital transfer tax, capital gains tax, inheritance tax and mortgage relief all gave advantages that were not available to those who made what I would call a true investment.[Interruption.]