Repeals

Schedule 8 – in the House of Commons at 8:45 pm on 29th July 1997.

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Amendment made: No. 15, in page 95, line 4, column 3, at beginning insert—

'In section 76(8), the definition of "relevant franked investment income".'.—

[Mr. Darling.]

Bill reported, with amendments.

Order for Third Reading read.

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury 9:07 pm, 29th July 1997

I beg to move, That the Bill be now read the Third time.

This debate concludes proceedings on the first Finance Bill of the new Government. The Bill goes a long way towards implementation of the manifesto commitments that we made prior to the election and resulted in our winning. It introduces a number of measures that are good for the long-term health of the economy. The measures that we have taken in the Budget and in our reform of the way the Bank of England fixes short-term interest rates will ensure that we have a stable platform on which to build for the future.

Before I deal with the merits of the Bill, I want to say a word or two about a recurring theme of the debate. Conservative Members referred to the guillotine and to proceedings on the Bill generally. We had the usual two days in Committee of the whole House, nine sittings in Standing Committee A and the best part of two days on Report. If there was insufficient time to discuss everything that the Opposition wanted to discuss, they have only themselves to blame. From our proceedings in Committee—both here and upstairs—it is obvious that the Opposition did not make the best use of their time.

For example, on Wednesday 23 July, the hon. Member for Grantham and Stamford (Mr. Davies), who has won the respect of all hon. Members on previous Finance Bills, and whose ability to speak without notes on any subject for any length of time the Whips care to allot him is unparalleled, was warned under Standing Order No. 42, which deals with "irrelevance, or tedious repetition", because he spoke for more than an hour on clause 43, which the Opposition did not even oppose.

The hon. Member for Witney (Mr. Woodward) spoke for about an hour on a measure relating to the film industry that the Opposition did not oppose. We had a long discussion about the mother of the hon. Member for Daventry (Mr. Boswell) and whether she was Welsh. At one point, the shadow Chief Secretary told us about a tour that he had taken in various parts of the world. We had all sorts of discussions.

We know, because we had 18 years—rather too long—to practise, that it can be easy and tempting for the Opposition to filibuster and waste time when there is no matter of substance to discuss. Conservative Members and those who follow our proceedings outside the House have every right to expect that legislation should be studied line by line, but the Opposition did not put their limited time to good use in this instance. Some Labour Members believe that the Opposition's strategy all along was not to discuss the matters in hand, so that they would have some reason to complain afterwards. That is a matter for the Opposition.

We gave ample time—more than has been given in the past—to debate the Bill. It is surprising, especially in view of everything that the Conservatives said during the general election campaign and right up to the Budget, that they gave the windfall tax on the privatised utilities such scant attention. That, we were told, was to be the main battleground for the Tory party, yet it was not even mentioned on Second Reading and there was scarcely any criticism—certainly none of substance—in Committee. The Opposition talked a lot beforehand, but when they had the opportunity to table amendments, they could find nothing that they wanted to criticise, and did not even bother.

Photo of Ken Livingstone Ken Livingstone Labour, Brent East

I agree with my right hon. Friend about the weakness of the attack. Many of us regret the fact that the Budget's weaker points were not scrutinised more diligently by the Opposition. Perhaps I can now help to rectify that. Does he think that the Opposition did not really attack the windfall tax because they did not think that it was too bad? As they had seen all those City forecasts that the utilities could stand £10 billion of tax, our settling for half that amount seemed like a pretty soft option.

Photo of Alistair Darling Alistair Darling The Chief Secretary to the Treasury

I am sure that my hon. Friend needs no encouragement to follow the Opposition and offer his own criticisms. Before the general election, we always said that the windfall tax was reasonable in every respect, and so it proved when it was announced by my right hon. Friend the Chancellor. It was a reasonable amount because we are a reasonable Government.

What is more, the tax will be applied to a reasonable cause: helping to equip the country for the future and to give many young people and the long-term unemployed some hope. Perhaps that is why the Conservatives gave up on their opposition to it; perhaps they realised that people in general, and even the utilities themselves, understood that our proposal was reasonable, as was the purpose to which the money was to be applied.

Not only will the tax help the young and the long-term unemployed, but there will be £1.3 billion, of which my hon. Friend the Paymaster General and my right hon. Friend the Secretary of State for Education and Employment are now considering the allocation, for rebuilding and repairing schools and thus improving education for children.

The Government have also introduced measures to begin a programme to reduce the deficit—the massive debt—that we inherited because of the outgoing Conservative Government's mismanagement of the economy. It is necessary to reduce debt if we are to secure the stable platform that the country needs to build for the future.

A central part of the Bill is the measure to reform the corporation tax system. Lowering corporation tax rates by 2 per cent. for both large and small companies is one of the major reforms of the system and will help businesses to plan and to invest for the future. The Bill also contains measures to increase investment relief. Conservative Members either did not find that exceptionable or did not get round to tabling any amendments to it.

A central part of the Government's approach to taxation is the concept of fairness—a concept that the Conservative party does not always understand. That is one of the reasons for our reduction of VAT on domestic fuel to the lowest rate that European rules allow. The Bill also contains a number of measures designed to close tax loopholes and deal with abuses in the tax system. That clearly excited Conservative Members. Let me say this to them: did not their Government, under prompting, try to close some of the loopholes in the Finance Bill that was debated earlier this year? It must be the duty of any Government to ensure that there are no unintended abuses in the tax system and, if there are loopholes, to close them.

I appreciate that it can be galling for those who engage in tax planning and who legitimately advise people on how to take best advantage of the tax system to find that the Government of the day have shut off a particularly lucrative avenue. They must accept, however, that as taxpayers themselves they have an interest in ensuring that the Government are rigorous in their approach to the system and do not allow abuses to develop.

The Bill also builds on our commitment to the environment and the promotion of health. It largely implements our manifesto promises, on the basis of which we won the election.

I note that the International Monetary Fund, which is not noted for its support for our party in government, said that the new Government have made an excellent start and that we have set a high standard for our economic policies, aiming to maintain stability and foster long-term growth while seeking fairness and developing human potential. That does not strike me as too bad an assessment of what we have done, and it strikes me as an infinitely better assessment than anything that could have been said about many of the Budgets that have been introduced over the past 18 years.

This is a Budget for fairness. It is a Budget for opportunity. It is a Budget that will create the right economic conditions for investment, growth and job opportunities. The Budget, and the Finance Bill, will equip the country for the future and provide a solid foundation on which to build. That is why it deserves an overwhelming endorsement.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells 9:17 pm, 29th July 1997

The Bill was conceived in great haste and forced through on a timetable motion. Its long-term effects will be extremely damaging.

The Chancellor promised only one tax increase in the Bill: the windfall tax. The Chief Secretary to the Treasury made the extraordinary observation that the Committee had not debated the tax. I realise that he made only fleeting appearances during the Committee stage, but one of his hon. Friends really should have told him that we spent the whole of the first day debating the windfall tax, having spent a good deal of the Committee stage on the Floor of the House debating clause 1—the clause that introduces the tax. The right hon. Gentleman cannot even get the facts straight in regard to proceedings in Committee.

The central feature of the Budget, however, is the fact that, although the Chancellor did indeed promise us one tax increase, he delivered 17. Despite all the assurances and promises that were made before the election, which were repeated so often and emphasised so strongly, the Chancellor will raise between £5 billion and £6 billion every year, starting this year. We have the immediate imposition of extra duty on fuel—petrol, diesel and heating oil—which nets the Chancellor £750 million this year and is far more than he is giving away in the 3 per cent. cut in VAT on domestic fuel. We have the restriction on mortgage interest relief, the stamp duty increase, the abolition of relief on health insurance and many other increases.

Then, an hour or so ago, we again witnessed the extraordinary spectacle of the foreign income dividends saga. The whole world knows, even if the Government will not admit it, that the Government made fools of themselves over that. They blundered ahead, trying to abolish foreign income dividends in the teeth of advice to the contrary.

For the benefit of any hon. Member who has just joined us, I remind the House that foreign income dividends are a form of tax relief for British companies with large overseas earnings that was brought in by the previous Government. The Labour Government simply wanted to abolish them, but were soon told by those responsible that the damage would be immense. Instead of withdrawing the proposals, however, they continued to blunder on and, an hour ago, we were forced to adopt the proposals in the Finance Bill. The Bill that is about to pass out of the House of Commons contains a clause and a major schedule that do not contain the Government's intention—we have legislated to put into law something with which the Government disagree.

The Government were a victim of their own guillotine. Having admitted their mistake, they did not have time to correct it. That is not the way to legislate. We did our best in Committee, both upstairs and on the Floor of the House, and on Report to improve the Bill. Few Liberal Democrats were involved in our proceedings, although I see that the hon. Member for Kingston and Surbiton (Mr. Davey), who was a member of the Committee, is here. I believe that they had three places on the Committee, but whole debates went by without any Liberal Democrat representative, so the burden fell on my hon. Friends. I can safely say on behalf of my hon. Friends that they did a great deal to try to improve the Bill but, despite their efforts, 14 clauses and three long schedules were left entirely undiscussed in Committee—24 pages of a Bill of slightly more than 100 pages went unexamined.

There was no filibustering—[Interruption.] If the Chief Secretary or his hon. Friends are alleging that there was, they are really saying that the Chairmen, one of whom is a member of their party, failed to control the Committee. The Chairmen did not allege that there was any filibustering, and there was none. There were long speeches because we had a lot to discuss. The Finance Bill is highly technical and it is no fault of my hon. Friend the Member for Grantham and Stamford (Mr. Davies) that he happens to know a great deal more about the subject than the—

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am responding to the Chief Secretary's points. One of his hon. Friends will have an opportunity to respond to the debate and we will listen to what is said. It is not the fault of my hon. Friend the Member for Grantham and Stamford that he knows more about the Bill than the Government or that he spoke at some length to some of the amendments and clauses.

About a quarter of the Bill remained unexamined at the end of our proceedings. That created great difficulty, not only for the members of the Committee but for outside bodies. The Chief Secretary's extraordinary statement that the Bill's being bundled through the House was all according to precedent ignores the fact that outside bodies often want to criticise some of the proposals, recommend improvements and propose amendments, but they were denied the opportunity to do so.

We are complaining not just about the short time between the Bill going into Committee and its coming out of Committee, but about the fact that the Committee sat every day of the week. Many outside bodies, institutes and tax practitioners wrote in to complain.

I have before me a letter from the respected Association of Unit Trusts and Investment Funds, which complains that it was not seeking, in its suggested amendments, to wreck the Government's proposals. It says that it likes to work with Governments to avoid unintended consequences of legislation. It says that its members would not meet Ministers because there was no time. When its members asked to meet officials they were told that there was no point in talking to officials because Ministers made the decisions. So the only people worth talking to had no time for them. Association members were offered the chance to meet Ministers only once the Bill had completed its Committee stage.

That is what we are complaining about. It is an insult not just to the House but to taxpayers outside the House that they had no opportunity to be consulted or to recommend improvements to the Bill. I am surprised that the Government do not concede that. Hon. Members will remember that they came to office full of all sorts of stuff about partnerships, the need to listen—they were going to be a listening Government—and the need to consult. How hollow and hypocritical it sounds now. The way we have proceeded is practically a definition of how not to legislate. The Government have proceeded in haste, made mistakes, and pushed ahead in the teeth of well-argued opposition.

The proceedings have not been fruitless. We are not saying that the procedures of the House have not brought advantages, because we have established certain facts beyond dispute. One interesting fact the Government did not deny—and implicitly accepted—is that real expenditure in the current year is reduced by £3 billion, and by more than £5 billion in the next financial year, because of the extra inflation that is now built into the Budget arithmetic at least in part because of the inflationary effect of some of the Budget measures.

I mentioned the increase, from the date of the Budget, in petrol and heating oil duties, which, as we have already observed, feed straight into the retail prices index. That is inflationary for all public services and an additional imposition on their costs, but there is extra money for none of the public services this year or next. What the Government have done for next year is simply pre-allocate some of the reserve, which was part of the control total anyway. Not a penny piece has been promised for public services as a whole, but the inflationary consequences of the Budget and other measures that the Government have taken ensure that the real value of public expenditure is reduced by £3 billion in the current year. It was therefore useful to be able to establish beyond doubt that that is indeed the case.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

My right hon. Friend will recall that the Chief Secretary has stated more than once—he certainly did it in his opening speech—that the Budget is designed to bring growth and stability for the future. That must mean unemployment continuing to fall and investment continuing to grow.

Does my right hon. Friend believe that the way the Government have dealt with foreign investment dividends and advance corporation tax in respect of pensions is likely to lead to further investment by companies, which will now need to invest rather more in their employees' pensions thus depriving companies of investment in technology and machinery? How will he further respond to matters relating to foreign investment dividends, which will have a damaging effect on some big companies that employ a large number of people?

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I agree with my hon. Friend. He will recall that, as an excuse for the timetable motion, the Government said that they wanted to get the Bill on to the statute book to end the uncertainty. In fact, as we now know, the Bill has created uncertainty. The status of foreign income dividends is in limbo. We do not know what the Government intend. All we know is that clause 36 is defective and inoperative.

My hon. Friend mentioned the effect on savings and pensioners. The central feature of the Budget is the huge and unexpected tax increase on pension funds and, therefore, on millions of savers. I use the word unexpected only because a few people might have believed the Labour party's promise not to increase taxation. They will have been alarmed and amazed by the speed with which the Labour party broke its pre-election promises.

Labour is hitting the very people who are attempting to provide for themselves and their families in the long term. The Government have the brass neck to call this a Budget for the long term. It is, in one sense: it hits the people who are saving for the long term.

To add insult to that injury, the Government deny that they are hitting pension funds at all. It remains Government policy, as enunciated by the Financial Secretary, that the withdrawal of £3.5 billion a year from pension funds is good for them. That is what she asserted on 3 July. No member of the Government has withdrawn or modified that remark.

The Budget will always be known as the pension tax Budget. If the Government believe that hitting pension funds to the tune of £3.5 billion a year is good for them, many other sectors of the economy must be hoping that the Government will not try to do any good to them in future Budgets.

We knew that the Labour party would break its promises on taxation. We did not know that they would break them within three months and on such a colossal scale. We and millions of people outside will never trust the Government on taxation again.

Photo of Mr Tony Clarke Mr Tony Clarke Labour, Northampton South 9:31 pm, 29th July 1997

I am grateful for the opportunity to make my maiden speech during this debate. I begin by offering through you, Mr. Deputy Speaker, my gratitude to Madam Speaker for her comments on her acceptance of office. She spoke about my predecessor, the right hon. Michael Morris, who was the previous Chairman of Ways and Means and a Deputy Speaker. She spoke of his fairness in handling debates, and I echo those remarks. Many hon. Members have commented to me on his fairness, and in particular his handling of the Maastricht debate.

I wish to take this opportunity of placing on record my thanks to Michael Morris for his service to the House, and wish him and his family well for the future. He was a good servant of the House and I am sure that he will be missed in the Speaker's Office.

Michael is not the only Member for Northampton to have left his mark on the House, as previous post-holders have played their part in the history and administration of this place. I am honoured to count myself among their number.

Spencer Perceval entered Parliament in 1796 and remains the only Member for Northampton to date to hold the post of Prime Minister. He also has the unenviable honour of being the only British Prime Minister to be assassinated. He was shot in the Members' Lobby in 1812 by an angry farmer by the name of J. Bellingham.

Photo of Mr Tony Clarke Mr Tony Clarke Labour, Northampton South

Indeed.

I appreciate that the folk of Northampton have strong views on parliamentary representation. Fortunately, Mr. Bellingham was not a local, but from the east coast.

Charles Bradlaugh was a radical Member, first elected in 1880, but it was six years before he was finally able to take his seat. Having asked to affirm rather than swear the oath on arrival, he was imprisoned in the Clock Tower and excluded from Parliament, and a by-election was called. The wise folk of Northampton refused to accept Parliament's view. They did not allow Parliament to tell them whom they should select or refuse, and continued to return Bradlaugh. Unlike people today, he faced elections in 1880, 1881, 1882, 1884 and 1885. The people of Northampton returned him each time, declaring, "It is up to us to decide whom we wish to represent us." Finally, the Speaker allowed him to take his seat in 1886. I am pleased to say that, in 1888, he secured the passage of a Bill legalising affirmation in both the law courts and Parliament.

Bradlaugh opposed the English oppression of Ireland. He also frowned on many aspects of the British empire, and was a great friend of India—of which I am sure many people are aware. He condemned war making and deplored malnutrition and neglect of the people. He was an advocate of land reform, and a staunch republican. There is much about Mr. Bradlaugh and his views that I find desirable today.

No history of Northampton parliamentarians would be complete without reference to Margaret Bondfield—who was also mentioned by my hon. Friend the Member for Northampton, North (Ms Keeble). Margaret Bondfield became the first woman Minister in this place when she was appointed Minister of Labour in 1929.

Northampton was a seat of Parliament many times during the 14th century, and it has a proud history in defence of this place. During the civil war, the strong parliamentary garrison at Northampton led the assault at Naseby. Its shoemakers made the boots for Cromwell's army on the promise of payment following his victory. That payment was never received—I raise that issue now as we are discussing the Finance Bill, and the relevant Ministers are present. I understand that the Chancellor is looking to introduce legislation on late payment of bills. I believe that Northampton has a just case in that regard. Alternatively, if that is not possible, we would settle for a favourable standard spending assessment settlement next year.

My constituency of Northampton, South today comprises the southern half of the town and its surrounding green belt. It remains one of the fastest growing constituencies in the land. Despite a recent review, the electorate is 81,000 and rising. The population increases at an alarming rate: Northampton alone grows at a rate of 2,000 people per annum. The current population of 192,000 is expected to exceed 200,000 by the millennium.

Industry has changed over the years. It still includes the tradition of shoemaking, but is now much more diverse. Church's shoes are particularly noteworthy, and I am grateful to the company for its assistance during the election campaign. The shoes that I purchased from it are still going strong and have seen me through both the election campaign and my many trips around this place, during which I have got lost many times. I recommend that brand to hon. Members.

As I said, industry in my constituency has changed and is now more diverse. Carlsberg, Barclaycard and MFI are based in my constituency and have their headquarters in Northampton. We look forward to welcoming Panasonic to the fold later this year. Industry looks to the Government to strengthen the economy, and the measures in the Chancellor's Budget and in the Finance Bill will ensure that there is long-term stability and prosperity, rather than a cycle of boom-bust, for the first time in several years.

My constituents welcome that stability and prosperity, and they welcome the additional provision for the national health service and for education. Although I understand the reasoning behind some of the amendments placed before the House today—I was in the Chamber for a considerable time this afternoon, listening to discussions about the pensions issue—I am somewhat disappointed that none of the amendments mentioned from where finance would come to replace that which they would eliminate. I found it particularly difficult to accept Conservative Members' advice on pensions, when they sat back for eight years and did nothing about the mis-selling of pensions.

It is a great honour to serve the people of Northampton and its surrounding areas. It is the town of my birth and where I live and raise my family. I am proud to be the first member of the town for many years to serve the place of my birth. If we look through its history, we will see that not many people who were born and bred in Northampton have had the honour of serving that area. I am proud to be able to do that.

May 1997 was a memorable time for me, not simply because of the general election result, but because, as the hon. Member for Daventry (Mr. Boswell) will know, my team, Northampton Town, were at Wembley. The cobblers, celebrating their centenary this year, reached Wembley for the first time and were victorious. Their defeat of Swansea was not appreciated by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) who joined me on that day, but Northampton Town has now been promoted to the second division. That is proof positive that anything is possible under a Labour Government. As vice-chairman of the supporters trust, I wish the team well in their centenary year.

I also place on record my gratitude to my constituents, who have supported me very well since the election, and thank my family for their support.

I trust that the Bill will be passed and will bring about the financial stability for which the country cries out. On a personal note, my task is to serve my constituents with the same diligence and dignity that were evident in the careers of the Members whom I mentioned earlier. Northampton was described by Daniel Defoe as the handsomest town in England. I share that view, and I look forward to serving Northampton's people well into the new millennium.

Photo of Mr Peter Brooke Mr Peter Brooke Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee 9:40 pm, 29th July 1997

On behalf of the whole House, I congratulate the hon. Member for Northampton, South (Mr. Clarke) on a perfectly excellent maiden speech. I suspect that he made it easier for the Deputy Speaker to decide who should be called when a wide range of hon. Members—I am not referring to myself here—got up in what is necessarily a truncated Third Reading debate.

The proceedings on the Bill have been notable for the fact—this is a tribute to my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb)—that Bognor has, I suspect, been mentioned more often than the City of London. I have visited Bognor, but the most vivid thing I knew about it before these proceedings was an exchange between the late Duke of Norfolk and someone who asked him whether, when he was senior steward at the Jockey Club, he ever had a flutter. He said that it was wrong that he should ever make a bet of any sort in that capacity, but it was true that Lavinia, the duchess, did occasionally have a bet. "Does she do well?", the person asked. "Not really," said the duke, "I had to sell Bognor last week."

The Government's defence for the truncated proceedings on the Bill—the 12 working days that it has taken—has been that they are guided and governed by precedent, and that we have had just as much time as in past years; but the fact remains that, by having to take it day after day without intermission, the outside bodies have not had the opportunity to contribute, nor necessarily has there been any margin for those of my hon. Friends who sat on the Committee to be able to absorb advice. Frankly, the test will be whether the Government, who have defended the use of 12 days this year, use the same technique next year. If they were to use it again next year, the City of London would have much more to say than perhaps it has had to say this year, in these circumstances.

The Chief Secretary alluded to the Treasury to the long speeches, and various references have been made to the fact that those speeches were not wholly satisfactory. One of the consequences of the long speeches of Conservative Members has been the nature of the interventions that they have provoked and prompted. The interventions of Labour Members on both the Back and the Front Benches have been the most revealing way in which they have shown that they have not fully understood the Bill.

I close, because I want other hon. Members to be able to speak in the debate, with one exchange that I had with the Economic Secretary to the Treasury, with whom I have had, broadly speaking, excellent relations throughout, although I acknowledge that there have been frissons.

On the subject of the windfall tax, I raised with the Economic Secretary the fact that one Minister had said that there was no difficulty at all in companies affected by the tax paying it out of their borrowings. Her response to me was that the Paymaster General had made it clear in other debates that the regulators had said that the utilities would have no difficulty in paying the tax without affecting their investments, but that was not the point that I was making.

The point that I was seeking to make was that it seemed to me to be an offence against the golden rule that the Chancellor had put forward in terms of his Budget that one should borrow for public purposes only if the money was to be used for investment and then oblige the utilities to borrow to pay the tax. That seemed to me an unfortunate imbalance and, although the Government have said that this is a one-off measure, I have an uneasy feeling that private borrowing will be used on future occasions.

I promised that I would be brief. I reiterate my congratulations to the hon. Member for Northampton, South.

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford 9:44 pm, 29th July 1997

I, too, congratulate my hon. Friend the Member for Northampton, South (Mr. Clarke) on his admirable maiden speech. This is my speech as a maiden from the Finance Bill, or perhaps a Finance Bill virgin. Friends and family asked, "So how was it for you?" I have to say that it was a strange experience.

I shall give the House some examples. I took Opposition Members extremely seriously when we began proceedings on the Finance Bill. For example, they said that they did not have enough time to discuss the important measures in the Bill which deserved deep scrutiny. I looked at the reports of the Committee's proceedings in Hansard. In my earnestness, I even timed some of the debates. I counted the column inches, subject by subject.

Taking an afternoon at random—not one of those that included some of the more strange and exciting flights of fancy around the world and around the various members of the family of the hon. Member for Daventry (Mr. Boswell); it was slightly more specific—we had a two and a half hour debate, of which Conservative Members spent 40 minutes discussing how little time they had. That was 40 minutes that could have been spent scrutinising all kinds of measures that would have been important to the House. Instead, 40 minutes was spent discussing how little time they had. A further hour was spent on various trips around the globe, flights of fancy and matters adding, shall we say, colour, a full character list, a cast to the debate.

Taking a step back from the intricacies of the Finance Bill, which obviously needed to be scrutinised, we see the overall balance of the Finance Bill. I found two dividing lines between the Government and the Opposition. The first is fairness and the second is consideration for the long term.

On fairness, Opposition Members felt the need to defend tax relief for private medical insurance, something that helps only a tiny minority, rather than using the money to reduce VAT on fuel, something that favours everyone and that we can extend to all. The most important measure of all for fairness was the windfall tax, raising money to help the long-term and the young unemployed into work. Nothing could be more important to fairness and to helping people who are in most need of support, help and fair opportunities in Britain.

Then there was the long term. The Opposition tended to cluck and crow, and kept raising the issue of the long term. They said that the Government did not understand it. I found that the Opposition simply did not understand that the most important long-term issue for Britain and the British people is to get out of the traumatic long-term boom-bust cycle that has plagued the economy for so long, doing huge damage.

We saw that time and again in the debate about pension funds. Opposition Members simply could not understand that what matters for future pensioners is the long-term health of the entire economy; what matters is staying out of another recession, not swinging on the same old rollercoaster—up we go, inflation takes off, down we come again, and crash into a recession with repossessions and huge numbers of people losing their jobs and being forced on to the dole once more.

Opposition Members did not seem to take that seriously, but the Government are determined to do something about it. That is what the Budget is all about: that means the measure to give the Bank of England operational control of interest rates, measures for investment and measures to improve the capacity of the economy and to help the long-term unemployed back to work. All those things can help to improve the long-term sustainable growth rate of the economy.

That also means sorting out the public finances. I heard little about that from Conservative Members, yet sorting out the public finances and the level of borrowing in the economy are incredibly important matters, not only to encourage a balanced recovery, but to get it on a sustainable footing for the future—something that the Conservative Government failed to do.

After the last recession, borrowing rose to 7 per cent. of gross domestic product. That is a shocking level. Even next year, on the Conservative Government's forecast last November, borrowing would have been £12.2 billion, despite the years of economic growth. That is not a sustainable level. The Labour Government pledged to do something about it, and they are doing something through the Bill. The measures for contracting borrowing by £4.1 billion are important, yet we have heard little from Conservative Members about that or about what they would have done. All we heard was, "Why are you having a Budget? It is not needed." Presumably they would have been content with borrowing at unsustainable levels.

Conservative Members took the same attitude on individual measures throughout our debates. For example, they opposed the abolition of tax credits on advance corporation tax, but they did not tell us what they would have done to find that £3.9 billion next year. However, they were content with the cuts in corporation tax of £1.9 billion, but where would they have found that money? They supported the cuts in corporation tax, but not the measures that would raise the money to fill the gap. Time and again, Conservative Members opposed measures to cut borrowing, yet they said nothing about how they would fill the gap and tackle the problem of unsustainable borrowing.

That typifies the irresponsible, short-termist view of the Opposition. It is a shame. This is a constructive Finance Bill, and there could have been a constructive debate about the long-term future of Britain, something on which the Government place great emphasis.

It is astonishing how little Conservative Members have taken into account fairness and the issues that matter to people throughout the country. They have quibbled, moaned and whinged about bits and pieces here and there—

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford

If the hon. Gentleman wants to talk about pensioners, let us talk about the 15,000 pensioners in my constituency who were horrified by the way in which the previous Conservative Government treated them and their future. They were denied their full entitlement to benefits and denied help to get the extra income support to which they were entitled. Some 2,300 people in my constituency were mis-sold personal pensions—

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

However much the hon. Lady wishes to return to better days and to bring back the past, I remind her that we are discussing this Finance Bill. Does she agree that pensioners, those approaching pensionable age and even those some years away from pensionable age who are making savings decisions, require, more than anything else, stability in their assumptions? This Budget has robbed them of any stability. Does she accept that the Budget will go down in history as one that attacks the saver?

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford

I am not trying to look backwards; I am trying to look forwards. The hon. Gentleman makes my point—pensioners need stability. They need to know that their pension funds will be worth something when they retire. What matters to them is the future performance of the pension funds. That performance depends on the state of the economy in which those pension funds are invested. That performance depends most of all on whether the companies in which they invest continue to grow and to prosper, rather than being slammed into a recession with the consequent destruction of capacity, of jobs and of those companies' value. The previous Government pushed companies and pension funds into such a recession.

The hon. Member for New Forest, West (Mr. Swayne) is absolutely right: stability is what matters—for people of my generation, considering our future. What most jeopardises our security and future stability is the fear that we may lose our jobs because the economy again tumbles into recession—which has been caused by the boom-bust, irresponsible policies pursued by the previous Government. Ministers in the previous Government simply shrugged their shoulders and said, "The economy has nothing to do with us; it can carry on rolling up and down, up and down."

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

We have the strongest economy in Europe.

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford

The previous Government slammed our economy into a deep and damaging recession, in which people lost their jobs and their homes were repossessed. Conservative Members seem to shrug their shoulders over those consequences.

We now have a chance to do something about that cycle and to try to prevent it from happening again—to make a difference for the sake of our future, of our children and of our grandchildren.

Mr. Deputy Speaker:

I call Mr. Boswell.

Photo of Ken Livingstone Ken Livingstone Labour, Brent East

On a point of order, Mr. Deputy Speaker. It is clear that my hon. Friend the Member for Pontefract and Castleford (Yvette Cooper) gave way to a colleague behind her—not to this.

Mr. Deputy Speaker:

It was not clear to whom the hon. Lady gave way. I thought that she had finished her speech. I call Mr. Cranston.

Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North

Does my hon. Friend the Member for Pontefract and Castleford agree that, in Committee, we heard nothing about issues of growth or, specifically, of social justice? We focused on the needs of only a few people who would be affected by withdrawal of relief on private medical insurance—a measure that will affect no more than 550,000 people.

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford

I thank my hon. Friend for his intervention. The Budget will be remembered for the contribution that it makes to jobs for the long-term unemployed. We are raising money and enabling people to get the jobs and the future that they need.

Future pensioners will depend most on stability, on jobs and on having the money to contribute to their own pensions—which they will not have if they are without a job and on the dole. Future and current pensioners care most about their children and their grandchildren and about jobs for them. Our Budget will get 250,000 young people off benefit and into work, making a huge difference to the 900 under-25s in my constituency who have no job and very little hope for the future. They certainly deserve better than they received from the previous Conservative Government.

The Budget has managed to provide extra resources for the health service, for education and for rebuilding our schools.

Photo of Ben Chapman Ben Chapman Labour, Wirral South

My hon. Friend is talking about the welfare-to-work programme and how it will affect 250,000 young people. In my constituency, as many as 2,000 young people are striving to get work, and as many as one in four are out of employment. Many of our young people have no aspirations, no hope and no opportunity of getting work, and they very much welcome the Budget. My entire constituency welcomes the Budget, and I applaud my hon. Friend's efforts to explain it.

Photo of Yvette Cooper Yvette Cooper Labour, Pontefract and Castleford

I thank my hon. Friend—[Interruption.] It is such a shame that Conservative Members want to cluck, crow and jeer when the subject under discussion is the future of the young unemployed and their opportunity to thrive and prosper—an opportunity not given to them by the previous Government but which they are being given by this Government, who believe in a future for the people of Britain.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Trade and Industry) 9:59 pm, 29th July 1997

The hon. Member for Pontefract and Castleford (Yvette Cooper) has clearly cast herself in the role of winding up the debate. No Government Front Bencher was prepared to do it, but the hon. Lady did not make too bad a job of it.

I attempted to congratulate my constituency neighbour, the hon. Member for Northampton, South (Mr. Clarke), on a most elegant speech full of wit and in which he paid a gracious tribute to Michael Morris.

I have very little time to say anything else about the Bill because of the operation of the guillotine. It is a Bill that should never have been. There might be some credibility in the proposal for the windfall tax, but there is no mandate for or credibility in the other 15—

It being Ten o'clock, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to Order [14 July] and Resolution [yesterday].

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 336, Noes 168.

[Division No. 74][10 pm
AYES
Abbott, Ms DianeBorrow, David
Ainger, NickBradley, Keith (Withington)
Ainsworth, Robert (Cov'try NE)Bradley, Peter (The Wrekin)
Allen, Graham (Nottingham N)Bradshaw, Ben
Anderson, Donald (Swansea E)Brinton, Mrs Helen
Anderson, Janet (Rossendale)Brown, Rt Hon Gordon (Dunfermline E)
Armstrong, Ms Hilary
Ashton, JoeBrown, Rt Hon Nick (Newcastle E)
Atherton, Ms CandyBrowne, Desmond (Kilmarnock)
Atkins, CharlotteBuck, Ms Karen
Banks, TonyBurden, Richard
Barnes, HarryButler, Christine
Barron, KevinByers, Stephen
Battle, JohnCaborn, Richard
Bayley, HughCampbell, Mrs Anne (C'bridge)
Beard, NigelCampbell, Ronnie (Blyth V)
Beckett, Rt Hon Mrs MargaretCampbell-Savours, Dale
Begg, Miss Anne (Aberd'n S)Canavan, Dennis
Bell, Martin (Tatton)Caplin, Ivor
Bell, Stuart (Middlesbrough)Caton, Martin
Bennett, Andrew FCawsey, Ian
Benton, JoeChapman, Ben (Wirral S)
Berry, RogerChisholm, Malcolm
Best, HaroldChurch, Ms Judith
Betts, CliveClapham, Michael
Blears, Ms HazelClark, Rt Hon Dr David (S Shields)
Blizzard, BobClark, Dr Lynda (Edinburgh Pentlands)
Blunkett, Rt Hon David
Boateng, PaulClarke, Eric (Midlothian)
Clarke, Rt Hon Tom (Coatbridge)Hanson, David
Clarke, Tony (Northampton S)Harman, Rt Hon Ms Harriet
Clelland, DavidHeal, Mrs Sylvia
Clwyd, AnnHealey, John
Coaker, VernonHenderson, Doug (Newcastle N)
Coffey, Ms AnnHenderson, Ivan (Harwich)
Coleman, Iain (Hammersmith)Hepburn, Stephen
Cook, Frank (Stockton N)Heppell, John
Cooper, YvetteHesford, Stephen
Corbyn, JeremyHill, Keith
Corston, Ms JeanHinchliffe, David
Cousins, JimHodge, Ms Margaret
Cox, TomHome Robertson, John
Cranston, RossHoon, Geoffrey
Crausby, DavidHopkins, Kelvin
Cryer, Mrs Ann (Keighley)Howarth, Alan (Newport E)
Cummings, JohnHowells, Dr Kim
Cunliffe, LawrenceHoyle, Lindsay
Cunningham, Jim (Cov'try S)Hughes, Ms Beverley (Stretford)
Cunningham, Rt Hon Dr John (Copeland)Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Curtis-Thomas, Mrs ClaireHurst, Alan
Dalyell, TamHutton, John
Darling, Rt Hon AlistairIddon, Dr Brian
Darvill, KeithIllsley, Eric
Davey, Valerie (Bristol W)Jackson, Ms Glenda (Hampstead)
Davies, Rt Hon Denzil (Llanelli)Jackson, Helen (Hillsborough)
Davies, Rt Hon Ron (Caerphilly)Jamieson, David
Davis, Terry (B'ham Hodge H)Jenkins, Brian (Tamworth)
Dawson, HiltonJohnson, Alan (Hull W & Hessle)
Dean, Mrs JanetJohnson, Miss Melanie (Welwyn Hatfield)
Denham, John
Dewar, Rt Hon DonaldJones, Helen (Warrington N)
Dobbin, JimJones, Ms Jenny (Wolverh'ton SW)
Dobson, Rt Hon Frank
Donohoe, Brian HJones, Dr Lynne (Selly Oak)
Doran, FrankJones, Martyn (Clwyd S)
Drown, Ms JuliaJowell, Ms Tessa
Dunwoody, Mrs GwynethKaufman, Rt Hon Gerald
Eagle, Angela (Wallasey)Keen, Alan (Feltham & Heston)
Eagle, Maria (L'pool Garston)Keen, Mrs Ann (Brentford)
Edwards, HuwKennedy, Jane (Wavertree)
Efford, CliveKhabra, Piara S
Ellman, Ms LouiseKidney, David
Ennis, JeffKing, Andy (Rugby & Kenilworth)
Etherington, BillKing, Ms Oona (Bethnal Green)
Field, Rt Hon FrankKumar, Dr Ashok
Fitzpatrick, JimLadyman, Dr Stephen
Fitzsimons, LornaLawrence, Ms Jackie
Flint, CarolineLaxton, Bob
Flynn, PaulLepper, David
Follett, BarbaraLeslie, Christopher
Foster, Rt Hon DerekLevitt, Tom
Foster, Michael Jabez (Hastings)Lewis, Ivan (Bury S)
Foster, Michael John (Worcester)Lewis, Terry (Worsley)
Fyfe, MariaLiddell, Mrs Helen
Galbraith, SamLinton, Martin
Gapes, MikeLivingstone, Ken
George, Bruce (Walsall S)Lloyd, Tony (Manchester C)
Gerrard, NeilLock, David
Gibson, Dr IanLove, Andrew
Gilroy, Mrs LindaMcAllion, John
Godman, Dr Norman AMcAvoy, Thomas
Godsiff, RogerMcCabe, Stephen
Golding, Mrs LlinMcCafferty, Ms Chris
Gordon, Mrs EileenMcCartney, Ian (Makerfield)
Graham, ThomasMacdonald, Calum
Grant, BernieMcDonnell, John
Griffiths, Jane (Reading E)McFall, John
Griffiths, Nigel (Edinburgh S)McIsaac, Shona
Griffiths, Win (Bridgend)McKenna, Ms Rosemary
Grocott, BruceMackinlay, Andrew
Gunnell, JohnMcLeish, Henry
Hain, PeterMacShane, Denis
Hall, Patrick (Bedford)Mactaggart, Fiona
Hamilton, Fabian (Leeds NE)McWalter, Tony
Mahon, Mrs AliceSavidge, Malcolm
Mallaber, JudySawford, Phil
Marek, Dr JohnSedgemore, Brian
Marsden, Gordon (Blackpool S)Shaw, Jonathan
Marsden, Paul (Shrewsbury)Sheldon, Rt Hon Robert
Marshall, Jim (Leicester S)Short, Rt Hon Clare
Martlew, EricSimpson, Alan (Nottingham S)
Maxton, JohnSingh, Marsha
Meacher, Rt Hon MichaelSkinner, Dennis
Meale, AlanSmith, Rt Hon Andrew (Oxford E)
Merron, GillianSmith, Angela (Basildon)
Michael, AlunSmith, Rt Hon Chris (Islington S)
Michie, Bill (Shef'ld Heeley)Smith, Miss Geraldine (Morecambe & Lunesdale)
Milburn, Alan
Miller, AndrewSmith, Jacqui (Redditch)
Mitchell, AustinSmith, John (Glamorgan)
Moffatt, LauraSmith, Llew (Blaenau Gwent)
Moonie, Dr LewisSnape, Peter
Moran, Ms MargaretSoley, Clive
Morgan, Rhodri (Cardiff W)Southworth, Ms Helen
Morley, ElliotSpellar, John
Morris, Ms Estelle (B'ham Yardley)Squire, Ms Rachel
Mountford, KaliStarkey, Dr Phyllis
Mudie, GeorgeStevenson, George
Mullin, ChrisStewart, Ian (Eccles)
Murphy, Denis (Wansbeck)Stinchcombe, Paul
Murphy, Paul (Torfaen)Stoate, Dr Howard
Naysmith, Dr DougStrang, Rt Hon Dr Gavin
O'Brien, Bill (Normanton)Straw, Rt Hon Jack
O'Brien, Mike (N Warks)Stringer, Graham
O'Hara, EdwardStuart, Ms Gisela (Edgbaston)
Olner, BillSutcliffe, Gerry
Organ, Mrs DianaTaylor, Rt Hon Mrs Ann (Dewsbury)
Palmer, Dr Nick
Pearson, IanTaylor, Ms Dari (Stockton S)
Pendry, TomTaylor, David (NW Leics)
Perham, Ms LindaThomas, Gareth (Clwyd W)
Pickthall, ColinThomas, Gareth R (Harrow W)
Pike, Peter LTimms, Stephen
Plaskitt, JamesTipping, Paddy
Pond, ChrisTodd, Mark
Pope, GregTouhig, Don
Pound, StephenTrickett, Jon
Powell, Sir RaymondTruswell, Paul
Turner, Dennis (Wolverh'ton SE)
Prentice, Ms Bridget (Lewisham E)Turner, Desmond (Kemptown)
Prentice, Gordon (Pendle)Turner, Dr George (NW Norfolk)
Prescott, Rt Hon JohnTwigg, Stephen (Enfield)
Primarolo, DawnVaz, Keith
Prosser, GwynVis, Dr Rudi
Quin, Ms JoyceWard, Ms Claire
Quinn, LawrieWatts, David
Rammell, BillWhite, Brian
Raynsford, NickWhitehead, Dr Alan
Reed, Andrew (Loughborough)Wicks, Malcolm
Reid, Dr John (Hamilton N)Williams, Rt Hon Alan (Swansea W)
Robertson, Rt Hon George (Hamilton S)
Wilson, Brian
Robinson, Geoffrey (Cov'try NW)Winnick, David
Roche, Mrs BarbaraWinterton, Ms Rosie (Doncaster C)
Rogers, AllanWise, Audrey
Rooker, JeffWood, Mike
Rooney, TerryWray, James
Ross, Ernie (Dundee W)Wright, Dr Tony (Cannock)
Rowlands, TedWright, Tony D (Gt Yarmouth)
Ruane, ChrisWyatt, Derek
Ruddock, Ms Joan
Russell, Ms Christine (Chester)Tellers for the Ayes:
Ryan, Ms JoanMr. Jim Dowd and
Salter, MartinMr. Jon Owen Jones.
NOES
Ainsworth, Peter (E Surrey)Atkinson, David (Bour'mth E)
Allan, Richard (Shef'ld Hallam)Atkinson, Peter (Hexham)
Amess, DavidBaldry, Tony
Ancram, Rt Hon MichaelBallard, Mrs Jackie
Arbuthnot, JamesBeggs, Roy (E Antrim)
Beith, Rt Hon A JJones, Nigel (Cheltenham)
Bercow, JohnKeetch, Paul
Blunt, CrispinKennedy, Charles (Ross Skye)
Body, Sir RichardKey, Robert
Boswell, TimKing, Rt Hon Tom (Bridgwater)
Bottomley, Peter (Worthing W)Kirkbride, Miss Julie
Bottomley, Rt Hon Mrs VirginiaKirkwood, Archy
Brady, GrahamLaing, Mrs Eleanor
Brazier, JulianLeigh, Edward
Breed, ColinLetwin, Oliver
Brooke, Rt Hon PeterLewis, Dr Julian (New Forest E)
Browning, Mrs AngelaLidington, David
Bruce, Ian (S Dorset)Lilley, Rt Hon Peter
Burnett, JohnLivsey, Richard
Burns, SimonLloyd, Rt Hon Sir Peter (Fareham)
Burstow, PaulLoughton, Tim
Butterfill, JohnLuff, Peter
Campbell, Menzies (NE Fife)Lyell, Rt Hon Sir Nicholas
Cash, WilliamMacGregor, Rt Hon John
Chapman, Sir Sydney (Chipping Barnet)McIntosh, Miss Anne
Maclean, Rt Hon David
Chope, ChristopherMaclennan, Robert
Clark, Rt Hon Alan (Kensington)McLoughlin, Patrick
Clark, Dr Michael (Rayleigh)Major, Rt Hon John
Clarke, Rt Hon Kenneth (Rushcliffe)Malins, Humfrey
Mawhinney, Rt Hon Dr Brian
Clifton-Brown, GeoffreyMerchant, Piers
Cormack, Sir PatrickMichie, Mrs Ray (Argyll & Bute)
Cotter, BrianMoore, Michael
Cran, JamesMoss, Malcolm
Curry, Rt Hon DavidNicholls, Patrick
Davey, Edward (Kingston)Norman, Archie
Davis, Rt Hon David (Haltemprice)Oaten, Mark
Davies, Quentin (Grantham)Öpik, Lembit
Day, StephenOttaway, Richard
Dorrell, Rt Hon StephenPage, Richard
Duncan, AlanPaice, James
Duncan Smith, IainPaterson, Owen
Emery, Rt Hon Sir PeterPickles, Eric
Evans, NigelPrior, David
Faber, DavidRedwood, Rt Hon John
Fabricant, MichaelRobertson, Laurence (Tewk'b'ry)
Fallon, MichaelRoe, Mrs Marion (Broxbourne)
Fearn, RonnieRuffley, David
Flight, HowardRussell, Bob (Colchester)
Forsythe, CliffordSanders, Adrian
Forth, Rt Hon EricSayeed, Jonathan
Fox, Dr LiamShephard, Rt Hon Mrs Gillian
Gale, RogerShepherd, Richard (Aldridge)
Garnier, EdwardSimpson, Keith (Mid-Norfolk)
George, Andrew (St Ives)Smith, Sir Robert (W Ab'd'ns)
Gibb, NickSoames, Nicholas
Gill, ChristopherSpelman, Mrs Caroline
Gillan, Mrs CherylSpicer, Sir Michael
Gorman, Mrs TeresaSpring, Richard
Gorrie, DonaldStanley, Rt Hon Sir John
Gray, JamesSteen, Anthony
Green, DamianStreeter, Gary
Greenway, JohnStunell, Andrew
Grieve, DominicSwayne, Desmond
Hamilton, Rt Hon Sir ArchieSyms, Robert
Hammond, PhilipTapsell, Sir Peter
Harvey, NickTaylor, John M (Solihull)
Hawkins, NickTaylor, Sir Teddy
Heath, David (Somerton & Frome)Temple-Morris, Peter
Heathcoat-Amory, Rt Hon DavidTredinnick, David
Horam, JohnTrend, Michael
Howard, Rt Hon MichaelTyler, Paul
Howarth, Gerald (Aldershot)Tyrie, Andrew
Hughes, Simon (Southwark N)Viggers, Peter
Hunter, AndrewWallace, James
Jack, Rt Hon MichaelWalter, Robert
Jackson, Robert (Wantage)Wardle, Charles
Jenkin, Bernard (N Essex)Waterson, Nigel
Johnson Smith, Rt Hon Sir GeoffreyWebb, Professor Steve
Wells, Bowen
Whitney, Sir RaymondWoodward, Shaun
Whittingdale, JohnYeo, Tim
Widdecombe, Rt Hon Miss AnnYoung, Rt Hon Sir George
Willetts, DavidTellers for the Noes:
Willis, PhilMr. Oliver Heald and
Winterton, Nicholas (Macclesfield)Sir David Madel.

Question accordingly agreed to.

Bill read the Third time, and pased.