Speeches, etc.

Margaret Thatcher

HC S 2R [Finance Bill]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [883/1383-98]
Editorial comments: 1652-1735.
Importance ranking: Major
Word count: 5535
Themes: Agriculture, Defence (general), Economic policy - theory and process, Education, Employment, Industry, Monetary policy, Energy, Pay, Taxation, Housing, Labour Party & socialism, Social security & welfare, Trade unions, Voluntary sector & charity
[column 1383]

Mrs. Margaret Thatcher (Finchley)

I beg to move, to leave out from “That” to the end of the Question and to add instead thereof:

this House declines to give a Second Reading to a Bill whose provisions, in the present critical state of the economy, are inadequate and in some respects damaging and which also provides, without good reason, for the retrospective repayment of tax to one section of taxpayers.

Inevitably, the Second Reading of the Finance Bill has turned out to be rather technical. We are grateful to Joel Barnettthe Chief Secretary for giving way to explain just how heavy these taxes will be so that we may know the full extent of their impost.

We are also grateful to the hon. Gentleman for peppering the beginning of his speech with a few provocative remarks. Indeed, he started by claiming that his administration's policy was fair and just. It depends what one calls fair and just. At the moment it is everything that the hon. Gentleman calls fair and nothing that most other people call fair.

It was rather ironic that the first proposal in the Bill to which the hon. Gentle[column 1384]man turned was the one that many people would consider most unfair—the surcharge on savings income. People who have been affected worst by inflation would hardly call this administration's policy either fair or just, because inflation, which is the most devastating tax of the lot, is imposed without the permission of this House.

The hon. Gentleman then dealt with food subsidies and indicated that they relieved inflation. I was rather interested that he should do that, because the Labour Economic Finance and Taxation Association published its views in a booklet by Johns Mills headed

“Redistribution, A Review of Progress” . Harold WilsonThe Prime Minister is president of LEFTA, and Denis Healeythe Chancellor of the Exchequer, James Callaghanthe Foreign Secretary, Roy Jenkinsthe Home Secretary and Professor Kaldor are vice-presidents. The seventh conclusion was:

“The main danger from inflation is not to the pre-tax distribution of income; it is that the Government may use the limited taxable capacity of the country to fight inflation with general subsidies. This policy will do nothing to mitigate inflation and is highly likely to be financed by marginal taxation on those whose incomes are already well below the national average thus leading to regression.”

The hon. Gentleman said that his administration had introduced measures to ensure that the country got a fair share of profits in the North Sea. Some of us would not describe them in that way. They are measures more likely to ensure that the oil stays under the North Sea rather longer than it would have done, because the Government are undoubtedly delaying the garnering of that tremendous harvest which could be of such benefit to this country in a few years.

The hon. Gentleman then turned to an effective tax on wealth. In this respect, he seemed to indicate that every person in this country had a bounden duty so to order his or her affairs as to pay the maximum amount of tax on the most unfavourable construction of the statutes. Denis HealeyThe Chancellor thinks that people should do it that way. What he will get, if he [column 1385]considers that people should do it that way, is mass avoidance of the easiest kind—spend the lot and save nothing. That is the kind of society that we shall have.

The Chancellor of the Exchequer (Mr. Denis Healey)

Hoard the lot.

Mrs. Thatcher

I am not as successful as the Chancellor at hoarding houses. I cannot afford to hoard houses, as do the Chancellor and Harold Wilsonthe Prime Minister. If I could, I would.

The way in which the Chancellor is going about it, by putting extra penalties on saving, is to aim at a spendthrift society. The right hon. Gentleman favours the spender but penalises the saver.

Joel BarnettThe Chief Secretary made some comments about domicile. There is a devastating clause on domicile as it affects the new capital transfer tax. I hope that the hon. Gentleman will draw to the notice of some of those foreign gentlemen upon whose support he relies to finance his borrowing requirement. If they buy assests here—some of them are already buying assets here—they should know the kind of gifts tax to which they will be liable if they transfer them to someone else. I understand that the capital transfer tax applies to properties situated here.

Mr. Joel Barnett

So did estate duty.

Mrs. Thatcher

Yes, but it is wrong to compare a gifts tax with estate duty. I gather that the Chief Secretary indicates assent. Then what possible relevance has the hon. Gentleman's statement? These people could have passed on assets to their sons or daughters or anyone else without encountering tax. They will not now be able to do so, due to the proposals in the Bill.

It is also wrong to compare estate duty tax on charities with the capital transfer tax. In most cases, donations and benefactions to charities escaped all tax because they were made well in advance of death and never came into estate duty charge. The Bill will have a devastating effect on many charities if the charitable provisions remain as they are now.

I am rather alarmed at the suggestion that we are to have a lot of amendments in Committee. If the hon. Gentleman [column 1386]is not careful, we shall not get the Bill out of Committee in time to comply with the Provisional Collection of Taxes Acts, because there is already a great deal to do. Ten sittings upstairs seem comparatively few to deal with the long list of amendments that we shall undoubtedly have. Let me warn the Chief Secretary that I am a very good night worker.

A year ago today Denis Healeythe present Chancellor cross-examined the then Chancellor, Anthony Barber, on a statement that he had just made. A year ago today the present Chancellor said:

“Figures published on Friday show that in the first year of the Government's humorously entitled counter-inflation policy, inflation was running at more than 10 per cent.” —[Official Report, 17th December 1973; Vol. 866, c. 967.]

May we now say to the Chancellor that figures published on Friday show that inflation under him is now running at the rate of about 18.3 per cent. per annum? That is the deterioration during the course of one year.

In the last economic debate before the February election, the right hon. Gentleman's last debate as Shadow Chancellor, on 6th February, he said:

“The Chairman of the Stock Exchange told us last autumn that the stock market was a barometer which indicated confidence in the Government's will to govern and the Government's ability to govern. We can look at the barometer. Yesterday, the share index fell below 300, and it is still bobbing round the 300 mark. It is a very accurate barometer.” —[Official Report, 6th February 1974; Vol. 868, c. 1253.]

Yesterday, the index closed at 156.2. The Chancellor stands condemned by the very test that he chose for my right hon. Friend Lord Barberthe then Member for Altrincham and Sale.

The Finance Bill must be judged on how it provides for the problems of today. Most of the broad economic matters will be dealt with in the debate tomorrow. Today we consider in particular the disruptive force of inflation as it affects companies—and, therefore, those who work in them and invest in them and those who retire from them—and as it affects savings in their several forms and their transfer from one person to another.

Before coming to the detailed effects, I should like to make a few observations about the general effects of inflation if it continues at its present rate. First, the [column 1387]rate of inflation is not static. It is accelerating. The annual rate of increase last December was 10.6 per cent. Last March it was 13.5 per cent. This December the annual rate of increase is 18.3 per cent., and next year rates of about 25 per cent. are forecast.

I do not believe that everyone has grasped fully what these rates will mean to our society or our institutions if they persist. Two or three weeks ago in an economic debate in the other place, the noble Lord, Lord Stokes, gave some figures for wages if the annual rate of inflation were to continue and stay at 20 per cent. per annum. I hasten to assure the Chief Secretary that the figures were not a matter of opinion but are obtainable by using the compound tables for calculating inflation. To retain the same purchasing power, a person who at the age of 18 was paid £1,800 a year would, if the rate of inflation persisted at 20 per cent. per annum, be receiving at the age of 30 £16,000 a year. At the age of 40 he would be receiving £100,000, and at the age of 50 he would be receiving half a million pounds a year—to retain the value of the original £1,800.

This obviously could not go on. If it cannot go on, it has got to stop. But I wish that the signs were better that the Government really intend to deal with inflation. Even the other day at Question Time the Chief Secretary was acting as if there were a kind of trade-off between inflation and unemployment. That seems to some of us very old-fashioned economics. The danger of inflation at this rate is that it will lead to massive unemployment of a kind which we have not seen in this country for some time and which most of us never wish to see again.

But even looking back at past rates of inflation. I doubt whether some 30 or 40 years ago we would have believed the forecasts of events which have actually happened? At the beginning of the big Economist diary there is a whole series of tables which is well worth studying.

Mr. James Dempsey (Coatbridge and Airdie)

Only a short time ago I spoke to a manufacturer of confectionery goods in my constituency. He advised me that sugar from Munich was being unloaded at a cost of over £200 per ton, as against our £83 per ton. He also advised me [column 1388]that he is unable to estimate manufacturing costs over the next week because he has been warned that this price will rise to £300 per ton. Is the right hon. Lady willing to say from the Dispatch Box that the Chancellor of the Exchequer is responsible for that situation?

Mrs. Thatcher

I think that the hon. Gentleman would have made a very good speech on our side during the February election campaign, when we had to deal with very considerable rises in commodity prices, affecting many commodities other than sugar. Undoubtedly that was a factor in pushing up prices. I do not wish to pause in my speech to give the hon. Gentleman a discourse on the difference between rising prices and inflation. There is a very good one in a chapter of Mr. William Rees-Mogg 's book called “The Reigning Error” . In the early chapters the hon. Gentleman will find a very good explanation, and a superlative cross-examination of an economist by a judge on what inflation is.

I was about to refer to the table in the Economist diary, which gives United Kingdom incomes from 1938 to 1974. This shows what past inflation has meant. We would not have believed it if we had been told at the time. A £1,000 income in 1938 would need today, to have the equivalent purchasing power net of tax, for a family man with two children, to be £7,669. A £2,000 income in 1938 would need to be £20,000 today for the equivalent purchasing power. A £4,000 income in 1938 would need to be £66,000. That is the effect of inflation. It also indicates the effect of inflation on taxation thresholds when they are not indexed. But that is a past rate of inflation, and most of us would consider that it had been at rates which were tolerable.

Mr. John Tomlinson (Meriden)

On that specific point, does not the right hon. Lady agree that as the figures she has quoted are net of taxation they contain a far greater reflection of taxation changes than of inflation?

Mrs. Thatcher

But the hon. Gentleman will remember that at the beginning of my speech I said that inflation was one of the biggest single taxes, and that unless one indexes thresholds one reaches this point. If the hon. Gentleman looks at the figures, he will find that even with [column 1389]average earnings, taxation takes an increasing proportion of gross earnings and leaves a smaller proportion as net taxed income. This is one of the effects of inflation. It is one of the effects which we are experiencing at present.

The other effect of inflation, which is quite devastating, is the effect on pension funds. They are already finding it difficult to provide adequate pensions for their beneficiaries in the light of present-day inflation. Company after company is having to top up pension funds from profits because the funds cannot meet their actuarial assessments owing to market collapse and inflation. BP has provided £38 million for its pension fund, and some of the banks and ICI have also had to provide large sums. Perhaps it is as well for the pensioner that this year the profits were there to do it. Next year they may not be.

Again, however, this emphasises that we cannot sit complacently and watch this accelerating rate of inflation. It should be the prime objective of the Chancellor of the Exchequer to deal with it. Even the Bank of England Quarterly Review, commenting on the position of pension funds, has said:

“The erosion of equity earnings also poses a problem for companies in the management of their pension funds. The need, with inflation, to finance rapidly growing pension liabilities, in face of a reduction in the real income from their accumulated equity funds will become a further drain on their resources.”

Let us make it quite clear that prosperous companies and good dividends are vital to the 11 million members of private pension funds.

I turn to the three aspects of the Bill with which I particularly want to deal—the effect on companies' savings, and the capital transfer tax. First I turn to the the effect of the Bill on companies. We know that the long-term problem is that companies cannot make enough profit to provide for investment or attract new capital. The medium-term problem, and it is pretty immediate, is to agree a new accounting system which will show what the true profit is and therefore establish a proper basis for assessing future needs and actions.

The immediate problem is that some companies are short of cash to meet their commitments and are therefore [column 1390]having to lay off workers although the position of profits on paper still looks reasonable. For the Chancellor to have done nothing in these circumstances would have meant a large-scale loss of jobs and it was that rather than conversion to the private enterprise system which led him to take the action he took.

The situation is an example of how inflation can create unemployment. The Chancellor has decided to relieve the cash position by reducing corporation tax payable on the value of the increased stock and limiting the increase to 10 per cent. of the trading profit for taxation purposes. I gather that trading profit means after interest has been allowed but before depreciation. Most of us doubt whether the Chancellor has done enough. We are aware that this action is accompanied by price increases. We are also aware that the problem of tax on stock appreciation has occurred in other countries, too, but I note the comment in the Bank of England Quarterly Review

“It is not entirely clear why industry's difficulties should have become so much more acute here than elsewhere … exact international comparisons are not available … it is possible that the return on capital in this country has fallen to a lower level than in other industrial countries. It may also be the case that the recent rapid rise in costs in at least some other countries has been passed on more quickly than here in higher prices … Taken together, the tax reliefs and the relief through the price code may not provide companies in the next 12 months with much more than a third of the prospective increase in the cost of their stocks in this period.”

Clearly, therefore, there is considerable doubt even in that quarter about the adequacy of the Chancellor's remedies in the present serious situation which faces companies.

Another point has also been raised by one of my hon. Friends. We believe that the relief this year should be extended to small businesses. I remain unconvinced by administrative arguments to the contrary. There appears to be no logic about the sum of £25,000 closing stock. We do not know how many companies that affects or how many it would affect if the figure were lowered to £20,000 or £15,000, and I doubt whether even the Inland Revenue knows. What we do know is that the accountants seem more able to make changes more quickly than the Inland Revenue. The speed with [column 1391]which they have been operating far exceeds the speed at which the Inland Revenue can operate.

May I say about this “bankable assurance” that an assurance just plain is not bankable. Only a legal entitlement is bankable. The expression “bankable assurance” is a contradiction in terms. An assurance does not pay the interest on the money a company has to borrow because it does not have the cash that it should be getting back, so this assurance just is not good enough.

The third point is that the relief is haphazard. I learned from an article in the December issue of Accountancy that Marks and Spencer gains nothing because its stocks increased by only £1.9 million whereas 10 per cent. of its trading profit is £8.2 million. Tesco, however, would gain £7.3 million because its stock rose by £16.9 million, which is far more than 10 per cent. of its trading profit. I need hardly say that companies like Leyland which paid little or no tax did not gain. The effect of the relief, therefore, is very haphazard.

It is also possible to contend that the Chancellor could have chosen a much simpler system, namely, that urged upon him by CBI, and then he could have found that it was possible to extend the relief to small businesses immediately.

By his action the Chancellor has enabled a number of companies to survive when they might otherwise have become insolvent, but he has not restored their capacity to invest. How quickly they resume expansion of fixed investment will not depend only on financial considerations, important though they are. It will depend also on industrial confidence, and there seems little hope of restoring that so long as it remains the policy of the Government to take a larger part of the running of companies. It is clear that some parts of the Labour Party believe in a mixed economy. The question is how large a part is it and is it the predominant part? Or are those whose avowed intention is to end the system in the ascendancy, either by their own actions, or through the acquiescence of their rivals.

On savings, it is important that we should invest more, that we should save more, and that the Chancellor does every[column 1392]thing in his power to encourage savings on a considerable scale. The massive re-equipment of industry is not likely to be obtained unless those who choose to put their money in it see that that money first retains its value, secondly, earns a reasonable return by way of interest or dividends, and, thirdly, that they are able to keep enough after tax to make saving preferable to spending.

These conditions are not being met at the moment. Savings are not retaining their value. The pound in the bank, the Post Office, gilt-edged stock, War Loan, Daltons, building societies and equities is being devalued even taking into account the high interest rate such as 17 per cent. gross which is obtainable on some long-dated gilts. Sooner or later the Chancellor will have to deal with this very difficult problem.

I admit that the Bill contains two small improvements for savers. Building society investment for pension funds has been improved in that the funds can reclaim the tax paid on interest. This is largely due to the strenuous efforts of my hon. Friend the Member for Croydon, South (Mr. Clark) during the last Finance Bill. Many people who will be purchasing houses through building societies can thank my hon. Friend for that. The second improvement is the small indexed savings scheme of up to £500 for retirement pensioners. I understand that it operates only over a period of five years and there is a technical provision in the Bill connected with that.

The main provision in the Bill on savings income is a new impost on this year's savings which will operate now and for so long as a Socialist Government remain in office. To levy a higher rate of tax on savings income when it exceeds £1,000 per annum is thoroughly vindictive and it is a measure which will create real difficulty for many retired people who have no pension provision but who had to provide for their own future by building up assets and then living off the income. I am aware that the figure can be increased to £1,500 for those over 65, but if £1,000 and £1,500 were the right figures, even accepting the Labour Government's arguments, in March, they are the wrong figures now. The tax on that sum would be even more severe than it was when the Labour Government proposed the system. [column 1393]

This is what makes me say that the Chancellor will have to give more serious consideration to adjusting some of these figures rather more rapidly than in the past in a way that is beneficial to the taxpayer. The limited age allowance next year will cope with only part of the problem. The disabled who have been victims of road accidents and other disasters and who have received heavy damages will be particularly badly affected. We shall fight this clause at every stage and hope that in future the Chancellor will take a more advantageous view towards savings. He did not do so on the last Finance Bill. I am still getting correspondence about one or two petty points which were put to his Department which he was told would adversely affect thrift and self-reliance, and he did nothing about them.

One case which I remember particularly, because I have come across three similar examples of it, was when he introduced a limit on mortgage relief. The examples I have in mind affected vicars. A number of them who purchased houses for retirement found to their great shock that they could not get mortgage relief on the house they were purchasing. They were living in the vicarage and were told “You are living in a tied house. The house you are purchasing for your retirement is a second house. Therefore, you cannot have relief for mortagage interest on it.”

The cases were put to the Exchequer, who said that those concerned must let the houses at a commercial rent—as if there is such a thing. Anybody who has been in the Department of the Environment knows that there is no such thing as a commercial rent at present. There are frozen rent and a fair rent, and in some areas a decontrolled rent. That is typical of how mean the Government can be towards those who save and try to look after themselves—mean, because the Government are much more concerned to pursue something doctrinaire than to give reliefs where they are due.

I come to the capital transfer tax. The Chancellor's reasons for introducing it seem to be threefold. The first is that great concentrations of wealth still escape largely untouched; the second is that the tax redistributes wealth; and the third is that other countries have similar taxes. [column 1394]

The first point just is not true. The yield from estate duty last year was £405 million and the yield from capital gains tax was £320 million. With inflation as it is, that is largely a wealth tax on inflation and not a tax on capital gains. The yield from another capital tax, stamp duties, was £190 million.

Estate duty was introduced in 1894 at a maximum rate of 8 per cent. on estates over £1 million, which would be worth £10 million today. A substantial extra charge has already been levied, because the rate now varies from 25 per cent. to 75 per cent., the latter figure in respect of estates of over £500,000. Therefore, there have already been substantial increased taxes on capital.

Secondly, a capital transfer tax does not redistribute wealth, nor does a wealth tax. They concentrate wealth in the hands of the Government, which is the very opposite of distribution. They strengthen the economic power of the State against the individual. It is interesting that, as this week's Economist pointed out, the day before the Bill was published the LEFTA Group published a pamphlet by John Mills entitled “Redistribution, A Review of Progress” . I have already quoted its seventh conclusion. On page I we read:

“it is impossible to increase working-class incomes to any substantial extent by milking the rich still further if the main objective is more equality for anyone” .

If one wants to distribute wealth and not concentrate it, a form of inheritance tax on the done is better, not a tax on the accumulated gifts of the donor. Such a tax was proposed by Anthony Barber in the Green Paper in 1972.

The Chancellor's third reason—that other countries have a capital tax, and therefore it is all right that we should have one—must be considered in the light of the weight of all taxes both here and overseas. A comparison was given in the 1972 Green Paper. An extra tax cannot be considered in isolation from the effect of all other taxes. A table in the Green Paper showed that in the relevant year, 1969, the yield from death duties alone in this country, both as a percentage of total central and local taxes and as a percentage of GNP, was already higher than the yields in Western Europe from the total of death duties and gift duties combined. The countries compared with us [column 1395]were Belgium, Germany, France, Italy, the Netherlands, Denmark and Luxembourg. The percentage capital tax here was also higher than in the United States and in New Zealand. We are not low but very high in the league of capital taxes. We do not need extra taxes.

I turn to consider some of the specific features of the proposals on capital transfer tax in the Bill. Joel BarnettThe Chief Secretary spoke of the benefit to the surviving spouse. If the total estate is left to the widow or widower, there is a benefit strictly to the surviving spouse—but at what penalty to the children! The amount payable on the second death is much greater under the new rules than under the old estate duty rules with the surviving spouse exemption. [Hon. Members: “No.” ] I am surprised that the Chief Secretary, being an accountant, does not know this point. The only exception is for estates over £1 million. For estates under £1 million the amount of duty under the new tax after the second death is greater than the amount of estate duty under the old tax with surviving spouse exemption. The suffererers are the children. It is a depressing thought if both parents happen to die in a tragedy and leave infant children. I wonder how many couples will leave their estates wholly to the surviving spouse, when the full consequences for the next generation are realised.

Secondly, one of the peculiarly Socialist features of the tax is that children are treated no better than strangers, with the one exception of gifts within the marriage consideration to which the right hon. Gentleman referred—that is, gifts upon marriage, the £2,500. Apart from that, children are treated the same as strangers. In many other countries where there is a gift tax, a lower rate is charged on gifts to the families than to strangers, but the Government do not appear to have considered that. They do not want children to benefit from the efforts of their parents.

Thirdly, although we have rampant inflation, there is no provision for indexation. If inflation continues at present rates, the £1,000 per annum exemption will soon be worth very little, and in effect the tax will become a prevention of gifts tax. Money, land and [column 1396]companies will remain in the hands of the older generation. They will not make the gifts, because of the tax. Some companies and farms will remain far too long in the hands of senior members of the family, when it would be better to pass them over to the younger generation from the point of view of management.

Fourthly, there is no quick succession relief, except in the case of some settlements.

Fifthly, the value of the gift is not the value that passes to the receiver but the loss to the donor. If the gift is part of a whole—for example, shares in a company with which control passes—the amount liable to tax will be greater than the amount given. Although the test is what is lost to the donor, and although the gift will rank as a realisation for capital gains tax purposes, no allowance is made to the donor for capital gains tax. It is a cost, a loss, to him, but he will have to pay it in addition to the capital transfer tax. That unfair extra impost does not apply to estate duty. We removed it.

The two taxes together—capital gains and capital transfer—will lead in many cases to a higher rate than that formerly payable under estate duty and to much higher rates than have yet been published for the capital transfer tax.

Sixthly, the effect of the Bill on agriculture will be devastating. The only asset of many farmers is their land. Many farmers, even with reliefs, would have to sell part of their land to pass some of the rest to the family. We should witness fragmentation and destruction of family farming if the Bill went ahead unamended. The proposed reliefs in some cases are not reliefs at all, and in other cases they are wholly inadequate. In particular, the figure of 20 years' purchase of the rental is much too high. The fact is that the previous estate duty provisions were much better for the health of farming and therefore better for food production.

Seventh, if the effect on farming is devastating, it is difficult to find words strong enough to describe the effect of the tax on those who invest in woodlands. That point has been raised and we shall return to it again.

Eighth, when we consider the effect of the taxes at present proposed on small [column 1397]businesses, the only rational conclusion is that the Chancellor and his hon. Friends are out to destroy them. The provisions would mean that to pay the tax the owner would have to sell the whole or part of the undertaking. Who would purchase that, other than the State? The nation would be living on its seed-corn, which is a sure recipe for calamity. In a letter to the Chancellor the Small Businesses Association wrote:

“We are sure that it is no exaggeration to say that the combined effect of the proposed wealth tax and capital transfer tax would be to destroy all privately owned business within a generation.”

The Opposition will fight for small businesses, believing that they are a valuable part of our national life.

Ninth, the provisions in respect of charities are extraordinarily mean, will put some charities in difficulties, and will severely affect the setting-up of new charitable foundations and trusts.

Mr. Robert Adley (Christchurch and Lymington)

Is my right hon. Friend aware that the Secretary of State for Industry has said that he is interested only in taking over big businesses and not small businesses? How does my right hon. Friend expect people to have any incentive to build up their small businesses when faced with a threat like that from the Secretary of State for Industry?

Mrs. Thatcher

If the Government continue, small businesses will not be built up and we shall lose an important source of wealth-creating activity.

Tenth, although there are many provisions about which I have made no comment, I must refer hon. Members to the provision contained in Schedule 7. It has always been a feature of estate duty that it did not apply in respect of property passing on the death of members of the Armed Forces on active service or other service of a warlike nature. That exception is to be abolished by the Government in respect of tax on capital transfers on such deaths. In what year is the abolition to occur? In 1984. Perhaps the Government will argue that by that year, at the present rate, there will be no Armed Forces. However, so long as our people are called upon to undertake such service for the country, and its way of life, so long should the exemption remain. [column 1398]

Most hon. Members would accept that in principle a capital transfer tax could substitute for estate duty. It could be a legitimate source of taxation provided its effect was considered in relation to other factors and it could be more beneficial than some of the older taxes. However, some of the provisions of the Bill will have to be altered radically, otherwise they will damage the wealth and food-producing capacity of our nation to the disadvantage of us all.

The last part of the amendment refers to Clause 14, which is the trade union clause. Yesterday in a Written Answer R. Prenticethe Secretary of State for Education and Science announced, as part of his public expenditure economies, an increase of 3p in the price of the school dinner. Yesterday the Government were taking money in from school meals. Today, under the Bill, the Government will give back £10 million to the trade unions—a fitting commentary on the priorities of Socialism.

The Chancellor of the Exchequer could have produced a recipe for recovery. The potential, the savings and the ability are there, but there is a doubt whether the Government want a flourishing, independent, private enterprise sector in industry. It is not enough to say that he does want such a sector—his actions must prove that he does. Until that time, confidence will not be restored and the right hon. Gentleman can offer only a recipe for decline.