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Lord Boyd-Carpenter: My Lords, I am grateful to my noble friend for giving way. I raised the issue not so much from the point of view of loss of revenue but in respect of what appears to be the unfair treatment of brewers or wine producers in this country.
Lord Henley: My Lords, as was said by the noble Lord, Lord Desai, there is no unfair treatment of brewers or producers. I accept the argument that it can have an effect and that possibly in some areas it does have a disproportionate effect on retailers. I was trying to put the point in perspective in terms of the figures and to assure my noble friend that Customs will continue to act as vigorously as possible to protect United Kingdom revenue and trade from smuggling and illicit action of that kind. That is important.
My noble friend asked about gaming machines. The increase in the rates of duty on gaming machines will raise £30 million in a full year. The extension of duty to amusement machines, such as video games, will raise a further £10 million to £15 million in a full year. Those are legitimate sources for my right honourable friend the Chancellor of the Exchequer to consider.
As regards whether there is discrimination against air travellers in terms of the air passenger tax, I do not accept my noble friend's point. He should note that in some respects air transport is subject to less tax than other forms of transport; for example, in accordance with international agreement there is no duty on most aviation fuel as there is on other fuels. Trains and buses face fuel duty on the fuel that they consume.
I turn to the National Lottery. I was interested to hear the noble Lord, Lord Houghton of Sowerby, reverting to what we call "old Labour"although at times he sounded "old Tory" in respect of some of his viewssuggest a 95 per cent. tax on winnings of over £1 million. I do not intend to address that particular point; I am not sure that the suggestion would go down very well with those who invest in the National Lottery. However, perhaps I may address the point about the 12 per cent. that is raked off into Her Majesty's Exchequer. The noble Lord implied that that was not sufficient. The lottery duty of 12 per cent. was chosen because we intend the lottery to be tax-neutral. It roughly offsets the tax yield from the sources of money invested in the lottery which we would otherwise have received if the lottery had not been introduced. We believe that the total effect should be neutral.
I turn to the issue of self-assessment. Obviously, we share the views of the noble Lord, Lord Houghton, on the value of the Civil Service. I would be more than happy to repeat those. We have set out our views in the recent White Paper. However, I do not agree that self-assessment will destroy the integrity of public administration. Self-assessment introduces clearer and simpler rules for taxpayers to understand. It removes bureaucratic and routine processes, so releasing Inland Revenue staff to spend more time helping taxpayers with their tax affairs. I believe that it will improve public administration and
As this year's Finance Bill draws to a conclusion, it is worth outlining the current prospects for the United Kingdom economy, for which the noble Lord, Lord Eatwell, asked. He accepted that on this occasion they were not that bad. We believe that continued economic growth is obviously the only way of raising living standards for all. It is the Government's objective to secure sustainable growth with low inflation. That means that growth should be balanced. We do not wish to return to the days of "boom and bust". I hope that that addresses one of the points made by the noble Baroness, Lady Seear. We might feel good for a while, but it does not last. That painful lesson has been learnt. Steady improvements in the standard of living are the prudent course.
The Government's prudent fiscal and monetary policies have contributed to the best set of economic indicators for a generation. Last year growth was around 4 per cent. It is expected to slow to a more sustainable rate this year, but the United Kingdom economy is still forecast to grow as fast as those of our major European Union competitorsand that after two years when the United Kingdom economy grew faster than any other major European Union economy.
We are experiencing healthy growth. It has come increasingly from exports, which are up nearly 9 per cent. Similarly, investment has risen by some 3 per cent. The noble Baroness believes that we should spend further on investment and she cited the case for spending yet more on education. I appreciate that that is Liberal Democrat Party policy. I can tell the noble Baroness that we spend more as a percentage of our GNP on education than, for example, the Germans. It is not so much a question of how much money you spend; it is very much a question of how you spend it.
As I said, investment has risen by some 3 per cent. and consumer expenditure is up by 2.5 per cent. We expect exports and investment to grow faster than the economy as a whole this year. Coupled with low inflation and sound public finances, the prospects for the UK economy are very good indeed.
Perhaps I may deal with an issue raised by the noble Lord, Lord Eatwell, which related to public finances. The noble Lord asked whether the fall in the dollar would increase our expenditure in terms of increased expenditure on the CAP. At the moment I do not intend to be drawn into the rights and wrongs of the CAP. However, I can tell the noble Lord that the new budget discipline decision makes it clear that any increase in the agricultural guideline can be made only by unanimity. I stress the phrase "by unanimity", and I assure the noble Lord that the Government will not agree to raising the agricultural guideline. Therefore, there can be no unanimity-
Lord Henley: My Lords, I was trying to make it quite clear that any increase in the agricultural guideline can be made only by unanimity. As the noble Lord put it, that might involve hard decisions. I am not sure whether I quite understand the full detail of the noble Lord's question. I should prefer, if I may, to write to him on that point. However, I should like to stress to the noble Lordthis is important first, that increases in the guideline require unanimity; and secondly, that unanimity will not be there because there will not be the agreement of Her Majesty's Government.
The noble Lord also asked where there would be cuts in government expenditure. My noble friend Lord Boyd-Carpenter, quite rightly, asked for cuts in government expenditure and then put forward his own suggestions relating to legal aid. Obviously, my noble friend would not expect me to comment on that particular aspect. Similarly, I do not think that the noble Lord, Lord Eatwell, would expect me to detail where restraint might be made in public expenditure, other than to say that, of course, we shall continue to subject the expenditure of every single department to the most detailed and scrupulous scrutiny in terms of looking for necessary savings. That is why I stressed in my opening remarks that we were looking for savings of some £300 million over original planned increases in government administrative costs over the next three years. We shall continue to look for savings throughout the whole range of public expenditure.
As I have stressed, we believe that the prospects for the United Kingdom's economy are very sound indeed. Certainly foreign companies still think so. Moreover, since the Budget, inward investment has continued to come into the United Kingdom, creating new jobsand has continued to come in at the rate that applied before, with some 40 per cent. of Japanese inward investment to Europe coming to this country, together with a similar figure of American inward investment.
Unemployment has been falling by about 1,000 a day, and employment has been increasing. For the first time, I believe, since figures began, the numbers employed in manufacturing have shown an increase. As my noble friend Lord Clark quite rightly stressed, and as I said, unemployment has been coming down by 1,000 a day, and living standards are rising and will rise further this year. We have now had 18 months with inflation at below 3 per cent. a record not seen since 1961. That certainly means much greater certainty and stability for individuals and businesses as they plan for the future. I hope very much that the noble Baroness, Lady Seear, accepts that that is part of our commitment to the stability that we certainly see as necessary for business in the future.
On the question of employment, the noble Lord, Lord Desai, said that we taxed labour far too much. I certainly have much sympathy with the noble Lord's views on the subject. However, I have to say that we tax labour
We believe that manufacturing has been revitalised. The skills and hard work of British management and workers are bringing success once again. Manufacturing output, investment, exports and productivity are all up, while unit wage costs fell last year. The performance of our exporters and the returns from prudent and valuable overseas investment have resulted in the current account returning to broad balance in 1994.
The United Kingdom's economy is strengthening month by month. The statistics are not just one month's figures. The momentum of recovery has been maintained. Businesses are continuing to capture world markets and our competitive position has been maintained as costs have been contained. More people are in work. Incomes are rising.
This Finance Bill ensures that the economy will strengthen further; that economic growth will be sustained; that inflation will remain low, and that the living standards of all will rise.
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