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Finance Bill 1991
#1
Mister Deputy Speaker,

It gives me pride and pleasure to be here alongside the Prime Minister to present the Finance Bill 1991 to Parliament. This budget is a direct response to the concerns of the people of the United Kingdom have as we look into an uncertain future, and it is a direct response to those who question the ability of this Government to govern effectively. 

After years of economic growth, after years of increases in personal productivity that brings us up to par with our colleagues in Europe, after years of wage increases and new opportunities created, we’re standing on the precipice of a recession. This is the natural progression of an economy: where there are booms, an economy can overheat and the changes can lead to busts. This is a fact of economies everywhere, no matter how much the opposition would like to spin it otherwise.

What is not an immutable fact, however, is how Governments react. The economic projections for the next year are negative. There is no avoiding that fact as we are dealing with the costs of steadily-rising inflation. We are dealing with the cost of high interest rates which are serving the purpose of promoting inward investment and confidence, the purpose of reducing inflation, and the purpose of keeping our promises to the rest of Europe through the Exchange Rate Mechanism. 

However, in living up to our promises and living up to our need to bring price stability to producers, workers, and families, we are also seeing a pinch. Prospective homebuyers are not purchasing properties. Homeowners hoping to continue to finance or sell their homes are seeing the interest rates as a turnoff. Businesses that want to invest see the cost of money higher than they’re willing to pay. And so in turn we’re seeing the beginnings of an economic adjustment. We’re seeing greater caution from businesses- and in turn we’re seeing businesses start to shed jobs.

And the goal of this Government, of this budget, is to get those businesses and those workers and those consumers and everyone that depends on all the above back to work and back to a place of confidence. This budget will do that, and will deliver an economic jump-start to our economy while we continue to work with Europe to bring our interest rates down.

First and foremost, we are working to lessen the pain of taxation. We’ve heard, loud and clear, the views of the ratepayer of Britain on the Community Charge. While my colleague, the Minister for Environment, has laid out a plan that would allow us to effectively eliminate this charge and ensure that local communities are funded, the Finance Bill 1991 will zero out the Community Charge for the next year and will provide additional funding to local governments in order to make up for that decision. In this way we’re going to ensure that local governments have the funding they need to carry out the services they’ve promised to families and communities throughout Britain. This is a temporary measure and a temporary expenditure while this Government works to deliver reform on how local governments are funded and how they provide services. But we will not ask local governments to cut back, and we will not ask the people to do without services while we move forward on eliminating the Community Charge. 

For those that do work, we’re establishing a new Introductory Rate of the income tax, set at 15% of earned income above £2,800. Prior to this budget, income above that level would be taxed at 25%. By establishing this Introductory Rate we are reducing the level of income taken in tax by £5 billion. That is money that can be used to invest, that can be used to consume, or even used to build the savings of workers and families throughout the United Kingdom. Our new 15% Introductory Rate will provide relief to those who are working and adds a level of progressiveness to our income tax where it was lacking before. 

For businesses that are facing higher costs, we have heard their needs as well, and are proposing a reduction on corporate income taxes by going from 35% to 30%. This additional funding for businesses will help them invest and keep on workers at a time where jobs are needed most. 

With the changes that we’ve made, we will be looking to tighten our enforcement of existing tax laws and ensure that, legal or otherwise, individuals do not get out of paying their fair share. To that end, we have increased funding to HMRC to step up enforcement of existing tax laws to cut down on dodging and cheating which is a tool too often used by the very few at the expense of this country and the promises that we’ve made to all Britons.

Now, I want to turn to highlight expenditures. 

This Government is providing a number of proposed programs with the aim of increasing our expenditures on infrastructure projects and investments that are designed to spur job creation and ease the costs of doing business in order to prove a foundation and an environment for economic growth. The ideas that we’ve had in this budget, and that will be laid out here, are designed with that single focus in mind. Government cannot be the sole engine of economic growth. But it CAN create the right environment and plant the seed for economic growth to flourish.

To that end, this Government is increasing investment in our communities and across the United Kingdom as a whole. Our funding to projects in Scotland, Wales, and Northern Ireland are seeing a surge based on the decisions that we are making in this budget, maintaining the use of the Barnett Formula as previous Conservative Governments have done. This represents, above baseline figures, an increase to Scotland of £4.5 billion. An increase to Wales of £2.4 billion. An increase to Northern Ireland of £1.7 billion. Our increase in spending means that Scotland, Wales, and Northern Ireland will see better services and more investment than ever before- and it’s something this Government wants to see put to work for the people that need it. 

These investments in Scotland, Wales, and Northern Ireland are matched with similarly high investments for England as well. 

When it comes to transportation, I know that there are many in Government and in the Opposition that have said they’d like us to do more. To that end we’re investing billions of pounds in local transportation projects, in highway transportation, in British Rail, and in nationally-owned airports. This will help us advance our transit infrastructure to where we will need it as a country, providing greater trips in more comfort for people and businesses in Britain. We’re increasing expenditures on road and rail by 50% over what was spent in 1990- that’s an increase beyond inflation of quite nearly £2 billion to ensure more projects are funded and can advance, putting people to work in expanding our infrastructure and ensuring smoother, faster, and safer rides for all. At the same time, we’re keeping fares flat to ensure that people who rely on mass transit can do so affordably. 

Our investments go beyond just roads and rails. We’re putting more into electricity production and generation as well, with an increase in capital spending by government-owned corporations of an additional £1 billion to increase capacity and invest in cutting edge equipment and supplies that will allow us to pass lower prices on to British power consumers at home and in business alike. On top of that, we’re investing £750 million in environmentally-friendly energy generation projects to help us expand our production of renewable, clean, limitless energy. 

We’re investing more in public housing- making sure that we continue this opportunity to increase the available housing stock in this country by over £200 million- again, a 50% increase over what we spent just last year. 

We’re investing in the construction of NHS facilities and schools as well- starting this year (1991), we’re allocating nearly £5 billion in spending on new school and medical infrastructure. That is going to result, when all is said in done, in 250 new clinics, 10 large village hospitals, 1 new town hospital, and a large hospital to make sure that we can better serve the British people with quality care that they expect from the NHS but also to spur investment through the construction and the supply of these new facilities. This will also result in 100 new primary schools, 20 secondary schools, and a college to reduce class sizes, to make more learning opportunities available in growing areas, and again, helping boost our companies involved in supply and construction.

Each of these investments will come with the caveat that where possible, we spend this money on UK-produced goods and UK-made equipment. Each purchase of a wind turbine, of a sack of concrete, of a pallet of brick, or a mile of rail will benefit, as much as we can, UK jobs and put British people back to work. 

Our investments are not just limited to the physical. Our greatest investments are in people.

When it comes to helping create and find opportunities for employment, this Government is pulling out all the stops. We’re adding £700 million into training programs for youth and adults, into programmes to help people find jobs that fit their skills, and into providing support for long-term unemployment. Of this, £200 million is in grants for unemployed individuals that want to start their own business, and we’re eliminating any capital requirements so that we can invest the most in the best ideas that people have to offer. 

If you disregard our new hospitals, we’re still increasing funding for the NHS by 10% over the course of the year, hiring new NHS staff and increasing our investment into medical research and public health programs. In fact we’re doubling the funding we have for research- from £350 million to over £700 million- to help support researchers but also find new treatments and new cures for those in this country that need it. This Government will take up the call issued by the Princess of Wales to expand funding for HIV/AIDS prevention, research, treatment, and education to help ensure that we’re doing our part to help those in Britain and around the world affected by this terrible disease.

In our schools, we’re investing more per-student than ever before, making sure there’s additional funding to support our classrooms and our students, including ensuring access to healthy food to ensure that no student has to miss a meal. And our Education Secretary will have more information on this, but we’re bringing in a brand-new program to target young people in the most need that we’re calling “Family Hubs.”

Family Hubs, as my colleague the Education Secretary will describe in more detail, will reach out to children and young people who need it most to provide childcare, early education, and health and family support. With this investment that we’re making in this budget, we’ll be able to reach out to 200,000 children throughout Britain in 1991 to put them on a path for healthy, successful development who would not have it otherwise. And we’re convinced the impact will go beyond this investment in improving the mental health and stability of families, in improving health outcomes for children in need, and improving performance in schools. 

For those who are impacted by rising unemployment, and particular for families that are feeling the pain, we’re increasing benefits that are made available to people in need. Unemployment benefits will, for the year 1991, be increased beyond the rate of inflation by £5 per week. We’re adding additional increases beyond the rate of inflation of £5 for pensioners and the disabled. Family benefits will be doubled- including the family credit for low-income individuals, and the child benefit that is made available to all. We’re similarly providing additional benefits for maternity pay and for guardians who are raising children- not just to encourage the creation and stability of families, but to reduce the extra pain that can be felt on the pocketbook in these hard times. These payments will help provide a vital safety net to those who are facing unemployment and for those who are worried that in these tough times that they or their families will be left out in the cold. This Government understands the pain that recession and unemployment can cause those wanting work, those on disability, those with families, and those who are on pensions. And this Government is taking concrete steps to soothe that pain while we foster a future of growth.

And for those individuals who are homeless or who suffer from rough sleeping, we’re establishing a fund of £200 million where this Government will help find a roof for these people to live under and work to rebuild their lives.

For those that serve the people of this country- whether it is our soldiers who are fighting to ensure that Kuwait remains liberated, or police officers keeping our streets safe, or nurses and doctors that are leading the fight against AIDS and against diseases and injuries of all shapes and sizes, or the educators that are ensuring the future is well cared for- we are providing them a meaningful wage increase that goes above and beyond inflation so that they see real benefits to their pocketbooks. Coupled with our tax reforms to establish an Introductory Rate, those who have volunteered to give their lives and their time in the service of Britain are getting more. Public servants, law enforcement, and our military personnel deserve and have our thanks, but they deserve the right to afford a life. And this Government will ensure that they have it.

Our investment in individuals will extend beyond the support of programs in health, education, and welfare. 

One of the dangers of rising interest rates is, if the rates are sustained, increasing defaults on mortgages, loans, and borrowed funds. These defaults have impacts throughout our entire economy. 

Obviously there is an immediate impact. Credit scores are impacted, making it harder to get a job or to get approval for future loans. There is the risk of foreclosure- where people who are unable to afford their current home for reasons beyond their control are cast out and then find themselves too far in the hole to get back on their feet. 

But then banks- large and small- find themselves with the last thing that they want: vacant property that they now have to pay to maintain. They have assets that can’t be readily transferred and that are capital sinks, which keeps banks from lending and that serves to further contract the economy. 

We’re already seeing the impacts of defaults, foreclosures, and the inability to get access to money in falling home prices as those who are trying to sell or companies that are selling new construction have to hold on to empty property even longer. 

The same problem applies to businesses as well- particularly small businesses that have taken out loans and that now have an inability to pay for them. Like homeowners, they find themselves 

Of course, the most prudent action here would be to reduce interest rates. This Government will do that in the coming weeks and months as our financial situation improves, particularly with respect to our position in the EEC Exchange Rate Mechanism. I will make a statement to the House soon about what we are doing and the path forward from here on that front. One of the proposals in this budget plan is a part of that- the financing of a European reconstruction bank. This bank will help to fund development projects in states that are shaking off the yoke of communism, it will fund needed investments in education, health, and infrastructure, and share the burden but also the success with the rest of Europe. Indeed, the point of this is to ensure a smooth transition into free democracy, but also avoid countries like Germany having to shoulder the burdens on their own, which puts pressure on the rest of us.

But for the purposes of the discussion on Finance Bill 1991, what I can say is that reducing interest rates is an action that is currently not available to us. 

To that end, this Government is going to embark on an ambitious programme to allow us to support those individuals and businesses that are most at risk of default and losing everything they’ve worked hard to build. We’re establishing programmes that will purchase some of the most at-risk debt from lenders and ensure that we prevent as many people from losing their homes or businesses as we can. By establishing funds with a total of £13 billion, we can target that assistance where it is most needed. It won’t solve everyone’s problem- only prudent actions to provide the foundations for growth can do that. But it will give breathing room and space from those who are close to losing what they have while our programmes start putting people back to work.

I know the questions that will arise from the Opposition and from the Liberal Democrats among others. Isn’t this a programme to just reward banks for lending out and allowing them to reward those at the very top? Isn’t this establishing some sort of moral hazard where individuals should feel free to not pay their debts? Isn’t this some scheme to expand the government’s control over the economy? 

And the answer to these questions is no. This Government will enact requirements to ensure that any money banks receive from these programmes are to be used to lend or to shore up balance sheets- and not be used for executive pay. This Government will lay out transparent and clear conditions for how debt will qualify to be purchased, so that those with an ability to pay aren’t just trying to take advantage of an economic reality that is causing pain to so many people. And this Government will, as our economy grows with our investments and other strategies that are in this budget and that will be outlined in the coming days, weeks, and months, seek to ensure these debts are either serviced or sold back to banks willing to take them. 

But while we do all this, our chief goal, and the chief impact, of these programmes will be to keep people in their homes. To keep businesses open and running so they don’t have to shut their doors. It will keep the vital underpinnings on our national economy stronger.  

This investment is a key part of our investment in people. And it couples with our other investments in construction projects and in infrastructure that will provide immediate opportunities but that will also help keep costs of doing business and moving around and going to work lower in the future.  It’s a key part of providing economic stability at a time where it is most sorely needed. And it shows that this Government is not blind and deaf to the needs of Britons everywhere, but that we are taking decisive action to help put us on a road to growth in the future. 

Mister Deputy Speaker, this country faces a challenge. It would be useless and it would be dangerous to try to suggest otherwise. But Britons will rise to the challenge. Our banks want to lend. Our businesses want to be open. And our people want to work. What we need to do is make sure that we are giving all players the tools to do so. 

It means keeping people in their homes where we can. 

It means keeping businesses afloat.

It means easing some of the burdens that are faced by those who worry about their health or about access to education when they’re most at risk. 

To support this country and its people, it means we need to look beyond the basic balance sheet. And this Government is doing just that. 

I am confident that with these measures, and with those we will take in the coming days, weeks, and months, we will arise out of this situation with a stronger economy, with better wages, and with greater support for those that need it. I look forward to working with the honourable members of this House as we move forward, as we enact the policies and programmes outlined in the budget on homelessness, on education, on medical treatment and research, and on so many other things. I am confident, Mister Deputy Speaker, that together we can achieve great things.

With that, I commend this budget to the House.

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LINK to budget (Google Sheets, view-only link provided): https://docs.google.com/spreadsheets/d/1...sp=sharing
Victor Wolfe MP
MP for Stirling (1983-) | Conservative
Chancellor of the Exchequer (1992-)


Messages In This Thread
Finance Bill 1991 - by Victor Wolfe - 07-02-2020, 06:57 PM
RE: Finance Bill 1991 - by Steve - 07-02-2020, 07:16 PM
RE: Finance Bill 1991 - by James McCrimmon - 07-03-2020, 07:06 PM
RE: Finance Bill 1991 - by Victor Wolfe - 07-06-2020, 08:37 PM
RE: Finance Bill 1991 - by Steve - 07-08-2020, 09:13 PM
RE: Finance Bill 1991 - by William Summer - 07-08-2020, 09:16 PM
RE: Finance Bill 1991 - by Brown - 07-08-2020, 09:16 PM
RE: Finance Bill 1991 - by Phoebe Lynch - 07-08-2020, 09:17 PM
RE: Finance Bill 1991 - by Victor Wolfe - 07-08-2020, 09:20 PM
RE: Finance Bill 1991 - by Ruan Preston - 07-08-2020, 09:42 PM
RE: Finance Bill 1991 - by James Davies - 07-08-2020, 09:47 PM
RE: Finance Bill 1991 - by Nicholas Eden - 07-08-2020, 09:51 PM
RE: Finance Bill 1991 - by Griff Rhys Morrison - 07-08-2020, 09:53 PM
RE: Finance Bill 1991 - by Tommy Dawson - 07-08-2020, 11:03 PM
RE: Finance Bill 1991 - by Ruth Murphy - 07-09-2020, 12:07 AM
RE: Finance Bill 1991 - by Amelia Lockhart - 07-09-2020, 10:57 AM
RE: Finance Bill 1991 - by Everly - 07-09-2020, 05:37 PM
RE: Finance Bill 1991 - by James McCrimmon - 07-10-2020, 08:54 PM
RE: Finance Bill 1991 - by David George - 07-10-2020, 09:10 PM
RE: Finance Bill 1991 - by John Shade - 07-10-2020, 10:50 PM
RE: Finance Bill 1991 - by Hamish Rothbard - 07-11-2020, 06:45 PM
RE: Finance Bill 1991 - by Vivian Rook - 07-12-2020, 02:49 PM
RE: Finance Bill 1991 - by Steve - 07-16-2020, 10:34 AM

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