§ [Relevant documents: The Second Report from the Treasury Committee, Session 1998–99, on the World Economy and the Pre-Budget Report (HC 91-I), and the Fourth Report from the Environmental Audit Committee, Session 1998–99, on the Pre-Budget Report (HC 93).]
§ 1.8 pm
§ The Secretary of State for Education and Employment (Mr. David Blunkett)
The Budget has gained acclaim from individuals and businesses in every part of the United Kingdom for its imagination and for its commitment to bridging the divide between rich and poor and to work, families and enterprise. It will help us to modernise our country, extend opportunity and narrow the gap between those who have and those who have not.
Last night, I helped with the launch of the Evening Standard awards for children. I am often reminded of the deep commitment of my right hon. Friend the Prime Minister to education and employment. As I stood up to speak, I was told that he was just behind my shoulder; on this occasion, it was his sculpture, bringing a whole new meaning to boom and bust. With him watching over me, I was able to celebrate the way in which excellence is being developed in schools.
Our task now is to generate the wealth that we must distribute to meet the challenge of the future through education and employment, liberating people's talents, narrowing the gap and ensuring that people are helped not only by the resources allocated for benefits or tax reductions but through the expenditure of public money wisely invested in the delivery of services. We have already set about that with a vengeance. Over the next three years, the sure start programme will spend £540 million on helping children and their families at the 512 very moment they need it most, from the time that a child is born. We will double nursery places for three-year-olds, through the reinforcement of the promise that we have already made of giving all four-year-olds a nursery place. We are substantially implementing our promise on class sizes, having reduced from 485,000 to less than 200,000, from this September, the number of children aged five, six and seven are in classes of more than 30. That is a magnificent effort in delivering one of our key pledges. Our literacy and numeracy strategy, with the commitment and help of teachers, is already making enormous changes in the classroom and fostering a new belief and expectation in those who were written off in the past.
Investment in young people and in lifelong learning has already started to yield fruit in terms of raising expectations. More than 230,000 young people have joined the new deal and they feel that their lives and opportunities have been enhanced by a programme that gives tailored help and makes an investment in our future. Some £1 billion of the windfall levy revenue will be spent on ensuring that schools are fit to teach and learn in.
Those who were against the windfall levy—and against spending the revenue on the new deal and on the environment of our schools—and who now use it in their calculations for their claims about how much the Government have raised in extra taxes, should examine their consciences and what they say to their electorate, because they cannot have it both ways. Some of them are in favour of investing in reducing unemployment. Some of them even applaud the fact that we have halved youth unemployment since the spring of 1997. Many of them write in and say that they want their school to be able to invest in a decent roof or window frames. Many of them applaud the fact that local authorities do not have to pay debt charges on the new deal funding for schools, because it is a grant under the capital allocation, not a credit approval, saving local authorities large sums of money—up to £100 million over the next three years. Many of them applaud all those achievements, and then attack the Government for raising the funds required.
Thank goodness the electorate are becoming more educated by the day. Thank goodness teaching citizenship and democracy in our schools will ensure that all our electorate will be able to see through the wheezes and guises of the Opposition.
§ Mr. Don Foster (Bath)
Will the Secretary of State confirm that newspaper reports yesterday that he has been unsuccessful in persuading the Prime Minister to allow citizenship lessons in our primary schools?
§ Mr. Blunkett
No, I will not confirm that.
The importance of adding to what we have already done was spelled out by my right hon. Friend the Chancellor in his excellent speech on Tuesday, including not least the importance of ensuring the extra £49 million for England—£61 million for the United Kingdom—that will give every school an extra £2,000 to invest in books, on top of the £2,000 that schools in England have already received, so that they can do their job better.
§ Mr. Desmond Swayne (New Forest, West)
Will the right hon. Gentleman acknowledge that structure and order in the lives of pupils are more important than 513 £2,000 per school? In what way can the Chancellor's assault on marriage in his Budget in any way assist in providing and stability in children's lives?
§ Mr. Blunkett
Structure and order come from ensuring that children have the income and decent home environment that enable them to grow up with confidence. Many of those in work take such incomes and environments for granted and, through the working families tax credit, the new children's tax credit and the increase in child benefit, we will completely transform the ability of parents to stay together, work together and invest together in the future of their children. We are creating that environment—not a poll tax, or deteriorating housing conditions, or accelerating unemployment, all of which really damaged the family during the 1980s. We are providing real stability in the economy, an opportunity to earn and to work and an opportunity to create a family for which stability can be provided.
Make no mistake about it—if the Conservatives to want to discuss the disintegration of the family unit, some of us are happy to take them on on that issue. Nothing damaged the family more than the disintegration of our social structure and cohesion. The Conservatives were responsible for under-investment in our public services and the imposition of the poll tax.
§ Mr. John Bercow (Buckingham)
Does the right hon. Gentleman accept that a continuing monitoring of improvements in teacher training is essential? What guarantee can he give that no notice whatever will be taken in the formulation of future policy of the weirdo views of the teacher training academics Kimberley, Meek and Miller, who are on record as saying that, within the psycho-semiotic framework, the shared reading lesson is viewed as an ideological construct in which events are played out, and that children need to position themselves in three interlocking contexts? Will the Secretary of State dispense with that sort of drivel?
§ Mr. Blunkett
I do not know about Norman Wisdom, but the wisdom of hindsight is always the easiest to adopt. The previous Government did not introduce a curriculum for initial teacher training, but we did so in September. They did not emphasise the targeting of the teacher training institutions through inspections by the Office for Standards in Education; nor did they ensure that resources were allocated where teacher training is best, but we have done both for the first time over the past year. They did not target major resources on in-service training for teachers, including resources for information technology, but we are about to do so. Had the Conservative Government done any of that, the hon. Member for Buckingham (Mr. Bercow) would not have needed to ask his question.
§ Mr. Huw Edwards (Monmouth)
May I assure my right hon. Friend that the schools of Monmouthshire will be delighted by the Budget announcements of additional resources for schools, reading and books? May I inform him of my sheer joy and wonderment at attending a small 514 village school in my constituency—Llanover—where I saw young children enthusiastically getting on to the world wide web and looking up my own website?
§ Mr. Blunkett
I shall do my best to draw attention to my hon. Friend's website on every possible occasion. I hope that it stands up to scrutiny.
We are preparing, not only through our schools and through lifelong learning, but at every point in our lives, for a new century in which the challenge of change will be enormous. The rapidity of what is occurring around us, the need to be able to know how best to use information technology—and when not to use it—and the ability to prepare for a knowledge-based economy of the future all mean that we need to invest in human capital. That means a transformation in thinking about the way in which we act as individuals, as employers and as a Government.
The philosophy that lies behind the Budget and behind the way in which we shall proceed in the months and years ahead seeks to create a tripartite approach, matching the responsibility of the individual with the duty to invest time, energy and other resources in their education and learning, with the commitment of employers and the Government to making all that possible. That is why Budget proposals and incentives for new individual learning accounts are so important. We will ensure, as we have with higher education, that the contribution of the individual is more than matched by the investment of Government in opening up new opportunities.
Portable skills and learning that are attached not to the individual training required for the moment but to the changes of tomorrow are the most important way to provide security at work and lessen people's fears of change in the economy and in society around them. That is why our new incentives for individual learning accounts—the 20 per cent. discount for all learners taking up ILAs and an 80 per cent. discount for those taking an introduction to information technology course—are so important. It is why the ability of employers to invest in those accounts tax free, and for it not to be counted for tax purposes for the individual, is so important. Employers will be able to provide, through skills and training, a wage or salary in kind that equips the work force of tomorrow and enables people to take responsibility for their own learning. We want to develop that, and the investment, to which I shall come in a moment, in respect of information technology. We will invest in ILAs and the computer revolution of tomorrow in a way that ensures that employers take their responsibility seriously and that the Government match that responsibility with resources.
§ Judy Mallaber (Amber Valley)
Will my right hon. Friend take measures to ensure that individual learning accounts, which we all welcome, are made available to those who have not previously had access to such schemes? In the past, opportunities have gone to people who already know how to work the system to get them.
§ Mr. Blunkett
I can give that assurance. We are awaiting publication of the report by Sir Claus Moser on basic skills. I want to ensure that what we are discussing today dovetails with the report's proposals. About 7 million adults of working age have no qualifications. There is a major gap in basic skills between the haves and the have-nots. We need to ensure that there is provision 515 for free entry into the learning system for those who have no basic qualifications. We need to do that imaginatively to capture their interest, and to ensure that those on low and moderate incomes can access ILAs. That is why my right hon. Friend the Chancellor's statement on Tuesday emphasised that tax relief for employers and employees would be available to employers only where they extended the facility for such investment to their lowest-paid workers, so that it was not available just to the haves, who often get the best in-work training investment.
§ Mr. John Healey (Wentworth)
Does my right hon. Friend accept that yesterday's decision to extend the training and enterprise councils review is a welcome chance to introduce greater coherence and local co-ordination to training and learning in respect of TECs, further education, the Employment Service and other local providers? What assurances can he give that any new arrangements will give local businesses the opportunity to influence plans, as well as to help deliver them?
§ Mr. Blunkett
As part of the development of the delivery of basic skills and lifelong learning, and of equipping our country with the skills of the future, we will build on the report of the skills task force, which will be available in a few weeks. We shall develop the recommendations of the Further Education Funding Council quinquennial review—it is a good job that it is lunchtime; one cannot use words like that when one has had a drink. With these reviews, we have the chance, with the TECs, to get it right for the future and achieve coherence in the funding, structure and delivery of skills, learning and training for everyone.
TECs, other institutions and learners accept that the system has lacked coherence and been a mishmash of providers and funding streams. The delivery of services locally and nationally has been fragmented. That is why we established in November the concept of learning partnerships at local level to pull together all those who have an interest in lifelong learning and why the review, which will be completed by the summer, will aim to ensure that coherence is available right across the board. It will be an opportunity to get right the delivery of skills and training for young people who are out of work, young people on work-based training schemes and adults returning to learning in further education and on more traditional adult courses. It also offers us the opportunity to bring coherence in the delivery of new skills and to extend the information age to the have-nots.
The greatest danger that we face in the decade ahead is that we will repeat the gap of the past in the investment of the future; that those who have access to information technology will forge ahead and those who do not, their families and generations to come will find themselves outside the learning age. We spelled that out in the Green Paper "The Learning Age". I am grateful to everyone who has contributed to the consultation process and responded to it. We are able from today to do something about that, with the £500 million that was allocated in the Budget on Tuesday for investment in training in information technology across the United Kingdom.
The £500 million is a tremendous opportunity to build on the £700 million of investment that will go into the learning grid to link schools, colleges and libraries with the community. It will enable us to build on the £230 million of investment in in-service training for 516 teachers and additional investment for librarians and others which will be needed. It will enable us to build, with the Department for Culture, Media and Sport, on the digitalisation of information that is already taking place.
The £500 million will enable us initially to target the most-deprived parts of our country, such as inner-city areas and outer housing estates. We shall ensure that information technology is available in schools and colleges, cyber cafés, outlets in arts centres and imaginative programmes in shopping arcades, so that people can learn wherever and whenever appropriate. That will be linked with the provision of other basic skills.
Many people will come in to learn how to use information technology and will admit, as I do, how difficult it is to learn to use technology, but will not admit that they cannot read, write or add up. Once they are prepared to come in and be helped, we can do a fantastic job of tackling the legacy of illiteracy and equipping people with higher-level skills to help their children to learn—well, not so much to help their children to learn, as to learn from their children—about the use of technology and how best to use it at home.
Some 28 per cent. of our population now have some access to the internet. That is twice as many as three years ago, but only 16 per cent. have access at home. It is estimated that 44 per cent. of our population have access to a computer, but many do not have one at home. One part of the package of measures that I am announcing today involves, as we did with libraries and the printed word, a technology lend-and-loan scheme for families who otherwise could not afford a computer or the software to go with it.
§ Mr. John Hayes (South Holland and The Deepings)
Much of what the Secretary of State says makes great sense, but does he acknowledge that information and comprehension are not the same thing and that the translation of information into understanding requires guidance from teachers? Without good teachers and trainers, the revolution that he describes will not be effected properly. How will he deal with the shortage of teachers and trainers to assist with the process that he describes? The right hon. Gentleman mentioned public libraries. Will he comment on the fact that many of them already provide access to information systems, yet, throughout the country, public libraries are threatened with closure?
§ Mr. Blunkett
I am grateful for the commitment and applause of the hon. Gentleman. I think that we share an understanding that, without guidance and teaching, people will not be able to have access to and make use of the technologies of the future.
As I said, not simply using that technology, but knowing how and when to use it will be so important. Our investment of £230 million in the teaching profession is therefore critical. We must also determine how we might use the skills of teachers and of librarians—who also will be trained—outside schools, colleges and libraries, so that we may achieve the best possible value for the investment that we are making. The issues of technology use and of guidance in that use are both important.
Already, 400,000 people have accessed Learning Direct—which was launched one year ago, precisely to give people access to the information and advice that they 517 need. I am so pleased that people have been able to use it. We are grateful to organisations, such as the BBC, that have helped enormously with their investment in information technology. In adult learners week, the BBC engaged 17 million people in its "Computers Don't Bite" initiative and programmes.
§ Mrs. Anne Campbell (Cambridge)
Does my right hon. Friend agree that it is important that people should understand that information and communication technology, via the internet and other means, can bring benefits to people at all stages in their lives? He may be interested to know that, yesterday, my right hon. Friend the Secretary of State for Social Security visited my constituency of Cambridge and saw the scheme that I initiated there, in which young mothers are able to access information on child care, benefits, jobs and training. The scheme will give them a real boost and real help in getting back to work once their children are back at school.
§ Mr. Blunkett
I certainly applaud that scheme, which is forming the basis of a roll-out across the country of similar programmes that will provide real information when people need it, and in a manner that enables people to access information and support when they need it. My hon. Friend has put an enormous amount of time and energy into making the programme work, for which we are very grateful.
We believe that people will have to update their skills at every stage of their life, and that they will require information technology skills to provide them with a link in applying those skills. As I said, enabling people to apply their skills poses a considerable challenge for Government. Although many people will learn how to use the equipment, and how to play games on the equipment, we have to encourage people—including schools and colleges—to use fully the technologies that enhance learning at every stage. That is what will add value.
I stress the importance—as we link school and home, and end the divide between learning in institutions and learning in the home and elsewhere—of enabling teachers to use those technologies. We also have to link the university for industry initiative to the initiatives that we are announcing today, so that they work hand in hand—thereby enabling small and medium-sized enterprises to access not only information on the training programmes that they need, but the training itself.
Small and medium-sized companies will therefore be able to share and take part in the learning centres, which will be focused initially in inner cities, and later in a roll-out of centres in communities across the United Kingdom. I hope that SMEs will be able not only to learn from and share in the initiatives, but to add to them, so that there is interaction between individuals and the community, and businesses and learning institutions. We are also initiating a £20 million scheme for easy-lease and low-cost computers for teachers, to enable the teaching profession to participate more easily in that interaction.
I should also say that, on Saturday, The Times contained a totally inaccurate report which misled people into believing that the Government were about to do something that we were not planning to do. We intend to help teachers to purchase or borrow computers—as many 518 companies do for their employees—for use at home in their work. We had—and have—no intention of doing what The Times said we were intending to do. I am also sorry that The Times has had today to publish letters in response to that article, and that people believed that the article described the true situation. I hope that The Times will put the record straight.
Our imaginative programme ensures that families have access to education, and we want to build on it. For example, the laptop computer programme for 12,000 head teachers and teachers has proved incredibly successful in helping people to update their skills and access information for a new age. We are talking about a public-private partnership which is making it work. We are talking about large-scale investment by both private and public sectors. We are talking about investing as a Government in the needs of a new century. What that is about is co-ordinating our activities well and ensuring that one initiative dovetails with another. Above all, it is about using imagination in investing public funds to liberate people so that they can earn for themselves. People want to have a job and a family. Achievement must be the right of every child in tomorrow's generation. That is the sign of a community, an economy and a society that is really working, and that is why my right hon. Friend the Chancellor received such applause for his Budget on Tuesday.
§ Mr. David Willetts (Havant)
We heard the truth about the Government's tax policies from the Prime Minister—not yesterday in Prime Minister's questions, but the week before, when he said:the tax burden will increase over this Parliament".—[Official Report, Wednesday 3 March 1999; Vol.326, c.1075.]That is the truth about this Budget. A tax increase in 1999 is still a tax increase even if it was announced in 1997 or 1998.
We have now discovered that Government propaganda about the Budget is to be distributed at taxpayers' expense. We know that it is propaganda because it contains all the buzz words. The Government say that they favour a "fairer society" and refer to people paying a "fairer share". In this context, they mean that the self-employed will pay higher national insurance contributions. It is outrageous that Government propaganda should be distributed to public institutions at taxpayers' expense.
We have been told that the document will also be distributed to schools. Notwithstanding the party political arguments we advance about the Budget in the House, sending documents such as this to schools raises some fundamental questions which I hope the Secretary of State will address.
§ Mr. Blunkett
I will happily address that matter. We have no intention of sending such a document to schools: we do not need to. We are sending 10 million extra books—that is our message.
§ Mr. Willetts
I am grateful to the Secretary of State. We were told yesterday that, at first, the Treasury wanted to send 17 million copies of the document to every household in the country. The Treasury then backtracked, and we were told that it planned to send 1.2 million copies 519 to every public institution in the country. I am very pleased that the Secretary of State has announced that the document will not be sent to schools.
The Secretary of State is quite correct: schools want to focus on raising standards in the classroom. He claims that today, he has announced extra money for schools. However, as is clear from the Red Book, there is nothing new for education in this Budget. Page 27 of the Red Book states:Departmental Expenditure Limits are essentially unchanged from those set out in the CSR"—the comprehensive spending review—in July 1998.The Secretary of State has simply announced money that was allocated already in the comprehensive spending review.
The £2,000 for books is a classic example of the Secretary of State's approach: he gives little penny packets of money to schools and allocates them for specific purposes of his choosing. What will happen if a head teacher writes to him to say, "Thank you very much for the £2,000. But, rather than spend it on school books, as head teacher, I believe that it is in the best interests of my school to spend it on trying to hold on to a classroom assistant for another term or on new software for all the IT equipment that we are supposed to be getting."? Will the Secretary of State refuse that request? Will he say that the money can be used only to purchase books? Why can he not trust head teachers to exercise their judgment about what is in the best interests of their pupils? The biggest single complaint made by teachers and head teachers around the country is that instead of the Government giving them one budget and trusting their professional judgment to spend it, they give them penny packets of funding, each attached to a new gimmick that the Government want to announce.
§ Mrs. Anne Campbell
Does the hon. Gentleman agree that Tory-controlled county councils such as Cambridgeshire do not spend the money that the Government give them to spend on education? This year, Cambridgeshire has short-changed its schools by £1.3 million, on top of the £1.6 million by which it short-changed them last year.
§ Mr. Willetts
I gave way to the hon. Lady last week in the debate on burdens on schools when she made exactly the same point, and I shall give her exactly the same reply—Cambridgeshire was spending above its standard spending assessment. The criticism made by schools is that the £19 billion is not getting through to them because too much of it is being absorbed by local education authorities and the Department in spending on central initiatives. The Secretary of State likes to announce those initiatives, but they simply get in the way of the money reaching the schools, which is where it belongs.
The Secretary of State spoke about computers. We welcome anything that strengthens information technology in schools, provided, of course, that it is educationally worth while. I hope that he will recognise that in 1997, when we left office, Britain waswell up amongst the world leaders in terms of ICT in education, both in terms of provision and in the extent to which new technologies are used across the curriculum.520 That was the view of Baroness Blackstone when she spoke about this Government's inheritance on IT in schools.
All that we have heard since then are classic examples of announcements and re-announcements. The Government announced last January that they had a£235 million programme to prepare teachers for the information age".The laptop announcement has been made before, on 16 April 1998, when the Government said that there was£23 million to provide laptops for teachers"—which was,a major contribution to the information age".We have had announcements on centres of excellence before. On 3 June 1998, the Government announced120 new Centres of Excellence for IT and high technology to boost local skills training throughout the country.We have had announcement after announcement, but there has been no rigorous implementation of them. Instead, there has been confusion on the ground about training and support. That has continued until this week. The Secretary of State may dismiss the headline in The Times on Saturday, which said, "Budget to give every teacher a computer", but the source for that story was the Prime Minister. He said in Scotland thatto complete that plan by 2003, every teacher in Scotland will be equipped with a modern computer.
§ Mr. Willetts
I shall be happy to give way to the Secretary of State, but first I make it clear that I was reading a quote that appeared in The Times and was attributed to the Prime Minister. When the No. 10 press office was asked why, if Scotland could receive those computers, England and Wales could not, it replied that perhaps they would be available in England and Wales. The No. 10 press office encouraged the story that the Secretary of State is now so keen to dismiss.
Similarly, we were told by the Chancellor in the Budget statement that there would be 1,000 computer learning centres. In the Department's announcement today, that figure is down to 800 new IT learning centres.
§ Mr. Blunkett
The difference is that my Department is responsible for England, and the figure of 800 applies to England, while the figure of 1,000 applies to the United Kingdom.
§ Mr. Willetts
If we are to have equality across the United Kingdom, why does not that equality apply to the computers that the Prime Minister announced last week as part of his election campaign for Scotland? He is willing to use the generality of British taxpayers' money to finance computers for teachers in Scotland, but he is not, when he is asked, willing to offer the same provision for teachers in England and Wales.
Of course, as we know from the press notice, there will be at least 30 learning centres in the first phase. The reality is that there has been massive hype, but very little will happen on the ground in any feasible time scale. That is why the Secretary of State has sceptics on his own side.
I shall quote from an article by the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), which is headed 521Derek Wyatt takes the Government to task for failing properly to plan funds and put into effect the National Grid for learning.The hon. Gentleman is one of the few Labour Members who has practical experience in the use of IT in communication. He referred to a paper with anenormous black hole—no budget attached and no strategy for implementation.The article goes on:Headteachers and governors do not want large Internet bills one year hence, when the initial "free" trial is over. Teachers should not have been issued with laptops; you cannot see the screens in the classroom and therefore they cannot be used as teaching aids, except by a small number of pupils.The Secretary of State's hon. Friend made the problem with the Government's strategy clear in that article: a lot of hype and very little practical implementation.
I checked with the Library how we were doing on computers in schools. The Library's response on the reality of access to computers to schools stated:the number of pupils per computer has remained relatively unchanged since March 1996.Despite all the hype, and nearly two years of announcements, there has been virtually no improvement in what schools have to teach with.
I turn to employment and the new deal. There was no reference in the Budget or the Secretary of State's speech to a revealing little footnote on page 159 of the Red Book, which explains in Treasury gobbledegook that social security benefit expenditure has beenAdjusted since the PRB to take account of the new NAO-audited assumption for unemployment-related social security spending, which raises social security spending by an estimated £1 billion in 1999–2000, £2 billion in 2000–01 and £2¼ billion in 2000–02.Those figures are in the Secretary of State's Budget document.
The National Audit Office independent forecast expects a steady rise in unemployment over the next three years. It is no use Treasury Ministers shaking their heads. I shall read out the figures from the NAO report, which was also released on Budget day, but not as part of the Budget documents. It says of unemployment:1.55 million in Q4 99, 1.69 million in Q4 2000 and 1.73 million in Q4 2001.That is what independent forecasters, on whom the Government's Budget arithmetic rests, say. The Government tell us that, compared with the pre-Budget document, we should expect a steady rise in unemployment. There was no reference to that in the Secretary of State's speech.
We heard about the new deal, but not about the fact that three in 10 people leaving it do so for destinations of which the Government are ignorant. Nobody knows what happens to such people. We know that another one in 10 people leave the new deal for another benefit. We know that the gateway is increasingly causing concern as people are trapped. I presume that that is the reason for obscure references in the Budget to intensifying the gateway. The Government's labour force survey shows that, despite an overall fall in unemployment in the past year, one of the few areas where it has risen is among young people who are unemployed between six and 12 months. We know that, in the last quarter, there was 522 a 20 per cent. quarter-on-quarter rise in unemployment among young people unemployed between six and 12 months.
§ Mr. Vernon Coaker (Gedling)
Will the hon. Gentleman answer a couple of questions? Would he scrap the new deal? In response to constituents of mine who say that there are sometimes one or two problems with the new deal—to be blunt, there are—does he accept that at least we have a Government who are determined to make the new deal work and to try to get people who were abandoned under the previous Government back into work?
§ Mr. Willetts
It is no good saying that the Government are determined to make the new deal work if it is not working. Our objection to the new deal is simply that it is not working. Evidence of that is that unemployment among the very group that it is most supposed to help is rising, when for other groups it is falling.
Look at what is happening on the options. We were told that 45 per cent. of people leaving the gateway to go on to an option would be going on to the employment option. In fact, only 24 per cent. of people are going on to the employment option. We know that 49 per cent. of people leaving the gateway for an option are going on to the education and training option.
That development may explain the extraordinary change in the pattern of expenditure on the new deal, which we see in table 4.1, where the expenditure this year is way below the level that the Government forecast, and expenditure next year is significantly higher than they forecast. However, we know that people who leave the education and training option do not seem to perform any better than the people who leave the new deal before they go on to any of the options.
§ Mr. Willetts
We would not have had the new deal, because we would not have had the windfall tax on the public utilities. We believe that the new deal is making no improvement on what would otherwise have happened. It is making no improvement to the job opportunities of young people.
Perhaps the most arrogant statement in the Red Book is in the discussion of the new deal, where we read on page 54 thatThe New Deal for 18–24s has already secured 58,000 jobs for young people.That assumes that every young person who was unemployed for six months and who found a job did so because of the Government. Do not the Government realise that people were finding jobs before the new deal came along? Do they not know that 80 per cent. of young people who had been unemployed for six months were leaving unemployment benefit anyway in the course of the following year?
523 The new deal cannot be claimed as the reason for any young person finding a job. The Government must show that they are doing better than would have been the case anyway. On that, the evidence is simply unavailable.
§ Mr. Barry Gardiner (Brent, North)
If, as the hon. Gentleman says, he would not have sanctioned the £5 billion worth of fiscal tightening—
§ Mr. Gardiner
Indeed—that the new deal entails, what would have been the consequences for inflation? How would the Opposition have moved to counter those? What effect would that have had on manufacturing industry—an issue on which they have been desperate to attack the Government?
§ Mr. Willetts
Taking £5 billion off British industry made no contribution to Britain's economic performance. The taxation of the utilities must involve either higher prices being charged by them, or a fall in returns on their shares, which are owned by the pension funds that serve all of us.
The new deal is not doing any better for young people than they were achieving anyway. Youth unemployment was falling by 100,000 a year before the new deal came into effect. The fallacy that the Government are trying to exploit is the claim that anyone who has been unemployed and finds a job does so because of the new deal. That would be true only if no one who had been unemployed for six months ever found a job before the new deal was introduced. That is an insult to the young people who have been finding jobs as a result of their own initiative and efforts, and the many schemes that we introduced to help them.
The Secretary of State referred to individual learning accounts. Let us be clear about the reality behind the hype. We have never had the White Paper that we were promised. We have had only a Green Paper, and years of dithering and delay since it was published.
The individual learning accounts are financed by taking £150 million off training and enterprise councils. They are merely a redistribution away from TECs, which were in any case going to spend money to help in a targeted way with training and employment needs in their areas.
Although the Secretary of State mentioned the new tax reliefs announced in the Budget, he did not refer to the overall picture shown in the Red Book on page 13, which reveals that the cost for employers and employees of the abolition of vocational training relief—a tax relief specifically to help with training costs—matches the value of all the new tax reliefs for training that he is introducing. All those are zero-sum games—individual learning accounts financed by taking money from TECs and new tax reliefs financed by getting rid of a training tax relief.
What about the administration of ILAs? The Institute for Fiscal Studies green book states thatit is questionable whether the administrative costs of setting up completely new accounts for the sole purpose of training are justified.524 The hon. Member for Amber Valley (Judy Mallaber) asked a pertinent question—sadly, she is no longer in the Chamber—which echoed the IFS criticism. The IFS stated:It is unclear how much of the £150 million subsidy to account-holders will result in new training which would not have happened in the absence of the scheme, rather than just being a dead-weight transfer to people who would have done the training anyway.In respect of training, the new deal, ILAs and the so-called extra expenditure on schools and on books for schools, the story is the same: announcement and re-announcement; launches and re-launches and a large amount of hype. However, the hype runs far ahead of reality— the reality in the classroom and the college; the reality of the burdens facing employers and of the performance of unemployed people in finding work. The Chancellor of the Exchequer claimed that 1999 would be the year of delivery, but 1999 will be the year of disappointment.
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. I remind the House that there is a 10-minute limit on Back-Bench speeches.
§ Valerie Davey (Bristol, West)
I want to celebrate a single line in the Budget which announced that £2,000 would be given to every school for books. That is generous and unconditional, and will be welcomed by every school. As we enter the 21st century, there will be a need for more computers and for greater understanding of science and technology, but that will never entirely replace books and libraries.
I grew up in a flat above a bookshop which, in those days, was also a library. It was natural for me to have books everywhere and to value and love them, and to value libraries. In every school that I visit, I gravitate first to the library, which I believe to be the educative heart of any school. It is there that children begin to make choices and begin self-learning. It is there that they discover, in what I trust will now be a greater choice of books, what they want to learn. Through books, they understand more about the world, the environment and all the things that excite them. Let me take hon. Members, in their mind's eye, to my favourite school library.
§ Mr. Nick St. Aubyn (Guildford)
Does the hon. Lady agree with the recent finding by the Office for Standards in Education that most of the problems of finding enough money for books in schools result from poor management of resources by the heads of those schools?
§ Valerie Davey
I dispute that. We have just heard from the hon. Member for Havant (Mr. Willetts) how good management is and that schools want more scope. This wholly generous and unconditional gift from the Government should be accepted in that spirit.
Come to that library with me—to the middle of a sprawling redbrick estate in Bristol, up the steps of a nursery school and down a small, colourfully decorated corridor with two classrooms ahead of us. Turn right and right again through a door which, in the original building, 525 was the entrance to a large walk-in store cupboard. Now, with the help of parents and the construction of a window in the roof, that cupboard has become a library: an oasis in that school and that community.
Children find sanctuary in that library. One day when I was there, a small boy came in. He was a three-year-old who knew instinctively that, if he could not cope in the classroom and things had got on top of him, he would find in the library a place where he could calm down, find his own way and, even at the age of three, instigate his own learning.
This beautiful little library has books at floor level, a nice carpet, bean bags and a welcoming atmosphere. It is very special to the school and to the community, and I trust—indeed, I know—that the money will be welcome and well spent. When the school received its first £1,000, it could not believe its luck: it could not believe the Government's generosity in giving it what it knew that families and youngsters needed most. I am sure that pattern will be repeated throughout the country.
Given the generosity and unconditionality of the gift, I shall not presume to dictate, or even suggest, how the money should best be spent—
§ Mr. Robert Syms (Poole)
There is no such thing as Government money. There is the people's money, which comes from the taxpayer. Will the hon. Lady acknowledge that?
§ Valerie Davey
What I acknowledge is that the party in power has a way of dictating, or deciding, how money should be spent. In this instance, the Budget has been generous to education in providing money for books. As I was about to say, I hope that some of that money will be spent on poetry books, because I feel that poetry gives the English language an extra dimension.
A book to which I often refer—not every day, but on some days—contains "poems for the day". The poem for today, 11 March, has a title that is not easy, but is nevertheless important. It is by Arthur Clough, and Churchill quoted it several times during the war. It is called "Say not the struggle naught availeth". We would hardly use the word "struggle" today, but we would use the word "challenge"—and the present Government face the greatest possible challenge: that of ensuring that education standards rise, and that every child has a choice in education, receives an excellent education and achieves the highest possible standards.
I trust that the allocation to education will bring real joy to children now. None of us can know how much it will enable children to attain in the future as a consequence of the excitement and expectations that it will instil. Let the children enjoy it; let schools, teachers and parents ensure that it is well spent.
§ 2.3 pm
§ Mr. Don Foster (Bath)
I thank the Secretary of State for the note that he sent me—and, no doubt, the Opposition spokesman, the hon. Member for Havant (Mr. Willetts)—explaining why he would not be able to stay for the whole debate.
I must confess that, having had to follow the hon. Member for Havant on a number of occasions recently, I experience a sense of nausea when I hear him criticise 526 what the Government are doing. It strikes me as hypocrisy, given the state in which his party left our schools and education in general. I therefore think it rather appropriate that, while the hon. Gentleman was speaking, the Secretary of State's dog was sick.
I hope that, if I am somewhat critical of aspects of the Budget, I shall not be considered hypocritical myself. My views are at least consistent with what I have, for some years, considered to be necessary to education and employment.
Although undoubtedly well-intentioned, the Budget was spoilt both by gimmicks and by unnecessary complexity.
There are some very good measures in the Budget—measures that we of course support—such as those to help small businesses or to improve competition. There are many other measures that we support but which we feel are too timid. For example, the Government are being far too timid in the extent of their support for pensioners, although the improved support is welcome.
The Government have also been unduly timid in relation to the environment. Nothing in the Budget will do anything to improve public transport in our country. It is therefore hardly surprising that I read today the results of an opinion poll showing that only 3 per cent. of people believe that the Government are doing a good job in relation to transport.
§ Dr. George Turner (North-West Norfolk)
Did I mishear the hon. Gentleman? I thought that he said that there was nothing in the Budget to help transport. I distinctly heard the Chancellor mention an extra 20 per cent., especially for rural areas; will the hon. Gentleman acknowledge that? [Interruption.] Twenty per cent.—£20 million extra in the Budget.
§ Mr. Foster
The hon. Gentleman says that he heard the Chancellor say all those things. Of course he heard that, but he fails to take into account the additional costs that will be imposed on public transport because of the changes that have taken place in the fuel levy. If he studies the Red Book, he will see that the net effect is zero additional support for public transport.
The hon. Member for North-West Norfolk (Dr. Turner), who is obviously interested in these affairs and in environmental matters, may agree that the Government were right to reduce vehicle excise duty, but I hope that he also agrees that it was rather timid to reduce by £55 the VED for vehicles below 1100 cc. The Liberal Democrats would have much preferred the complete abolition of VED for vehicles of 1600 cc and below.
We welcome several other measures. The introduction of the energy tax is welcome—we had proposed that for many years—but it is a great pity that, in the same Budget, the Chancellor of the Exchequer did not make good the Government's general election pledge to start a wide-scale home energy insulation programme.
I said that the Budget was marred to some extent by gimmicks. The biggest gimmick is the 10p income tax rate. Liberal Democrats believe that it is absolutely right to provide more help for the poorest in our society—indeed, we might go even further than the new Labour Government and argue that there is an urgent need to redistribute wealth, and that that can be done through the tax system. However, the introduction of the 10p rate of 527 income tax is certainly not the most efficient or effective way to do it. It would have been far better to raise personal tax thresholds. That would have been more tax-efficient and would have helped more people.
I should have liked the Chancellor to make a long-term pledge to impose a starting threshold of £10,000, which, once fulfilled, would have meant that 10 million people no longer needed to pay income tax. That would really have helped the least well off in our society and would—I am sure that the Secretary of State will agree—have had a direct impact on educational standards, because we know that there is a link between low educational standards and poverty.
The view that I have just expressed is not without support elsewhere. The Institute for Fiscal Studies has said:In terms of the key goal of improving work incentives, it is clear that the introduction of a 10 per cent. tax rate is an expensive way of achieving little. The tax system could be reformed for equivalent cost, yet with more progressive results and without the introduction of additional complexity, by an increase in personal allowances.I therefore believe that the announcement of the 10p tax rate was a gimmick. There are better ways of doing what I believe that the Chancellor wanted to do, which is to help the less well off. He could have helped more people, with less complexity, without that gimmick.
I shall now discuss issues of education and employment. I shall criticise some aspects of the Budget, but as I have said many times, I want it to be understood that I give the Government credit for many of the things that they have done. I therefore hope that my criticisms will not lead the Secretary of State to accuse me—as he has allegedly accused other critics—of being a sneering cynic or a miserable sod. The Secretary of State is said to have called people that, but he can tell us for himself whether that is true.
The House ought to welcome the additional £100 million for the research infrastructure fund, the second round of university challenge, the tax incentives for companies to invest in research and development and the development of individual learning accounts, which we have already discussed. It is right and proper that employers are given an opportunity to contribute to individual learning accounts.
My party was the first political party to propose the introduction of individual learning accounts. We are delighted that the Government belatedly accepted that idea. We also proposed that businesses should be able to contribute to them, and we are delighted that, at long last, the Government are following our lead. We are concerned that current individual learning accounts are minuscule and will not deliver the learning revolution that we want, but at least they are a step in the right direction.
The hon. Member for Amber Valley (Judy Mallaber) intervened on the Secretary of State about the importance of ensuring that individual learning accounts are made available to all. I was delighted to hear him assure the House that he will consider that carefully in the light of Sir Claus Moser's report. I hope that when he does so, he will also look into the position of those students who have no qualifications and who are currently barred from access to individual learning accounts. I hope that he will ensure that that is reversed.
We welcome many other measures in part. We welcome, as did the Secretary of State, the Chancellor's announcement of a boost for the nation to improve its 528 skills in information and communication technology. I am delighted that the Secretary of State has at last acknowledged that, if we are to get our pupils on-line, it is vital that we also give teachers the opportunity to get on-line. That is a change of heart for the Department. A senior spokesman for the Department was quoted in The Guardian last year as saying:There's no reason to buy teachers computers. They are being trained in how to teach ICT, not how to use a computer.At least the Department now acknowledges that teachers need to be given computers, so I am pleased about that improvement.
The Secretary of State can wrap up any announcement in various ways, but today's announcement does not go very far. After all, we now know that, under the original scheme to give teachers laptops, only 2.5 per cent. of teachers have so far received one. At that rate, it would have taken 40 years for all teachers to get a laptop. The announcement of additional resources is welcome, but sadly it will only increase that percentage to 6.5 per cent. of teachers, so there is a very long way to go. I hope that in the winding-up speech we will be told whether trainee teachers, who will need access to laptops, will be eligible under the scheme—a point raised by the hon. Member for Havant.
We welcome the additional money for ordinary computers in schools, particularly inner-city schools. I hope that the Secretary of State will acknowledge that the current announcement does not go very far, particularly when we bear in mind the fact that, according to his Department's figures, 64 per cent. of primary schools and 57 per cent. of secondary schools have computers that are more than three years old, and 44 per cent. of computers in primary schools are over five years old. The vast majority of them will not be millennium compliant, and additional funds will be needed fairly rapidly.
The hon. Member for Bristol, West (Valerie Davey) praised the Secretary of State and the Chancellor for the £2,000 for every school for books. I agree with her in principle: any additional books for our schools must be welcomed. However, I suggest that that is not the most effective way of carrying out that operation. It looks like a good idea and it will grab the headlines, but one wonders whether it is a sensible way of providing more books.
Schools will not have the freedom to decide how best to use that money. They could perhaps make more effective use of the money through the purchase of CD-ROMs or software. Moreover, in a small group 1 primary school with 50 pupils the measure will look good, because it will have £40 per pupil for books. However, for Banbury school in Oxfordshire, which is a group 6 secondary school, the amount is merely £1 per pupil. One has to question whether it would not have been better to have a per capita system.
I want to show support for the new deal for the over-50s, although I have some concern about it. That Government initiative has not been mentioned today. I believe that it is an important measure, but it may flounder unless the Government are prepared to take tough action on age discrimination. If employers are not willing to take on people over 50, the scheme will come to naught. [Interruption.] I note that the Secretary of State is nodding. I remind him that the 1997 Amsterdam treaty requires European Union countries to take appropriate action to tackle discrimination on the grounds of age. 529 During the last election, the Government made a commitment that they would do so, yet sadly so far they have been lukewarm on this important issue. I hope that the new deal for the over-50s will rapidly be matched by positive action from the Government on discrimination.
§ Mr. Willetts
Does the hon. Gentleman accept that one of the reasons why the Government are so wary about addressing the problem of discrimination by age is that the new deal discriminates by age? The new deal would probably fall foul of any significant legislation banning such discrimination.
§ Mr. Foster
I suspect that the hon. Gentleman, in asking that question, is well aware that that may have been one of the motivations behind the Government's introduction of this new element of the new deal. Although he and I may disagree about the mechanics and some of the details of the new deal, surely he would accept the broad principle of trying to provide additional support for that age group, who are particularly badly hampered in the jobs market and who find it difficult to get back into work if they lose their jobs. There is an urgent need to do something about the problem.
I should like to comment on the issue of money. The Secretary of State and the Chancellor seemed to be providing new money for education and employment. The sad fact is that nothing could be further from the truth. No new money was announced for education and employment.
§ Mr. Foster
The money for education and employment that was announced in the Budget came predominantly from the modernisation fund. It was money that had been previously announced in the comprehensive spending review. Opposition Members have a problem with that because the comprehensive spending review was intended to be an opportunity for people to plan over a three-year period. That is what the Chancellor said when he announced it. In practice, however, the Government are drip-feeding announcements about different bits of the money that have already been allocated.
§ Mr. Foster
I shall give way to the Secretary of State in a moment.
We a getting a drip feed of information from Departments about how the money is to be used. If the Secretary of State does not mind, before I give way to him I shall make one further point, because I am sure that he will want to respond to it. If proof is wanted of my claim that the money is being drip-fed so that the Government get double the credit for it, I suggest that, over the next few weeks and months, hon. Members look out for announcements from the Department for Education and Employment on what it will allege is additional money for the national grid for learning, for the university for industry, for special educational needs provision, for travellers' children and for adult education, higher education and further education. I predict that we 530 shall hear announcements over the next few months about alleged new money in each of those areas. That money has already been allocated in the Department and it could and should be announced immediately so that the organisations responsible can prepare.
§ Mr. Blunkett
I am not sure whether I am asking or telling the hon. Gentleman about the issues that he has raised. We have announced £1.5 billion extra for further and higher education and there is more money to come. There is a crucial flaw in the hon. Gentleman's argument, which I should like him to acknowledge. We have announced a comprehensive spending review with departmental totals. That is part of the departmental expenditure limits. The cumulative total for education over the three-year period is £19 billion. The Treasury has allocated an additional £561 million this week. That is not part of the £19 billion departmental expenditure limit; it is new money. It is no more not new money than any other Treasury allocation above departmental budgets in our history. It happens to come from the capital modernisation fund, which was not part of the departmental expenditure limit of £19 billion—
§ Mr. Foster
I am sure that the House is grateful for the Secretary of State's detailed response. He failed to point out that the capital modernisation fund to which he referred and from which the money that he has just said is new money for education came was part of the announcement at the time of the comprehensive spending review. No additional money is being made available by the Secretary of State.
I give the Minister for School Standards credit for at least being prepared to acknowledge from time to time the way in which the Government attempt, somewhat tongue in cheek, to re-announce sums of money. If hon. Members have nothing better to do, I advise them to get hold of the Hansard report of the 6th Standing Committee on Delegated Legislation on 9 March and look at column 10. I recommend it to the entire House, because it contains one of the most honest responses from the Government about how money is cycled and recycled time after time in their announcements.
The key task for all political parties is to try to raise standards in education, not to have arguments about which council spends more money than another or which Governments do better than others. What matters is what is delivered. The hon. Member for Cambridge (Mrs. Campbell) talked about what particular councils are doing. I have a list of Labour-controlled councils that will be making cuts in the education service next year, but I also have similar lists of Liberal Democrat and Conservative-controlled councils. The issue for all of us is to find ways of ensuring that money is properly targeted to raise standards in those important areas.
Because class sizes are still rising in primary schools, because we are still not giving appropriate support to part-time students in our further and higher education institutions and because we have still not got rid of the scourge of bad buildings and shortages of books and equipment, more money is still needed in our education service—more than the Government are putting in. That is why it was wrong of the Chancellor to announce in his Budget that next year he would reduce income tax by 531 1p in the pound. The money that could be raised from that should be committed to the education service. For that reason alone, we shall vote against that measure.
§ Mr. Ivor Caplin (Hove)
I should like to say how much I enjoyed the speech of my right hon. Friend the Secretary of State. I hope that, (Mr. Willetts), Lucy is now feeling better, having had to listen to the hon. Member for Havant.
I almost agreed with a lot of what the hon. Member for Bath (Mr. Foster) said—until he got close to the last 20 minutes or so. I should like to begin by telling him about my experience at one of the smallest primary schools in my constituency on Monday morning. St. Peter's school in Portslade is a well-run school with a roll of just over 100. The centrepiece of the school is the library. Every child goes in the library almost every day. Because of the size of the school and the way in which the education system operated under the previous Government, until the first £1,000 came from this Government, the library was underfunded. The school will now be celebrating the chance to double the number of books in its library over the next few months. Nearly £100,000 is being spent on books alone in schools in my constituency. I have not heard a word against that from teachers, heads or pupils. I do not know what schools in Bath are up to.
Nearly £1 million of new deal money is going on school buildings. That is already having an impact and helping to drive up school standards. The literacy test results for schools in the Brighton and Hove local education authority have improved considerably this year, with figures up by 7 or 8 per cent. since 1996. School buildings are a central aspect of that improvement.
It would be foolish of a Member of Parliament to say that he did not want computers in classrooms. On my visit the other day, I saw a series of computers that had been installed as part of the national grid for learning. The head teacher of the school, which is in a deprived part of the constituency, told me that children there had never had the opportunity to see and deal with a computer. They were discovering an education and learning experience through those computers. If having more computers in classrooms means teachers needing a laptop at home to help them prepare, I am all for that.
I want to talk briefly about the environment and the escalator, because there seem to have been some double standards in evidence in the past couple of days. The Leader of the Opposition said on Tuesday that the Government hadincreased the so-called fuel escalator from 5 to 6 per cent."— [Official Report, 9 March 1999; Vol. 327, c. 197.]What on earth did he mean by "so-called"? The fuel escalator was introduced when the right hon. Gentleman was a member of the Conservative Government. Did he not know what the Government of the right hon. Member for Huntingdon (Mr. Major) were doing? That was an astonishing phrase to use.
The fuel escalator is about trying to improve the environment. I am happy for the Conservatives to vote against it on Monday, because that will show which party truly cares for the environment. Maybe their spokesman will tell us later whether they intend to vote against it. Many people will wonder what the Conservatives are 532 about if they introduce an escalator in one Parliament and then vote against it in the next. They cannot face both ways. I know that some local Liberal Democrats like to do so, but they cannot do that in national politics.
§ Mr. St. Aubyn
Will the hon. Gentleman confirm that this Government, with three Budgets in two years, have had a dramatic effect on the escalator, not only by increasing it, but by increasing the number of times that it has been applied? That is why motorists in this country are complaining. The hon. Gentleman has made it clear that his party is against motorists.
§ Mr. Caplin
As a motorist, I am certainly not against them. I was privileged to serve on the Standing Committee on the first Finance Bill of this Parliament, in July 1997. That Budget was primarily about putting right some of the ills that we had inherited from the Tories and implementing the windfall tax, to which I hope to return shortly if time allows.
I welcome the increase in the winter fuel allowance, which along with the minimum income guarantee represents a significant change to pensioners' funding. The £100 has been widely welcomed throughout my constituency. I am very much looking forward to speaking at the meeting of Age Concern in my constituency next week, given that organisation's long-standing campaign on winter fuel payments.
I shall refer briefly to the windfall tax as I find it rather disingenuous of the Tories to include the windfall tax in the figures that they continually quote. The shadow Chancellor tried to do so last night on television, but his broadcast persuaded me only that we were about to spend £40 billion on health and education.
The windfall levy was in our manifesto. Before the election many Conservative Members said that it would be challenged in the courts. Some companies said that they would challenge us in the courts, but no such challenge ever occurred. The companies affected by the windfall levy knew that it was right and accepted the democratic principle of a general election. It cannot be described as a tax, as it was freely given. I am pleased that it was accepted by all the companies concerned.
I have three final points. First, I am an officer of the all-party football group. One issue that has not yet been raised in the Budget debate is nevertheless very good news for football—the change in the pools betting duty, which will allow the Football Trust to continue for another three years. I very much welcome that funding, which could amount to £20 million; and I make the plea that the FA Premiership should match pound for pound the Government's new funding for the Football Trust to provide support for grassroots football.
My second point relates to smuggling. I was pleased to hear that the Government intend to take action on tobacco smuggling. When the Financial Secretary to the Treasury replies to the debate, perhaps she will reassure me and other hon. Members with constituencies in the south-east about the white van trade in alcohol which causes considerable problems in Sussex and Kent. There are several small breweries in the region, so the smuggling trade has a double-whammy effect. The small breweries very much welcome the freeze on alcohol duties, but I wonder whether the Government's approach to tobacco smuggling can be extended to the illegal trade in alcohol 533 so that we can make some real inroads into a disgraceful trade that is imparting an imbalance to the tobacco and alcohol industries.
Finally, I welcome the extension to 2002 of the film taxation benefits announced by my right hon. Friend the Chancellor. Although films are no longer made in Hove, 102 years ago Hove was the birthplace of British cinema.
§ Mr. Christopher Chope (Christchurch)
It is a pleasure to follow the hon. Member for Hove (Mr. Caplin). I am sure that his constituents will be most interested to read about his priorities in this year's Budget. I suspect that many of his constituents, like many of mine, are enjoying their retirement on the south coast and will be most concerned about the Budget.
The Budget gets an alpha plus for presentation and marketing but a gamma minus for honesty and content. It is a dishonest Budget; it is bad for business and for many individuals. Indeed, it is a Budget of missed opportunities. The Government could and should have rectified some of their past mistakes. As the former Minister for Small Firms, Trade and Industry—now the Financial Secretary to the Treasury—is on the Front Bench, let me say that I was particularly disappointed that the Government did not have second thoughts about the capital gains tax retirement relief. Why will they not admit that they are wrong, and withdraw the penalties that are being imposed on those who sell their businesses on retirement after a lifetime of hard work?
The second missed opportunity is the tax on the dividend income of non-taxpayers. It is outrageously unfair that those with incomes below the tax threshold should have to pay income tax on the income from their savings. Why should they be forced to rearrange their modest portfolios and put them into individual savings accounts, which seem to be the Government's answer?
The Government should also have second thoughts about abolishing personal equity plans and tax-exempt special savings accounts. The idea that ISAs will increase savings has been disproved by projections that show that they will further harm the savings ratio. The Government are damaging the savings culture in Britain.
The Government should have realised with experience that they made a big mistake when they removed from the over-60s the tax relief on health insurance premiums. If that were reintroduced, it would encourage many more people to help themselves as regards the provision of health care. Its abolition is one of the factors that has contributed to the increase in national health service waiting lists. My constituents are saying that as a result of the increase in premiums by something like 23 per cent. they can no longer afford private insurance, so they are now placing an additional burden on the national health service.
My strongest criticism of the Budget relates to the so-called environmental taxes—the taxes on fuel oil, diesel and petrol. The taxes on fuel oil are very much in the small print and involve relatively small sums of money, but what can be the justification for a 21.5 per cent. increase in the duty on fuel oil? For the most part, fuel oil is light heating oil which is used by householders, mainly in rural communities, who do not have access to 534 mains gas. It is also used by small industrial and commercial undertakings. To impose such an increase is petty and spiteful. It will produce £30 million a year for the Exchequer. I am concerned that it will produce a further £30 million every year for the next three years. In other words, it is an escalator of 21.5 per cent. per annum on those who choose, or have no alternative but to have, central heating systems that use light oil.
The increases in fuel duty at three times the rate of inflation every year until the end of this Parliament are a tax not on a luxury but on a necessity. Why are we imposing so much pain on the motoring public and our road transport industries? The money is not being reinvested in the transport infrastructure, which is crumbling, and it is certainly not being invested in new roads. The Government have slashed the new roads programme, even compared with the reductions that were made by the previous Administration. The money is certainly not being reinvested in public transport. Some Labour Members may be satisfied with the thought of collecting an extra £2 billion in tax and giving back £10 million to rural motorists and bus users, but Opposition Members do not consider it in the least bit fair.
What is the purpose of all those increases? The hon. Member for Hove said that they would produce great environmental benefit. According to the small print in the Red Book, the gain is that the Government estimate that, in 11 years' time, in 2010, there may be a reduction of some 5 per cent. in carbon dioxide emissions from transport—what a price to pay for such a paltry reduction.
Reducing carbon dioxide emissions by the price mechanism is extremely unfair and inefficient. The environmental justification for every fuel tax increase is specious. The Government are acting on that basis only because they achieved such a bad deal for Britain in the share-out of the Kyoto targets last June. When one considers the European target of an 8 per cent. reduction in carbon dioxide emissions, it is clear that the Government took pride in giving Britain a larger burden than almost all other European countries.
We accepted a 12.5 per cent. reduction; the Netherlands accepted 6 per cent.; Finland and France did not accept any reduction; Sweden is allowed to increase emissions by 4 per cent.; Ireland by 13 per cent.; Spain by 15 per cent.; Greece by 25 per cent.; and Portugal by 27 per cent. Is it any wonder that fuel is much cheaper in those countries?
The gap will widen between now and the end of this Parliament, resulting in a lot more cross-border shopping for fuel. There is already a loss of revenue of probably £1 billion a year because of what is happening between Northern Ireland and the Republic, and increasingly hauliers are driven to take their businesses overseas to the continent.
Why are motoring taxes being increased? I suggest that it is part of the Government's vendetta against the motorist and the motor car. They are using the Kyoto summit as an excuse for doing something that they relish. Why is the Secretary of State for Trade and Industry making much of the price of new cars, when most of our constituents are finding the burden of driving their used cars too great? Why do not the Government think about the burden of extra taxes on the ordinary car user?
Much is emerging from the small print in the Budget. A newspaper article today suggests that the Government are saying that the abolition of the married couple's 535 allowance is a reduction in public spending rather than an increase in taxation. That logic misleads the public and suggests that the Government are reducing taxes when in fact they are increasing them.
The other day, my children introduced me to an ice lolly called a "Twister". It is a superficially attractive ice lolly: it is green on top, but when one licks it one finds the red underneath. The Budget is modelled on a "Twister" and it has been introduced by a Government of twisters. The people will enjoy their revenge when the truth is out.
§ Ms Bridget Prentice (Lewisham, East)
I am delighted to speak in a debate on a Budget that is recognised by the people, if not by the Opposition, as radical, forward-looking and good for those in need, in work and with families.
I have listened carefully to what Opposition Members have said today and throughout the week, both here and in the media, and I am somewhat perplexed by some of their responses. They ask why we do not use the money for teachers and nurses. It strikes me, if it has not struck them, that teachers and nurses are taxpayers, too, and will benefit from the tax decreases announced in the Budget.
Teachers and nurses are members of families. Their children will benefit from the huge increase in child benefit, the children's tax credit and the extra money for books in schools. They will also have parents who are pensioners and will benefit from the huge increase in the winter fuel payment as well as from other aspects of the Budget directed specifically at them.
As someone who is not a parent, I, too, welcome the fact that money has been targeted in that way. I happen to be a smoker. My hon. Friend the Member for Cambridge (Mrs. Campbell) will now frown at me. I am happy that the taxes that I pay as a smoker will help to provide books for schools, the minimum pension guarantee and all the other help for those who are most in need. The Budget is radical: it targets those in need and it makes work pay.
Several Opposition Members, and one or two of our national newspapers, have mentioned the married couple's allowance. They seem to think that its abolition is, as I believe the Daily Mail said, the breaking of the last fiscal prop to marriage. I have yet to meet someone who married because of the prospect of a £1,900 tax-free allowance. I honestly know of no one who has waltzed down the aisle saying, "This is the happiest day of my life, because tomorrow the Chancellor is going to give us £1,900 tax free."
§ Ms Prentice
Many marriages break down because of financial pressures. My hon. Friend the Member for Hove 536 (Mr. Caplin) was hoping that the hon. Gentleman was about to propose to me. Unfortunately, it was not to be, but we live in hope.
§ Ms Prentice
I am sorry, but I have only 10 minutes in all, so I will have to move on.
It is a bizarre concept to suppose that people marry for such a reason, and that is hardly the rock on which a marriage should be founded. It is not for the Government to pay people to marry. Marriage is a moral and spiritual decision. Of course the Government are right to advocate it as a way of life and to support married people and parents, and many aspects of the Budget are about much more productive ways of doing just that. We should welcome the working families tax credit, the provision of child care, the improvement in standards in schools and the new deal for young people.
I am extremely pleased about the help and support for the British film industry, which my hon. Friend the Member for Hove mentioned. We have a wonderful, dynamic and internationally successful industry of which we should be proud. It is heartening that at last we have a Government who recognise that and take it seriously. I hope that our support for the industry will mean that talented young people will be able to use and develop their talents here rather than going abroad where the incentives have been more attractive.
I hope that my hon. Friend the Financial Secretary will be able to tell us that the changes will help our entrepreneurs and creative talents to make more films here in Britain. I am delighted to see that my hon. Friend the Minister for Tourism, Film and Broadcasting is here, because I want to congratulate her on the way in which she has advocated the change to help our film industry. I hope that others will also be encouraged to come from abroad and make films here. It is tragic that films that could and should have been made here were made elsewhere because of a lack of incentives to invest in Britain.
I welcome the use of the capital modernisation fund for the network of learning centres, and I look forward to the opening of the first cyber café in Lewisham; but my particular delight is in the provision of £170 million for the fight against crime. My right hon. Friend the Home Secretary has rightly emphasised the need to curb youth crime and to target ways of preventing young people from getting involved in crime and of tackling criminal behaviour as early as possible. That is the best way of preventing young people from ending up with a string of offences and a belief that not much will be done about it.
I do not know exactly how that £170 million is to be spent, but I have a couple of suggestions. Will local communities, councils, police and other agencies working together make bids for the money, and on what basis will an area qualify? Will money be made available when the police or local community identify an aspect of criminal activity that needs a rapid response?
I am glad that Departments will work together on that—what we call joined-up Government. The initiative will have been effective if we can make communities safe. That involves improving street lighting, better environmental care and so on. If street lighting 537 is improved, more people go out, especially women and the elderly, and if more people are around, less crime is likely to be committed, so it has a double effect. The same applies to the environment generally. Graffiti, litter and general dereliction give the impression of a community that is not interested in being safer. Environmental improvements make for safer communities. By giving people pride in their community, we give them a stake in keeping it safe, and that applies to the young as much as it does to the old.
I hope that the Government will bear those points in mind when they implement this excellent, radical and unifying Budget. I am delighted to support it.
§ Mr. Christopher Gill (Ludlow)
I doubt whether any hon. Member disputes the fact that good communications are essential to a strong and vibrant economy. I wish to examine the effects of the Budget on the transport industry and, as a former naval person, I shall start with the shipping industry.
Last February, I received a letter from the British Chamber of Shipping, which stated:Within weeks of taking office at the Department of the Environment, Transport and the Regions, John Prescott established a Shipping Working Group to find ways in which the Government can work in partnership with the shipping industry and the maritime unions to boost training, employment and investment. The Group will soon be reporting to the Deputy Prime Minister.I was encouraged that another former naval person was taking an interest in the future of the British shipping industry. The upshot was the publication of "British Shipping: Charting a New Course". It looked as though we were on course to making some progress in the direction in which both management and the unions of British shipping wanted us to go. Indeed, the National Union of Marine, Aviation and Shipping Transport Officers wrote to me recently about the tonnage tax, which it calledone of the most important recommendations made in the Charting a New Course report.However, all that the Chancellor had to say in the Budget on that point was:the shipping industry has put to me the case for enhanced training incentives and for a lower rate ring-fenced tonnage tax. While I am attracted to these options, I have to be satisfied that lower tax rates will not become a vehicle for tax avoidance".—[Official Report, 9 March 1999; Vol. 327, c. 177.]In two years, we have made no progress. However, over many years, we have seen the increasing tendency of British shipowners to flag their ships out to other nations.
§ Mr. Gill
I shall not give way, because the hon. Gentleman knows that we are limited to 10-minute speeches, and I have a lot to say.
What has happened in the British shipping industry will now almost inevitably happen in the road haulage industry. We read in our newspapers about the serious plight of the British road haulage industry. As a result of the Budget, it will be possible in Belgium to fill a 1,000 litre tank on a diesel-engined lorry for £300 less than in 538 this country. That is before one takes into account the huge discrepancy between vehicle excise duty on the continent and in this country.
I cannot stress too strongly the importance of a good transport infrastructure. I am concerned that the Budget does not contain an increase in expenditure on road, railway or shipping projects. The Government say that they will allocate £1.7 billion extra, but that is less than the extra tax that they will take from those industries in future years. Since taking office, the Government have cancelled several road projects. Hon. Members from the west of England who drive to London will know that, after the M40 becomes the A40 Western avenue, at the intersection with Old Oak Common lane, it ceases to be a dual carriageway. The improvement to that section was cancelled by the Government, because they thought that removing that bottleneck would encourage people to use the road. That is the stagecoach mentality. When will the Government realise that people need, want and will continue to use vehicles, either private or commercial? Failing to carry out a road improvement to try to stop people using vehicles is a luddite approach.
The chairman of the Automobile Association, Sir Brian Shaw, has noted the lack of investment in Britain's transport infrastructure. Earlier this month, he was reported as saying:The only European country with worse traffic congestion than Britain is Poland … yet British drivers pay more in motoring taxes than any other European road users … Other countries spend 40–50 per cent. of road taxes on transport, but in Britain £100 billion has `effectively been stolen from its proper purpose'".What is the Government's answer to that point? The article continues:Roads minister Lord Whitty…restated the Government's commitment to road charging and its determination to introduce taxes on business parking.We hear much about the Government's integrated transport system. I heard on the "Today" programme this morning that somebody had come up with the bright idea that, in future, people should be encouraged to take taxis to bus stops. The Government are anti-road, anti-motorists—which affects me as the representative of a large and sparsely populated rural area—and anti-progress.
The Government crow about the volume of freight that they have transferred to the railways, but I want to put the record straight. That has happened only since the railways were privatised. Before privatisation, which occurred under the Conservative Government, there was no increase in the volume of freight on railways, but this Government want to take credit for the increase in rail freight. The Labour party criticised the Conservative Government for selling the railways too cheap. Labour Members opposed privatisation at every turn and did their level best to destroy market confidence in the flotation. They threatened to renationalise the railways, and it is hardly surprising that, at the time of the flotation, it was impossible to sell the railways at the price that we would have liked to achieve. Labour Members should stop being so hypocritical on that subject: they know that the railways were sold for less than their full potential because of their opposition and threats.
Every hon. Member will have received in advance of the Budget a circular from the Automobile Association in which it was pointed out that £8 of every £10 spent on 539 road fuel was tax. The figure is now £8.50 in every £10. On diesel fuel, the situation is even worse. The increase in duty on diesel oil is 11.6 per cent., which adds nearly 28p to a gallon of diesel, or £60 for every 1,000 litre tankful.
I want the Government to realise the serious impact that those taxation measures will have on rural areas. They have a serious impact on the road haulage industry, and a consequentially serious effect on our whole economy. Any business—be it manufacturing or road haulage—
§ 3.1 pm
§ Mrs. Anne Campbell (Cambridge)
I am pleased to be able to speak in the debate on a Budget that is good for children, pensioners, business and self-learners. It is very good for entrepreneurs, and it is even good for cyclists. It is especially good for my constituents.
The hon. Member for Ludlow (Mr. Gill) spent some time on the difficulties of living in rural areas and the extra taxes that people there must pay as a result of the Budget. Many of the taxes introduced by the Chancellor will, however, be revenue neutral. For example, the increase in fuel duty will be balanced by a reduction in vehicle excise duty. The Chancellor is also introducing additional support for public transport through the rural transport fund and other measures. That will help people to use their cars less often and to use more public transport. All of us will benefit from the resulting improvement in air quality and from the reduction in congestion.
§ Mrs. Campbell
No, the hon. Gentleman did not give way, and nor shall I. I have made my point to him.
We are fortunate to have a Government who have recognized—as none before ever did—the importance of a strong science base and of the innovation that links that science base to the industrial base. We also have a manufacturing industry that recognises the important contribution that can be made by scientists, entrepreneurs and people who have ideas.
We have a world-renowned university in Cambridge and a strong scientific output which is probably the best in the world. We have recognised the importance of linking the development of high-tech services and products to the science base. There are around 36,000 high-tech jobs in and around my constituency, and industrial leaders there are delighted with the Budget.
The Cambridge Evening News carried the headline "Big boost for region's biotech companies" and the amusing sub-head "Measures to help high-tech firms which almost match 'wish list"'. We all know that no one expects a wish list to be satisfied, but the Budget contains proposals warmly welcomed by industrial leaders. Research and development tax credits are important to the high-tech sector. Expansion of the university challenge fund will help universities to produce better laboratories and equipment. The removal of tax from share option deals is designed to lure the high-flyers from the big companies to risky start-up companies.
540 Tax cuts are good for small business, and the 40 per cent. extension on capital allowances will also boost the high-tech sector and others. The recognition that an extension of employee ownership is good for both business and employees is also welcome.
However, having said many good things about the Budget, I hope that my hon. Friend the Economic Secretary to the Treasury will forgive me for mentioning one concern raised at a business breakfast yesterday. I fear that the raising of stamp duty will have an effect that the Government do not intend, given their strong support for science-based industry. The fear is that the value of most knowledge-based industries rests not in physical assets—typically, they do not have a lot of freely movable plant or machinery—but in intellectual property rights. Dealings in those rights are hardest hit by the increase in stamp duty.
There are several reasons why one might wish to acquire assets of a company rather than its shares. For example, part of the business—the intellectual property rights relating to a particular computer programme or drug discovery—might be for sale, rather than the whole of it. In some circumstances, stamp duty might be payable on licences of intellectual property rights.
I hope that my hon. Friend will reconsider that point, examining how transactions may be affected when the assets of a company are transferred, rather than the shares, which are subject to lower taxation rates. That concern was one of very few voiced by my constituents yesterday. It is unusual for a Budget to be so universally praised.
I welcome the extra £19 billion for education, and the further £560 million added by the Chancellor on Tuesday. Will Treasury Ministers consider, however, how to ensure that county councils pass the money on to schools? Cambridgeshire was given an extra £9.4 million last year for education, but the county council spent only £7.8 million, cheating schools of £1.6 million. This year, Cambridgeshire had an extra £10.7 million for education, but the council plans to spend only £9.4 million, cheating schools of a further £1.3 million.
If the intended increases over the past two years had been passed on fully, Cambridgeshire schools would have benefited by an additional £2.9 million. Many of their problems simply would not have occurred. The hon. Member for Havant (Mr. Willetts) has suggested that the money has been withheld because of increased bureaucracy, but that is absurd, and schools simply do not recognise that argument.
One way around the problem would be to tie money to specific objectives. The recent money for the reduction of infant class sizes could not be spent on anything else, and it was warmly welcomed. Cambridgeshire benefited by almost £1 million, and that will create 69 additional teachers' jobs. It will reduce the number of children taught in classes of more than 30 from almost 7,000 to just 227.
The Government are trying hard, but they are constantly thwarted by local Conservative politicians. I was slightly surprised to receive a letter from the leader of the Liberal Democrats on the county council. She is the chair of Mayfield primary school, one of the largest in the country, which has, sadly, decided to ask parents to contribute towards the cost of keeping a teacher in place. Schools should not be doing that. It would not be necessary if the county council were spending the whole of the money allocated by the Government for education. 541 Cambridgeshire has a low standard spending assessment, largely because of historical factors: when Baroness Blatch was running Cambridgeshire county council, she did her best to cut education to the bone.
I welcome individual learning accounts and the emphasis on computing courses. I know from experience how much information technology has increased the efficiency of my office. I pay tribute to my staff, Dick Robinson and Rosie Turner, who have improved my office's efficiency many times over by increasing their IT skills and experience, updating my web page and using e-mail for 30 per cent. of my correspondence. I wish all hon. Members success in training their staff.
§ Mr. Michael Fallon (Sevenoaks)
The Chancellor of the Exchequer gave a self-confident performance on Tuesday. I do not entirely share his confidence, and certainly not in respect of the economy. If he has enjoyed a benign six months since the pre-Budget report, it has not been down to his judgment. Japan and South Korea have been recovering, the American consumer remains remarkably buoyant and our economic cycle is clearly out of kilter with that of the rest of Europe. If he is going to enjoy a soft landing, it will not be due to his judgment, but to the framework that he inherited from my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). It was he who took the key decisions on interest rates and tight public spending, and who started to foster the climate of low inflation which, I suspect, lies behind some of the benign economic indicators.
It is often said that Budgets that are cheered on the day disappoint six months later. I cannot recall one where the gloss has come off so quickly. The newspapers that cheered it yesterday are discovering the reality behind the hype: most taxpayers will be worse off, and they will be worse off at the end of this Parliament. It is the wrong time in our economic cycle for the Government to increase borrowing and taxes.
Let me begin with borrowing. Careful examination of the Red Book shows that the net cash requirement is going up from £2 billion to £4.5 billion. Net borrowing will be £3 billion in each of the next two years. It was only in the March 1998 Budget that the Chancellor chirped about the budget being in surplus. There was much talk of repayment of debt in the interests of our children. Now we are back to old Labour borrowing. The Government are not only borrowing more; they are taxing more. They are taxing marriage, taxing home ownership and taxing car driving. The Chancellor did not make much of the fact that he is increasing national insurance— wages tax—for those in self-employment.
Why are the Government having to borrow and tax more? Of course, they have to fund the stealthy redistribution round the edges, but there are two fundamental reasons. First, they have failed in their promise to tackle the increase in welfare spending. Secondly, they have failed to realise the receipts that they envisaged from privatisation.
The Red Book shows that social security spending will rise from £93.5 billion to £106.4 billion. The Government have failed to use their mandate and the majority that they command. They had one row, over lone parent benefits, 542 which was a reform that we left for them. They persisted with that, and then the great welfare reform campaign fizzled out into chatter about anti-fraud measures. Even unemployment benefit continues to be paid without any sanction other than that the recipient should turn up for interview.
On asset sales, I warned the House last July that some heroic assumptions had been made. The former Chief Secretary, my right hon. Friend the Member for South Norfolk (Mr. MacGregor), also questioned the Red Book entries. The Government have pencilled them in again: £4 billion every year from privatisation. However, for the first time, the Red Book is silent about exactly where those privatisation receipts will come from. We know now that London Underground privatisation is being postponed. The air traffic control privatisation seems more complex than the Government first thought. The national asset register was a good idea. It has been compiled, but is now forgotten. In the Command Paper on public service agreements, the sections on assets are the weakest part of every departmental agreement. There are no sanctions. If Departments fail to yield asset sales, their budgets remain unaffected.
Some measures in the Budget were worth while. There are some things that some small businesses will welcome, but they are a long way down the track. Flicking through the Budget press releases shows that the full effect of some measures will not be felt until 2002 or 2003. Like the hon. Member for Cambridge (Mrs. Campbell), I attended a Budget seminar yesterday, at lunch-time in Sevenoaks. I found little enthusiasm for the 10p corporation tax for small businesses, research and development tax credits or the computers that companies would probably buy any way. Such measures are welcome but de minimis.
What matters to small business as much as taxation is red tape. In two years, the Government have introduced a wave of employment legislation, an increase in social costs and the national minimum wage. They all burn up management time and make it more difficult for the small businesses that the Government say they want to foster to employ more people. In this Budget, more taxes are being piled on. There are the environment taxes, the energy taxes, and the cold climate change levy—a weather tax for the first time. This is a tax-and-take Government. Already the press is waking up to the reality of an old Labour Budget. Borrowing and taxation are up, there is redistribution by stealth and there is over-regulation of businesses. It will not take six months for the public to see through the Government.
§ Mr. Ian Pearson (Dudley, South)
People and businesses across the borough of Dudley welcome this Budget. It is a Budget for the future, for success and for fairness. There is something in it for everyone. In the borough, more than 40,000 families will benefit from the increases in child benefit and child care tax credit. Around 50,000 pensioners will benefit from the £100 winter fuel allowance. Many of them will also benefit from the increase in the minimum pensioner income guarantee and the continuation of the married couples allowance.
Patients and staff at Russells Hall hospital will welcome the money for the accident and emergency department because improvements are still badly needed. 543 Parents and teachers will welcome the £2,000 for school books for each school in the borough. I was particularly pleased that the over-50s who have been out of work for six months or more will get new hope and practical financial support when they look for employment. That measure will be warmly welcomed by them.
The whole community across Dudley borough will welcome the extra money to fight crime. People everywhere in Britain will welcome the cut in the basic rate of income tax to 22 per cent. and the cut in the starting rate to 10 per cent. I hope that, over a period, the Government will have the opportunity and resources to move to four rates of tax—0, 10, 20 and 40 per cent.
Businesses will welcome the cuts already announced in corporation tax, which will bring the rate down to 30 per cent. for large businesses and 20 per cent. for small and medium-sized companies, and the new 10p starting rate. I welcome the extension of 40 per cent. capital allowances, which is timed exactly right at this stage of the economic cycle. I welcome, too, the tax credits for research and development. They will have a significant impact and will help to build a more enterprising and dynamic economy.
I believe that it is sensible to align income tax and national insurance rates. That is something that businesses of all sizes will welcome. Businesses have also given a warm welcome to the formation of the small business service. We look forward to seeing the detail of how that will operate.
I do not know exactly how the British economy will perform in the next 12 months. I do not know anyone who does, but I believe strongly that the Government have the balance right in their overall fiscal and economic policy. I am certain that investment in skills to make the economy more enterprising, and investment in our infrastructure are vital to our economic success.
I believe that the Budget will go down as a landmark Budget. It embraces the role of government in supporting economic growth and driving productivity in a modern economy. I am also glad about some things that are not in the Budget. I am glad that there was not an aggregates tax. It would have been damaging to industry, and I hope that one will not be introduced in the future. Although I welcome the anti-avoidance provisions in the Budget, I am disappointed that there seems to be no great willingness to proceed with either a general anti-avoidance rule or a mini GAAR.
Inevitably, there are some areas on which we want to know more and need to see some of the detail. Pensioners will be disappointed that no announcement was made about the dividend tax credit, which is still an issue with non-taxpaying pensioners. I do not believe that it will go away. Similarly, there is some uncertainty about the fact that it seems as if pensioners will start to pay tax at a rate of 20 per cent. on their savings while all other individuals in the community will start at 10 per cent. That is something that we might want to consider when we examine the Finance Bill.
On manufacturing, it is important to welcome the introduction of the energy tax. I am glad that the Government have decided that it will be revenue-neutral overall. However, we have to be very careful to make sure that manufacturing industry is not hit. I do not want to see the introduction of a tax that will benefit supermarkets but harm our manufacturing sector. We need to think carefully about how it is introduced so that we do not 544 penalise capital-intensive, relatively low-employing sectors such as the forging industry, and reward less capital-intensive sectors such as retail.
While manufacturing will welcome the announcements about share schemes and encouraging employees to buy shares in their companies, incentive schemes are much more difficult in unquoted companies, which form the vast bulk of manufacturing companies in my constituency. I warmly welcome proper incentive schemes from which small and medium-sized companies can benefit.
I have to raise the issue of road hauliers. If as a Government, we believe in modern growth theory, which says that skills and infrastructure are important, we must recognise that the road infrastructure is highly significant. There is no doubt that the road fuel duty escalator imposes an additional cost on business. That is obviously a significant problem for the road haulage industry, but it is also a problem for business as a whole. The escalator is increasingly making our industry less competitive than businesses outside the United Kingdom.
§ Mr. Pearson
If the hon. Gentleman will forgive me, I have only two minutes left. I think that over time, we need to do something about the road fuel escalator. Over the next three years, we shall raise about £8 billion as a result of the road fuel duty escalator if we do not change our policy, and we must consider the effects on our industry and what we can do to ameliorate them. When we look back in five or 10 years' time, we will ask whether we should not have put more money into researching clean fuel technology rather than penalising our road haulage industry. A balance needs to be struck, and there is more for the Government to do on that.
On science and technology policy, I must declare an interest. I am a visiting fellow at Warwick university, and I am writing an article on universities and innovation. I warmly welcome the boost to the science and engineering budgets in the past two years, the extra £100 million that has been invested in the infrastructure fund and the £15 million extra for the university challenge fund, but we are only scratching the surface. Far more needs to be done, and far more radical action needs to be taken. We are spending £6.1 billion as a Government on research and development, of which less than 2.5 per cent. is going to experimental development. We have a development gap. If we are to get better at turning inventions into innovations and commercially exploiting them, we must reconsider the main funding streams in the United Kingdom. When less than 10 per cent. of the research councils' budget is spent on experimental development, we need to do better.
This is a forward-looking Budget which lays the foundations for future prosperity. I have every confidence that it will boost productivity—
§ Mr. Nick St. Aubyn (Guildford)
The hon. Member for Dudley, South (Mr. Pearson) told us that this was a landmark Budget. It was so much so that some of us on the Conservative Benches observed the Prime Minister 545 nodding off in the middle of it. We heard this afternoon how the Secretary of State's dog is sick of the whole thing. Many will be sick as a dog when they hear the details of the Budget and how it affects them. There should be a warning not to be a saver under a Labour Government, a warning not to live in the countryside and a warning not to work in manufacturing industry. The savings ratio has fallen by a third. Petrol tax has gone up to £8.50 for every £10 spent on fuel, which penalises those who live in the countryside. Manufacturing is in recession and jobs are being shed.
§ The Parliamentary Under-Secretary of State for Education and Employment (Mr. Charles Clarke)
I wonder whether the hon. Gentleman is trying to become the Joe Biden of the Conservative party by stealing other people's speeches.
§ Mr. St. Aubyn
I am not sure whether that was an attempt at flattery but I will ignore it, given the prospects of that former member of the Opposition.
We must remind ourselves that when the Government talk about a strategy for transport, they are really talking about raising taxes on running a car or a lorry until the brakes squeak. They are really talking about making a smash-and-grab raid on the majority of the British people. So much for the party that claims to rule for the many, not the few.
If the Government were serious about their transport strategy, we should today have heard the Secretary of State for Education and Employment tell us how he will encourage more people to walk their children to school or to give their children a bicycle to go to school. Last summer, I went with the Select Committee on Education and Employment to Switzerland. One of the striking features of Switzerland is how many—almost all—children bicycle to and from school. At peak travel times, roads in Switzerland are relatively free of cars, unlike in Britain where roads are congested. Reducing traffic congestion would be a strategy worth pursuing.
We should be encouraging schools to have their own budget for special educational needs. At least in my own constituency, too much of the schools' budget is spent on transport. However, enabling schools to manage their own budgets would go against the grain of a Government who like to dictate and run everything from the centre, with all the inefficiencies and waste that that involves. We have a Government who want to control from the centre and take more out of our pockets so that they—not the individual—may decide how to spend it. Central control is at the heart of the Government's agenda and at the heart of this week's Budget.
Let us leave the magic world of the conjuring Chancellor and return to the real world—in which jobs are on the line and businesses are at risk, and in which families have budgets of their own to prepare, children of their own to raise and hopes of their own to fulfil. When those families examine the Budget, they will be asking what kind of Government take away the married couples allowance and mortgage relief this year, but provide them with no help in the form of the children's tax credit until a year later. They will be asking what type of Government think that they should help business by helping something called the serial entrepreneur.
546 The Government think that the modern economy is composed of high-rolling, risk-taking business enterprises, that all should go to those who brave all, and that those who risk all win all. That is not the economy that the Government inherited.
The Government inherited a Conservative capitalism that believes in saving, in investment and, above all, in commitment. There was nothing in the Budget for the vast majority of medium-sized firms in middle England which underpin our economy and form its bedrock—the many thousands of firms employing millions of people who work hard and save hard simply to secure a decent living, and who are risk averse, not risk takers. There was nothing for those businesses or employees in the Budget. But there was something for them in Conservative Budgets.
The previous Government inherited an economy that had far too few such businesses—but we built them up. From 1986 to 1997, the number of firms with an annual turnover between £250,000 and £5 million rose by 70 per cent., and the number of firms turning over between £5 million and £10 million rose by 80 per cent. The number of businesses turning over less than £250,000 barely increased. Yet the Secretary of State for Trade and Industry announced yesterday that the Government will target the 10p tax relief at the bottom end of firms—at the 250,000 firms which will undoubtedly appreciate the benefit but which are not the firms that will deliver the growth, jobs and stability that our economy needs.
What have the Government done to the bedrock of our economy? They have, for one thing, imposed stamp duty—which is a tax not only on expensive housing but on the typical premises of the typical British business. Recent research has shown that, for every 1 per cent. rise in stamp duty, there has been about a 3 per cent. fall in the value of that property.
How do those businesses grow and how do they raise money? They do not seek out serial entrepreneurs: they seek their bank manager. When their bank manager lends them money, he asks, "What is the value of your business?" The value of their business is tied up in their property. Therefore every time the Government hit the value of a property, they hit the business occupying it, the business's growth and the jobs that might have been created. I tell the Financial Secretary to the Treasury—who was recently the Minister with responsibility for small business—that the Government are doing that damage to small business.
§ Mr. Phil Willis (Harrogate and Knaresborough)
Is the hon. Gentleman essentially offering an abject apology from the Tory party to the House—and to all the people, businesses and householders of Great Britain—for what happened on Black Wednesday in 1992?
§ Mr. St. Aubyn
I should declare an interest: I have a small business. I also had a small business that went bust after black Wednesday. I know well the suffering of a modern economy. However, there is also gain. Under the previous Government, some of us suffered, but we fought back and won back. Ultimately, we were all winners. The Government are stopping the possibility of such an outcome. They are taking away, with higher taxes and more regulation, the ability to create wealth.
We now have a minimum wage. Someone earning just above the minimum wage will benefit from the Government's Budget by just 1p an hour. Introducing the 547 minimum wage creates a problem of wage differentials. This Budget was the one in which the Government should have alleviated the problem by targeting any tax breaks on those earning just over the minimum wage and up to £1 an hour above it. But the Government completely lost the point and the plot, just as they will lose the next general election.
§ Helen Jones (Warrington, North)
I should like to confine my remarks to the Budget's provisions on education. Earlier in the debate, when I heard the speech of hon. Member for Havant (Mr. Willetts)—who is no longer in the Chamber—I realised that the Tories have still not grasped the realities of education in the United Kingdom. I had hoped that we might have a serious debate on the way forward for our schools. Today, however, Conservative Members are again only indulging in political opportunism. For 18 years, they were guilty of the culpable neglect of our children's education; now, they want to convince us that they have had a Damascus road conversion.
Apparently struck by a blinding light, Conservative Members have become the enemies of centralisation and bureaucracy and want to tell us that they are the teacher's friend. I am sure that the entire teaching profession will be touched by that concern, particularly when they remember that, for 18 years, those same hon. Ladies and Gentlemen supported a Government who increased bureaucracy and centralisation in schools as never before.
We should remember that their Government introduced an unworkable national curriculum, with over 1,000 individual learning targets. Their Government changed the secondary science curriculum three times, so that school books had to be thrown away. They were the Government who left teachers and children to work in crumbling schools, with a repairs backlog of £4 billion. The provisions in the Budget and the way in which we are structuring spending in our schools are necessary to tackle the failures of the previous Government.
Last week, the Opposition had the brass neck to initiate a debate entitled "burdens on schools". The only burden that the previous Government did not impose on schools was the burden of success. When they left office, almost half our 11-year-olds did not reach the expected standards in English and maths, and two thirds of 16-year-olds could not even achieve a grade C at GCSE in those subjects. Even worse, the United Kingdom was second from the bottom in the international league survey of mathematical achievement.
We believe that tackling that failure in education is not only an economic necessity but a moral imperative. A Government who leave their people ignorant stunt their people's lives. A Government who deny people the tools to understand, control and master their world deny them power. The Victorians said that knowledge is power, and they were absolutely right. By insisting that all the efforts in our schools be devoted to raising standards, we are in a very real sense giving power back. The Government are giving power back to all our children because we will no longer tolerate a system in which a child's chances of getting a decent education depend purely on luck.
We believe that all children deserve the best. We are investing an extra £19 billion in education over the next three years to demonstrate a commitment that begins the 548 moment a child enters the system. Our commitment begins with a £540 million sure start programme, which is designed to tackle disadvantage at the roots. All teachers know that some children come to school already disadvantaged, and that disadvantage must be eradicated.
We have already spent £62 million reducing class sizes at key stage 1. The Government's commitment extends to lifelong learning and to the £470 million that we are spending to improve access to new technology and establish 1,000 IT centres. The truth is that, by failing to make that investment, the previous Government profoundly disadvantaged areas such as the one that I represent. Schools in my area could not raise money voluntarily for the computers they needed and people did not have computers at home. As a result, people were cut off from the skills that they needed and from a vast pool of knowledge. They were denied the skills that would make them more marketable in the future. People who were disadvantaged as children would have been disadvantaged as adults if it were not for this Government's actions.
That is why I welcome the £2,000—which is additional to the £2,000 that schools have already received—that the Government are giving to every school in the country to buy books. I know that Opposition Members will say that that funding is centrally directed and is a burden on schools. I assure them, as a former English teacher, that I would rather have carried that burden than the burden of not having enough books, of children having to share books or of books falling apart. We cannot expect to expand people's minds, hearts or spirits when they are working in crumbling buildings without adequate equipment—as they were under the previous Government.
To accuse this Government of over-centralisation is to ignore what is happening on the ground. I have seen the books going into schools and I have seen the literacy hour working—not as a straitjacket, but as a tool for teaching and learning. I have talked to the children who benefit from it and the teachers who use it, and they enjoy it. I do not believe that any Government should apologise for making it a priority that our children leave school literate, numerate and conversant with new technology. That is a basic duty of government. It is Conservative Members who should apologise because they neglected that duty for 18 years and sold our children short.
The real difference between Labour and the Conservatives is that we do not just talk about raising standards: we commit the resources to make that a reality. I can already see the results of that strategy on the ground in my constituency. My local education authority has received more than £1 million to cut class sizes. Schools are to receive eight extra teachers and 10 additional classrooms. Eleven schools in my area have received money for energy efficiency schemes. Two schools used the money to remove outside toilets, and it is a disgrace that those conditions had been allowed to persist for so long.
Last week, the Under-Secretary, my hon. Friend the Member for Norwich, South (Mr. Clarke) and I visited a school in my constituency where we saw a room full of computers, installed as part of the national grid for learning. I had seen the same thing in another school the previous week. When one considers the three summer literacy schemes in my constituency and the new money 549 that has been devoted to after-school activities, one begins to get a sense of the real enthusiasm and enjoyment that the Government's policy is re-introducing to schools.
§ Helen Jones
I hope that the hon. Gentleman will forgive me, but I cannot give way as time is limited.
Our teachers and our children are valued. In this and in previous Budgets, we have allocated the money to underpin the high standards that we require. We will not write off the majority of our children as previous Governments did.
We recognise that there is a long road ahead. I would like to see many more resources allocated to researching the effectiveness of different teaching methods. We could, for instance, examine the relative effectiveness of generalists and specialists in primary school. I would like to see proper research into how new technology will change teaching styles and approaches—because it certainly will. I hope that my right hon. and hon. Friends will consider those issues in the future.
We must also continue our policy of attracting the most highly qualified graduates to teaching so that it is the first career choice of our best students. We are beginning that process with the Green Paper, which will reward good classroom teaching—something that teachers continually called for when I was in the profession. I hope that that process will continue.
Most important, this Budget and our previously announced spending plans have changed the focus on education so that it is seen not as a drain on resources but as a basic investment in the future. Education is a source of experience and emancipation for people. It is the source of their future well-being, and we must view the money that we allocate to education in that light. I hope that we shall continue to change our focus on education in the future; and I commend the Budget resolutions to the House.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Before I call the next hon. Member, it may be helpful if I remind the House that, under our current arrangements, the clock is stopped if an intervention is taken. Hon. Members are thus not prejudiced and do not lose any speaking time if they take an intervention.
§ Mr. Phil Willis (Harrogate and Knaresborough)
The hon. Member for Cambridge (Mrs. Campbell), who is no longer in her place, referred to a school in her constituency that had agreed, with the support of the Liberal Democrats, to pay for an additional teacher. I think it is fair to put it on record that that agreement—which many of us regret—was supported by all parties, including the Labour party in Cambridge.
In my 10 minutes, I do not intend to waste the time of the House by rehearsing the comments made by other hon. Members, either for or against the Budget. I come from a practical education background, and I wish to explore how the Budget will affect people on the ground. I have spent a fair amount of time in the past two days consulting the local education authority in North Yorkshire and schools 550 in my constituency to discover what the Budget means to them. The reality is that, from the director of education downwards and upwards, the Budget will have little, if any, effect on them.
North Yorkshire has passported all £12.9 million into schools, as it did last year. It has seen a provisional increase in its tax rate of 9.6 per cent., which is a significant figure, on top of 14 per cent. last year. Despite that, every school in my constituency and throughout the LEA area will lose at least 0.75 per cent. of its budget. The Budget proposals may sound marvellous in the House and in some of the press releases, but they will make absolutely no difference to the vast majority of schools in North Yorkshire. I challenge Ministers to contradict that statement.
As a result of the Budget, libraries, which are part of our education service in North Yorkshire—I know that that is not the case elsewhere—will face real cuts. It is no use saying that the odd library will have computers when most libraries are able to buy fewer and fewer books—another major resource that some people quite like—to lend. More important, libraries are having to cut staff—the very people who will be needed to teach people to use the computers to access the internet and the learning age initiative.
I want to raise the major issue of a group of people who were not mentioned in the Budget, or by the Secretary of State or other hon. Members. They are the army of people who support our local authority and school services. They include special needs assistants, those who work in the music service and library and office staff. The single status agreement, which was made in 1997 under this Government, will cost the local authority in North Yorkshire £2.27 million. The net result is that the Tory administration in North Yorkshire has decided that it cannot afford that cost and it will therefore be paid by the very poorest people in our system—the care assistants in local authority homes and the teaching assistants in our schools, who will lose 24 per cent. of their pay as a result of the agreement.
I ask the Financial Secretary, when she winds up the debate, to address that issue. How can a national agreement such as the single status agreement, which impacts on every local authority in Britain, be ignored in the Budget and the departmental totals when some of the most lowly paid staff in the country are having to pay for the agreement with their jobs?
Another issue that has not been mentioned today is the further education sector. Baroness Kennedy called it the Cinderella service, and there was to be a revolution in FE. It is the engine room of lifelong learning, but did the Secretary of State for Education and Employment, in his statement, or the Chancellor, in his Budget, announce a single extra penny for information and computer technology in FE? Is there not to be a learning revolution in our colleges? There is no money for the infrastructure, or to deal with the chronic debt that so many of our colleges have.
§ Mr. St. Aubyn
Will the hon. Gentleman agree that, compared with the increase in the numbers of people going through further education that was achieved in the previous Parliament, this Government's claims and ambitions are pathetic?
§ Mr. Willis
I apologise, Mr. Deputy Speaker, for that unfortunate slip. I shall answer the hon. Gentleman's question in due course.
The hon. Gentleman has hinted at one of the issues for FE—the growth in the number of students. The Government are making available an extra £1.1 billion for FE and HE and most of that will be used to cope with the 700,000 extra students whom FE colleges are asked to deal with during this Parliament. The Budget and the Education Secretary's statement completely ignore the plight of FE staff and lecturers. Since incorporation, they have been utterly demoralised.
There were 60,000 full-time FE lecturers in 1993, and 21,500 have either been made redundant or taken early voluntary retirement packages. We now have an army of agency staff working in our colleges. They do not have the same commitment to those colleges and to delivering their programme as do the full-time staff. Yet there is nothing in the statement to deal with the huge problem of demoralisation.
The hon. Member for Guildford (Mr. St. Aubyn) referred to the success of the previous Government. They were successful in productivity terms because they got rid of a third of the staff and increased the number of students by a third, but they also wrecked the FE system.
§ Mr. St. Aubyn
The hon. Gentleman will recall that the report of the Select Committee on Education and Employment, of which the hon. Member for Bath (Mr. Foster) is a member, agreed with recent findings that there was no significant change in the quality of teaching as a result of those productivity gains. There was a real saving, and a real increase in the numbers being taught.
§ Mr. Willis
I have to disagree with the hon. Gentleman and point him to the Further Education Funding Council inspections. The council's latest report makes it absolutely clear that the poorest-quality teaching in our colleges is by part-time staff. Why is that? The hon. Gentleman knows the answer. So highly valued were FE staff under the previous Government's regime that one in five full-time permanent FE staff now have no teaching qualifications, and 60 per cent. of the part-time agency staff—the bogus self-employed staff, as the Secretary of State once called them—have no qualifications at all. That is an absolute disgrace. The Secretary of State today had no answers, no proposals and no funding to deal with the under-qualification of our FE staff or to rebuild their morale by investing in them.
Finally, Liberal Democrat Members make a plea that the pay and career structure in the FE sector should not continue to be ignored. If FE is to be the engine room for lifelong learning, we must recognise that people have to want to enter FE, just as they want to go into teaching, and they should feel that they have a career that is worthy, recognised and valued.
§ Dr. George Turner (North-West Norfolk)
There is much to welcome in the detail of the Budget, but I am particularly pleased about the extra commitment being 552 made, and the earlier commitments being accentuated and continued, to education. We have heard much this afternoon to which I say, "Hear, hear" but which I will not repeat. In particular, my hon. Friend the Member for Warrington, North (Helen Jones) said much with which I entirely agree.
I was delighted to hear about the better deal that the Budget delivers for the more than 20,000 pensioners in my constituency, for children and for business. I entirely endorse the modernisation theme and the Government's attempt to encourage and coerce people, throughout society, into making better use of new technology.
At Budget time, we look more broadly at the direction that the Government are taking. Although I understand that the role of the Opposition is to whinge and to find details to complain about, we must occasionally stand back from the detail of the Budget.
It was no accident that the Chancellor referred to measures that are being introduced over a period of at least three years. The right hon. Member for South Norfolk (Mr. MacGregor) made much of the fact that the Chancellor was in his statement discussing three years of Budget changes. The Chancellor should be congratulated on that, rather than condemned for it. Having spent many years in local government, I know that the greatest problems were caused by lack of certainty and the fact that only from year to year did one know what it would be possible to achieve within the budget.
§ Mr. Grieve
I certainly share the hon. Gentleman's view that projecting budgetary proposals over three years may have a great deal to commend it. Is it not therefore incumbent on the Chancellor clearly to spell out in his statement and accompanying documentation the year-by-year impact on total tax over the same period?
§ Dr. Turner
As one who spends no more than the average amount of time on these issues, I must say that I am much less confused than some Opposition Members tell us that they are. I heard the confirmation of previous announcements. I knew that it was confirmation because I had heard the earlier announcements. I heard the Chancellor refer to confirmation of some of the detail, and have seen it in the documentation.
The Chancellor and the Government are displaying a welcome element of vision. They are saying, "We intend to introduce reform". They are acknowledging that they cannot reform in one Budget but that telling people where they will be in a year or two's time is helpful, and are saying, "We do not want to be pulling rabbits out of the hat on Budget day." That is a helpful development in the running of our nation's finances.
The reforms that we are introducing are necessary. We inherited an unacceptable situation. When Opposition Members refer to some golden inheritance, they entirely ignore the reality of the problems that the nation faced when this Government were elected. It was necessary to change the direction of the ship of state, and when one is changing direction, one faces problems and difficulties. The Government have none the less been right to do as they have. It would not have been right to continue with a business taxation system that was not in the best interests of the future of business—despite the difficulties that that change caused, particularly in the pensions industry. I congratulate the Government on the way in 553 which they have withstood the flak over such changes. It was essential in the long-term interests of business that we reformed the taxation system under which it operated.
As a constituency Member of Parliament, I should like to raise with the Government two points on more detailed issues. I know that the Chancellor has recognised that the impact on the rural environment, from which most of my constituents come, of changes in the fuel escalator is dramatically different from that on more urban environments. That has been accepted by the Government, and was acknowledged in last year's Budget by the introduction of special measures to encourage better provision of rural transport, which was very welcome.
As I have told the House before, however, a problem remains for many of my constituents, who count the number of buses by the week rather than by the hour. One cannot encourage better use of public transport that does not exist. I therefore welcome the extra money in the Budget, to add to last year's, to address those issues, but suggest to my right hon. and hon. Friends on the Front Bench that there is a limit to the public money that can be used to improve public transport without being wasteful. The Government must acknowledge that, in their effort to reduce car emissions, more stick than carrot is being applied in rural areas.
I ask the Government to consider a related issue which ought to be addressed. My constituents find that 6p or 7p a litre is being imposed on prices at rural petrol stations, over and above the prices paid more routinely in London, for example. Given yesterday's announcement by the Secretary of State for Trade and Industry on the Government's commitment to looking at competition, we ought to be asking at least national chains, such as supermarkets, how they can justify adding a rural tax to petrol. I hope that the Government will consider at least taking that issue on board. Given that high petrol prices have much to do with national policy and protection of the environment, will the Government consider obtaining voluntary agreements from supermarkets and others on fairer prices for rural service users?
§ Mr. Grieve
Might not the reason for higher rural prices be the cost of transporting petrol to such petrol stations?
§ Dr. Turner
That may be the answer, although the research that I have seen suggests that it is not. I suspect that it often costs less, depending on where the fuel is imported from. Fuel can be imported in King's Lynn in my constituency. We must look at prices of other products. I do not find the same variation in the prices of bread, sugar and other commodities in Tesco. The Government could look into that. As we perhaps head towards further increases in the price of petrol, the Government ought to consider whether the stick—however necessary that might be to protect the environment—should be accompanied by a carrot, by other initiatives to help those who live in my constituency and those like it.
I know that, like me, the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Norwich, South (Mr. Clarke) takes a personal interest our efforts to ensure that pupils and teachers make better 554 use of information technology. My concern is the sheer scale of the problem—although perhaps I should say "challenge" rather than "problem". I know that my hon. Friend is a "can do" member of the Government, and will see that we must address the issue as a challenge—
§ 4.8 pm
§ Mr. John Hayes (South Holland and The Deepings)
The Budget has all the characteristics of cheap fiction: it contains assault, deception and betrayal.
There is no question but that the assault is on rural Britain. The increase in petrol duty and the 11.6 per cent. increase in diesel prices will be a blow to domestic car users and the haulage industry, which is a substantial employer in my constituency.
The deception is to suggest that there is substantial extra spending in the Budget on public services. Very little extra spending on public services is detailed in the Red Book: there is some recycling of money, and there are some reannouncements, but little extra money, and I will come to that later.
The betrayal is of married people and home owners. I make no bones about the fact that I am a substantial loser as a result of this Budget. Because my wife and I are without children, have a mortgage and both have a car, we will probably be about £600 a year down. For myself, I do not mind a great deal, but that burden will also apply to a great number of my constituents.
I feel particularly for elderly and disabled essential car users in my constituency. People in rural Britain must often travel many miles to social services, schools and shops. It is cold comfort for elderly or disabled car users to be told that they should be pleased because other people will get money at some time in the future because they have children, or that people who are earning substantial wages will get the benefit of some future cut in taxation. There has been a substantial betrayal of disabled and elderly car users.
Business has been mentioned several times in the debate by Labour Members with—I choose my words carefully and generously—varying degrees of business experience. When the Chancellor speaks of businesses with a declared profit of less than £50,000 taking real risks, he is speaking about the very narrow band to which he is giving additional support. As my hon. Friend the Member for Guildford (Mr. St. Aubyn) said, many businesses are typically risk averse, not risk takers.
When the Government talk about business, they sound like a child with a new toy. They are unaware of businesses' virtues or vices. Those of us who have been in business regard the Budget, in the context of all the other burdens that have been imposed on business since the Labour party came into office, with a great deal more scepticism.
I shall address my main remarks, however, to the speech of the Secretary of State for Education and Employment, which in many ways was a good speech. He made some valid points. It is sad that we never hear such generosity from those on the Labour Back Benches. They will never acknowledge that the 18 years of Tory rule delivered some benefits. When will they grow up and acknowledge that all Governments do some good things and some bad things, that all Governments have good policies and bad policies?
555 I am the first to acknowledge that the Secretary of State for Education and Employment said some sensible things in his speech. He was less sensible when he was parroting Blairite soundbites. The Secretary of State never sounds good when he tries to imitate the Prime Minister, but then the Prime Minister does not sound terribly good when he tries to imitate himself. When the Secretary of State speaks his own mind and uses his own words, he is far more impressive. I draw attention to three things that he mentioned in respect of information technology and schools.
I ought to declare an interest, as I am still a non-executive director of an IT company, so by design my comments will be very general. The first point is the confusion between information and knowledge. There is a worry that, because people have finally acknowledged that the ways in which we gain, exchange and use information are expanding so rapidly, they assume that information is automatically translated into greater understanding and wisdom. However, information and wisdom are not the same thing. It may be possible to be wiser with fewer facts, and less wise with more facts.
As G. K. Chesterton suggested through one of his characters, Basil Grant,Are you still so sunk in superstitions, so clinging to dim and prehistoric altars, that you believe in facts? Do you not trust an immediate impression? … this world may be founded on facts, its business is run on … impressions and atmospheres",as well as understanding and experience, of course. We must not run away with the idea that simply providing children and adults with more information will necessarily make them wiser, happier or more employable.
The second point is that the role of the teacher is changing radically. Teachers will need to be better prepared to deal with the new challenges facing them, and the Government have acknowledged that in some of the work that they have done since the election. It is not enough to provide technology and train teachers; the Government must go one step further and work with teachers to apply that to the curriculum and blend it with existing good practice. Information technology is not just a bolt-on to what we do already; it is intrinsic to the teaching and learning process.
That brings me to my third point. The relationship between the teacher and the taught is changing. It is unfortunate that the debate on class sizes has taken place outside that context. By focusing on class sizes, the Government have reinforced the out-of-date notion of teaching as essentially didactic—a traditional pedagogy, rather than self-paced learning or any of the developments about which the Secretary of State spoke. The Government will have to update their rather primitive views of class sizes to make them consistent with what they are saying about the changing world of information, understanding, teaching and the relationship between the teacher and the taught.
All that raises the question of where people will be taught. I refer hon. Members to the McKinsey report on IT and education, produced last year, which is arguably the definitive study of IT in schools. It raised exactly those points in its conclusions. Specifically, it identified the need to blend an educational philosophy— a view of teaching—with the use of information systems. Too often in schools and colleges, the blend is not successful.
The money allocated in the Budget is insufficient to deal with the current challenges in education. There is a little new money. The hon. Member for Bristol, West 556 (Valerie Davey) waxed lyrical about books. What she said was rather sweet, but, if the £2,000 were translated into computers, it would mean one computer per school. One extra computer per school would be virtually meaningless. The extra money is valuable, but it is not the be-all and end-all. When there is a crisis in the number of teachers, when schools are unable to employ experienced head teachers and department heads because of a lack of funds, it is an insult to tell them that, instead, they will be able to buy some new poetry books.
That is even more of an insult in the context of the widespread closure of public libraries. I am sure that the hon. Member for Bristol, West will share my concern, although I have not heard her express it in the Chamber. The Government should be thoroughly ashamed of those closures, which are taking place mainly, but not exclusively, in Labour local authorities. Unlike the hon. Member for Cambridge (Mrs. Campbell), I do not blame the local authorities for that. I know that they have been obliged to channel money away from those essential services, because of Labour cuts in the funding of local government.
This Government are probably more hostile to local government than any other Government in recent memory. The settlements that rural local authorities have enjoyed over the past two years—[Interruption.] Labour Members laugh. Perhaps they could tell me why Labour local authorities are closing libraries, why they do not consider libraries an important priority, and how they marry that with their enthusiasm for books and literacy, and the Prime Minister's much-vaunted visits to schools? Perhaps they have not checked the record, but I have read every speech that the Prime Minister made when he was a Back Bencher, and I do not think that he mentioned education even once.
§ Mr. Barry Gardiner (Brent, North)
It is an honour to be called to speak in the Budget debate. I have listened carefully to the speeches in the Chamber over the past three days. The contributions that I have not heard, I have read in Hansard. Many of the speeches show great knowledge and economic understanding. Many have been sharp and politically incisive. Occasionally, a speech has been both.
I have no doubt that my speech will be neither. My adversaries will say that I am no great economist, and my friends, I hope, may say that, by nature at least, I am no politician. I hope that the House will understand if my remarks depart somewhat from the consensus of the debate.
The consensus seems to be that the question that arises from the Budget concerns the level of taxation. Has it risen or has it declined? What was promised and what was delivered? The Leader of the Opposition—for the sake of clarity, let me say that I am referring to the right hon. Member for Richmond, Yorks (Mr. Hague), not the right hon. Member for Yeovil (Mr. Ashdown)—stated that it was no good the Chancellor claiming that taxes were not rising. He said that, the previous week, the Prime Minister had finally let the cat out of the bag. He went on to misquote the Prime Minister selectively, saying that that was a betrayal from a man who had said at the general election that there would be no tax increases at all.
557 The hon. Member for Mid-Bedfordshire (Mr. Sayeed), who may well be a better economist than the Leader of the Opposition, but is only half the politician, made the cardinal mistake of quoting the Prime Minister correctly, saying that Labour hadNo plans to increase tax at all."—[Official Report, 9 March 1999; Vol. 327, c. 251.]The shadow Trade and Industry spokes-Martian returned to the Opposition's theme yesterday. He said:we know their true priority—it is tax, tax, tax."—[Official Report, 10 March 1999; Vol. 327, c. 391.]Are the British people really concerned about whether the fiscal burden is rising or falling and, if so, whether in cash terms, in real terms or as a proportion of gross domestic product? I make no claim to be a great economist, but even I understand that, when the Office for National Statistics tells me that the tax and prices index has risen by 4.9 per cent.—a good deal more than inflation—the next figure that I need to look at is in the average earnings index for the same period. When that shows a rise of 8.2 per cent., my poor politician's brain tells me that the people of Britain will not be following Mr. Hague and Mr. Maude to the barricades.
§ Mr. Deputy Speaker
Order. The hon. Gentleman has been a Member of the House long enough to know how he should address other Members of the House.
§ Mr. Gardiner
I thank you for that correction, Mr. Deputy Speaker.
Economics is the scientific study of the allocation of scarce resources, but Budgets are not simply about allocation; they are about ensuring that that allocation achieves specific policy objectives. In other words, people do not mind paying money to the Government as long as they think that it is spent wisely on projects of which they approve. When we spend money in a shop, we want to feel that we have obtained good value for it. When the British people spend money on taxes, they want to feel that they are getting good value for their money as well.
§ Mr. Gardiner
No, I will not.
If the Leader of the Opposition is proved right and there has been a betrayal of the people of this country, that betrayal can have happened only if the Government have failed to deliver the new politics that the people of the country elected them to deliver. That new politics has been characterised by my right hon. Friend the Prime Minister as the third way. If we are truly to examine the merits of the Budget, we should do so against the values and objectives of the third way.
What are those values and objectives and what does the Budget do that relates to them? The values are human dignity, opportunity, responsibility and community. Human dignity is the equal worth of all our citizens, irrespective of their background, their religion, the colour of their skin, their age or their disability.
We must assess the Budget on what it has done for pensioners. It has provided a £3 billion package to give people dignity in old age and the £100 winter allowance, 558 which increases the previous payment fivefold; the minimum income guarantee of £78 a week, and £121 a week for couples; and the linking of that guarantee to earnings, which makes average pensioner households £240 a year better off.
Another of those values is opportunity, which means the ability to shape one's own life free from either the overbearing interference of the state or the stifling bonds of poverty and inequality. Here we must assess the Budget on two distinct fronts. For children and the poorest in our society, the Budget has brought real relief. It has eliminated the poverty traps, which produced the obscenity of people losing money when they took up a job, through marginal rates of more than 100 per cent. The new national insurance contributions structure will raise the starting threshold from £64 to £87 a week and 900,000 people on low pay will be relieved of NIC payments altogether.
Child benefit rises mean just that—children will benefit. That measure, taken with the new children's tax credit and the working families tax credit, means that families will receive the financial help that they need at the time they need it—when they have to meet the expense of bringing up children. As a result of the Budget, no family with children will pay any income tax until it is earning more than £235 a week.
I said that the Budget should be judged on two fronts against the value of opportunity. Opportunity is not only freedom from poverty; it is freedom for people to shape their lives without excessive interference from the state. I admit that my party's record in that area is less than perfect. Before being elected to the House, I ran an international business for 10 years, and I will judge the Budget by its encouragement for small and medium-sized enterprises. The 10p rate of corporation tax for small companies is a real boost and, combined with the 20 and 30 per cent. rates for small and larger corporations, amounts to the best fiscal climate for business anywhere in the industrialised world.
However, most business decisions are not governed solely by the fiscal system. They are front-loaded, not end-conditioned. That is why the incentives for research and development through tax credits and the £100 million to upgrade our university laboratories are part of the Budget's delivery of opportunity to business. The Government could do more at the front end. Although I welcome the extension of 40 per cent. write-offs in the coming year, I must add that making a real difference to business investment will depend, in my view, on the Treasury considering capital allowances of up to 100 per cent.
Finally, in this respect, I cannot help but record my disappointment that my right hon. Friend the Chancellor did not adopt a tonnage-based tax for British shipping. In Holland, such measures have boosted employment in the industry by 23 per cent. and boosted GDP by 19 per cent. Such measures would provide a wonderful boost for United Kingdom jobs and prosperity, particularly in the north-east and in other traditional shipping areas, and would maintain the pre-eminence of maritime London. I look forward to Lord Alexander's report and trust that it will give the Chancellor the necessary background to introduce a tonnage tax next year.
Responsibility is our third value of the third way. It means recognition that the benefits that society brings come at a price. That price is our obligation to care for 559 ourselves if we can, and to care for others where we can. Nowhere is that better illustrated in the Budget than in the measures to reward work. The 10p rate of tax and the new 22p basic rate do so proportionately more for the low-paid. Our new deal has made it clear to the young unemployed that there is a responsibility on them to get work. That expectation will be backed up by practical help and advice through the gateway.
I am delighted that the Budget is extending provision for the over-50s. Those people have tremendous skills and experience to offer, and the £60 a week employment credit will help them to assume control over their own lives once again. The working families tax credit, guaranteeing a minimum income of £200 a week, is another encouragement to people to take responsibility for their lives and reap the financial benefits.
Responsibility, though, works in two directions, and society must also behave responsibly towards the future. There has been no greater cant in this Chamber over the past few days than the Opposition's synthetic anger about the fuel escalator, which is required to meet our Kyoto emissions targets. Responsibility is about building a safe environment for the future and for our children and investing in our children through books and computers to give them the skills and the wisdom to use that environment wisely when they assume responsibility for it. The £295 million for capital programmes to replace crumbling portakabins, classrooms and outside toilets, the extra £100 million for information technology in schools and the extra £2,000 to every school for books are the best expression of that responsibility.
§ Mr. Gardiner
No, I will not.
The final value by which we should judge the Budget is that of community. How does the Budget strengthen our sense that we depend, quite properly, on one another and that we are not individuals pitted against one another in the colosseum of the economic market. We are co-contributors to building a society in whose prosperity we all share.
The Institute for Fiscal Studies response to the Budget shows that every decile of the population gains from the Budget, but, critically, the richest decile benefits least and the poorest deciles benefit most. That means that the Budget has begun to reverse the widening gap between the rich and poor. The Rowntree Foundation report on inequality showed that that gap was growing faster in this country than in any other country during the 18 years of Conservative rule. The £430 million extra put into our health service accident and emergency departments, the extra £170 million to combat crime and the doubling of child support since May 1997 are all part of—
§ Mr. Nick Hawkins (Surrey Heath)
I must tell the hon. Member for Brent, North (Mr. Gardiner) that there is nothing synthetic about the anger felt by Conservative Members on behalf of their constituents. My constituents are well aware of the Government's propaganda, although some hon. Members may not have realised that the 560 Government have been found out, as recently as this lunchtime. I am not used to hearing the BBC attacking the Government for their duplicity, but as I listened to "The World at One" today as I returned to the House to take part in the debate, I realised that the BBC had done this country a signal service.
The BBC had been investigating what was being provided as a commentary on the Budget; apparently, it has been written by civil servants. That commentary was described as deliberately misleading. The hon. Member for Bolton, West (Ms Kelly) had been put up by the Government to try to defend the indefensible on "The World at One" today. She is Member for whom I have great respect; she is well known in the House for having come from a serious position in financial matters with, I think, the Bank of England. Nevertheless, she found it difficult to deny the suggestion by the BBC journalist that misleading information had been provided by the Government on the internet. It was apparent from this lengthy interview that the BBC recognised the position. Not only was all the bad news being edited out; not only were all the figures on the Government's website misleading; there was a whole page of Labour party political propaganda which had no relevance to the Budget.
I may be the first to break the news of that particular discovery, but I have no doubt that considerable concern will be expressed during the remainder of our debate on the Budget—and, perhaps, in points of order next week—about the scandalous misuse of taxpayers' money that has been involved in the Government's presentation of misleading propaganda. Even worse, the Government got civil servants to write the propaganda for them, pretending that it was in some way a factual analysis of the Budget.
As several of my hon. Friends have pointed out, this Budget is, in fact, nothing better than a scandalous conjuring trick. Misinformation has been deliberately given. As recently as yesterday, at Question Time, the Prime Minister deliberately failed to respond to my right hon. Friend the Leader of the Opposition, who repeatedly pointed out that, over the three Budgets delivered by the present Government, there had been a huge increase in the tax burden. On each occasion, the Prime Minister deliberately failed to answer the question: he tried to talk only about this Budget.
We are becoming aware of one aspect of even this Budget, as it unravels. It involves a further tax hike. In his attempt at a music hall act—his attempt to turn Question Time into a pantomime, which he does so often—the Prime Minister did not make any effort to answer my right hon. Friend's real question, which concerned the tax hike that had taken place in the three Budgets added together.
In fact, that came as no surprise. When the Prime Minister appears on Wednesday afternoons—he is now prepared to face questioning only once a week, rather than twice a week as before—he never answers a question. He reminds me of the late Lord Olivier in his great performance as Archie Rice in "The Entertainer", portraying a down-at-heel, sad, failing music hall artiste. That is how the British people will see our current Prime Minister. He never answers a question, he betrays parliamentary democracy, and he has no interest in telling the British people the truth.
561 Some in the business world, however, have already seen through the Budget. Ian Peters, deputy director of the British Chambers of Commerce—quoted in The Times yesterday—says:The sting in the tail may be that the Bank"—the Bank of England, that is—may have less room to reduce interest rates than we would have wished.Ruth Lea, head of policy at the Institute of Directors and one of our most informed economic commentators, was quoted in the same edition of The Times as saying:We wanted to see looser monetary policy and tighter fiscal policy and it looks as though we're getting the opposite.My main concern, however, lies with small business. My constituency contains many thriving small and medium-sized businesses, and I am one of the vice-chairmen of the Small Business Bureau. All the small business organisations have seen through the Budget. Brian Prime, chairman of the policy unit of another small business organisation, the Federation of Small Businesses, estimates that the increased contribution rates for class 4 national insurance from 6 per cent. to 7 per cent. will hurt about 500,000—half a million—self-employed people. He says:The real entrepreneurs and risk takers—the sole traders—will miss out on the corporation tax changes, but will be hit by increases to national insurance contribution.Ian Hanford, chairman of the federation, says that the Budgetcompletely missed the target where the majority of small firms were concerned.The gloss has already come off this Budget, and the truth behind the Chancellor's attempted conjuring trick has emerged.
Quoted in The Daily Telegraph yesterday, Patrick Stephens, a partner in Ernst and Young, said that the Budget wasnot going to make a difference where people are looking at starting a business or not.We realise that Labour Members have little understanding of small business. The hon. Member for Brent, North said that he used to run an international business, but he is a rare figure on the Government Benches. Most Labour Members have never had to work in a business.
§ Mr. Hawkins
I hope that my hon. Friend will forgive me if I do not. Time is limited.
Before coming to the House, most Labour Members have never had to worry about the bottom line. Hardly any have had to run a work force, or look at a balance sheet. Most have come from the public sector. A number of other sectors have been hard hit. I used to work in the insurance and financial services industry, and I should have thought that a Government who claim to be caring would recognise that it is a good idea for people to take out insurance. Not a bit of it. Not for the first time, the Chancellor of the Exchequer regards insurance as a cash cow to be milked whenever he wishes, so that he can balance the books in a particular Budget. This year, 562 he has hit insurance premium tax; in the past, he has regarded travel, holiday and tourism businesses as a cash cow, and has raised airport passenger duty.
Mark Boleat, director-general of the Association of British Insurers, says:The increase in insurance premium tax is regretted. It will result in higher premiums and could further encourage some people not to insure. It will hit people on the lowest incomes hardest and those starting up new businesses.So much for this caring, family-friendly Budget. This Budget makes it more difficult for people to take out insurance. It means that more people will not take out insurance, and will not protect their families, homes and businesses.
The Budget has a nice, easy, soft target. The increase in insurance premium tax is rather like the Chancellor's earlier raids on pension funds. This is a soft target, and a stealth tax. As my right hon. Friend the Leader of the Opposition has said, this is a pick-pocket Chancellor, who proves time after time that he believes in stealth taxes.
Even some Labour Back Benchers have referred this afternoon to the difficulties in controlling smuggling to which the Budget will lead. Certainly, the Budget has done nothing to reduce smuggling; in fact, the incidence of smuggling will increase. The hon. Member for Hove (Mr. Caplin) referred to the "white van trade"—a black economy in white vans. That is the black and white truth of this Labour Government.
The hon. Gentleman also expressed concern about the implication of his own Chancellor's Budget for small breweries. There is one in my constituency—the Hog's Back, an excellent real ale brewery whose product I take great pleasure in sampling whenever I am in my constituency. Such small breweries will certainly be hit, as will the entire brewing industry. I declare my interest as joint treasurer of the parliamentary beer club. I am very concerned on behalf of those who buy and enjoy beer. I want them to enjoy British beer lawfully rather than smuggled beer, and the same applies to wine and spirits.
Labour Members have raised concerns about shipping and hauliers. My constituency contains several hauliers' firms, most of which cannot afford to take their businesses abroad. Earlier, a Labour Member said that he feared that some hauliers would indeed take their business abroad. The small hauliers whom I represent—
§ Mr. Gareth Thomas (Clwyd, West)
I welcome the Government's broad strategic approach, which is consistent with their desire to create a society that is both enterprising and fair.
I want to concentrate on two issues. I want to discuss what the Budget does for pensioners, and its ground-breaking efforts to promote environmental objectives through the tax system. I shall make particular reference to the climate change levy, which represents a radical departure.
My constituency contains more pensioners than any other Welsh constituency, and is among the top 20 in the United Kingdom in that regard. The announcement of a substantial increase in the winter fuel payment to 563 £100 has met with universal acclaim. It is indeed a generous measure. Pensioners may look forward to a warmer winter, thanks to that increase.
The Budget has improved the position of the poorest pensioners with the introduction of a minimum guarantee on tax, and the minimum income guarantee, which introduces an above-inflation increase. A commitment has also been made to link the minimum income guarantee to earnings. Those measures are very welcome.
The Chancellor has agreed to extend the new deal to the over-50s. I agree with Age Concern that the measure isa welcome recognition of the particular problems experienced by many in this age group".However, I concur with many groups involved with older people that it is important to tackle age discrimination and make job opportunities available to older people. Older people are an increasingly powerful force in society. They represent an increasing percentage of the population; it is highly significant that the Budget acknowledges that.
More needs to be done to tackle the plight of pensioners in poverty. I should have liked the Government to say more about the need to tackle fuel poverty. There should be a cross-departmental integrated strategy to deal with the scandal of fuel poverty. According to objective research, no fewer than 8 million households in the United Kingdom cannot afford to heat their homes properly. Perhaps we may look forward to future announcements in that regard, because something needs to be done.
The climate change levy on the business use of energy is a radical measure. It conforms with the recommendations of the Marshall report on using economic instruments to promote environmental protection. It shifts the burden from economic goods, such as jobs, to environmental bads—pollution, waste and inefficient use of energy. Significantly, the proposal is revenue-neutral in so far as it has been offset by savings in employers' national insurance contributions.
I agree with the Chancellor that this important measure will improve energy efficiency. It will enable the United Kingdom to meet its crucial international commitments in combating climate change and it will encourage employment opportunities, especially in sectors dealing with the new environmental technologies. Crucially, it will do so without affecting UK firms' competitiveness. I congratulate the Chancellor on having squared that circle, and on having achieved a balance between the need to maintain economic competitiveness and the need to take significant strides towards environmental sustainability.
I welcome the reform of company car taxation, the reduction in vehicle excise duty for small cars and the increase in landfill tax to promote sustainable waste management. Money raised by the landfill tax is of special advantage to many people in my constituency. One scheme, in Old Colwyn, is known as the "Fairy Glen". Money from the landfill tax has been used to improve the environment in that locality, by improving amenities such as footpaths; that work is to be welcomed. I congratulate the people involved in that scheme.
§ Mr. Thomas
I am afraid that I will not because, with respect, I am coming to the end of my speech.
564 The Budget is to be welcomed. It provides a substantial boost to enterprise and fairness; I welcome it wholeheartedly.
§ Sir Peter Lloyd (Fareham)
I am grateful to you for calling me, Mr. Deputy Speaker. I am afraid that I did not manage to hear the two opening speakers in today's debate. As they are not present to hear me, I suppose that honour is in some ways satisfied, but I apologise to the House.
Naturally, I heard the Chancellor make his Budget address. He has been very fortunate. He inherited an inflation rate on target, in a world where inflationary pressures were subsiding fast. He had the sense to continue, for his first two years, with sound Conservative spending policies and reap the benefit. But, behind the screen of election promises not to raise personal taxation, he has, since 1997, contrived systematically to increase a battery of other taxes and imposed, in the process, heavy extra costs on industry and commerce, in no way offset by the decrease in corporation tax.
The Prime Minister was wrong to say, in the House yesterday, that this was a tax-cutting Government, not a tax-raising Government. The way in which the Government have chosen to raise the extra money has reduced the ability of industry and commerce to invest and create jobs. What is worse, by abolishing dividend tax credits for pension funds they have diminished savings and future pensions.
The Chancellor has with some ruthlessness—and, as my right hon. and hon. Friends like to say, with stealth—built up a very tidy balance, a part of which he is giving back in this Budget. To give credit where it is due, he gave it back last Tuesday with such a commanding flourish that, at the time, hardly anyone appeared to notice that they were being treated with their own money—and with only a part of it at that, and a good part of that part filched from their future pensions.
Despite the Chancellor's prudence in hanging on to so much of that money, the growth forecasts on which his Budget is based look very optimistic. He expects lower growth in the coming year, but his figure is higher than most informed commentators expect and he predicts a rapid bounce back to trend in the following year.
With Asia in recession, Japan stuck fast, Europe struggling and the world kept going by a dazzling performance in the United States—which surely cannot be sustained at that level indefinitely—it is difficult to see how the United Kingdom can be expected to be so buoyant while the pound is so high and we are so dependent upon exports. I hope that the Chancellor is right, but the Budget speech would have been a good place to justify his confidence, as it is essential to his whole Budget strategy. Perhaps one of the Ministers winding up today or on Monday will do so before the Budget debates end.
It is very difficult to see what the Chancellor has actually done in the Budget, especially from his speech. He constantly uses figures for one year, two years or three years; cumulative figures or figures for the period of the whole Parliament; last year's tax changes are sometimes included and sometimes not; and sometimes next year's changes are included. It depends on what point the Chancellor is trying to make. The aim is presentation, not 565 clarification. That is not setting the Budget in context, as the hon. Member for North-West Norfolk (Dr. Turner) suggested. It is not a contribution to open government and serious debate. It is too often a public relations exercise in obfuscation and spin.
It is possible to get near the truth from public documents, but that takes time. No doubt by the time the objective position is laid bare, the Budget debate will be over, the headlines will have been written, and public attention will have moved on to other matters. However, I expect that the minds of more people than the Chancellor cares to admit will return to those headlines when they look with disappointment at the various stoppages that continue to be made in their pay cheques. I also suspect that a good many pensioners who caught the words "increased in line with earnings" will be a little downcast when they find that their pension increase continues to be in line with inflation.
Similarly, it is difficult to weigh up the merits and the real effects of the multitude of tax changes that the Chancellor has proposed. Despite the green Budget discussions and the leaks—which would have obliged Hugh Dalton to resign 50 times over—most of the changes have not been properly weighed and discussed. Now that the Chancellor has nailed them to his mast, they will no doubt eventually arrive on the statute book, whatever their merits. It would be good to hear from the Minister in her winding-up speech that, if effective argument is deployed against any of the proposals, the Government will not feel unmanned by dropping or changing the measure in question.
I welcome the ending of MIRAS—although not all my hon. Friends do. It has served its Conservative purpose most triumphantly by creating a property-owning democracy. It had been much reduced by Conservative Chancellors in the interests of simplicity and neutrality in the tax system, and it is time that it went.
Unlike even more of my hon. Friends, I also welcome the end of the married couples allowance. It did absolutely nothing to sustain marriage. It is absurd to argue that a husband or wife are kept out of the divorce court and away from the warm embrace of the Child Support Agency, or were originally propelled into church, by the lure of a £200 tax advantage. One cannot buy a sound marriage in that way, and it demeans such marriages to pretend that one can. Indeed, if it is possible to bribe a family unit to stay together—which it is not—child tax credits might be more effective. Therefore, I guardedly welcome their appearance in the Budget, although it seems that they are being introduced with a built-in anomaly in the taper, which means that, unlike child benefit, they will disadvantage the many families in which the wife chooses to stay at home and look after the children.
Too many of the other changes look ike window dressing. There will be a 10p tax band: how much better if the threshold had been raised and more people had been taken out of tax altogether. No doubt the scheme for tax-free purchase of shares by employees is well-intended, but it is not a good idea for people to put much of their savings in the company on which their livelihood depends. It would have been much better if the Chancellor had left PEPs alone and had sought to devise workplace schemes to promote them.
566 I do not have the time to mention other changes, but I fear that it will be accountants who will prosper from many of them, while management will find them a time-consuming distraction, and the intended benefits will not materialise.
The Chancellor has been less than frank with this Budget. There was no need for him to be disingenuous, as in many respects he had a good story to tell of the performance of the United Kingdom economy in a troubled world. He has been busily increasing taxes rather than reducing them, and the electors will find that out. Where he has reduced taxes, he has made a little seem to go a long way. The reductions are spread far more thinly than he has persuaded people to expect, and they will not be pleased. Where he has made reductions and given incentives, he has often made the system more complex and time consuming—especially for business and the Revenue—than is justified by any likely benefit.
The Budget is a strange mixture of new Labour spin on the macro side and old Labour intervention and manipulation on the micro side. I do not think that it will wear well.
§ Mr. Dominic Grieve (Beaconsfield)
I have found the debate fascinating, especially the speech by the hon. Member for Brent, North (Mr. Gardiner), who started by making some sensible points and then disappeared into a peroration designed to beat the clock, and was unwilling to participate in a debate. However, he made a compelling point. He said that those who pay taxes want to know, above all, that the money will be spent wisely. It was noteworthy that he did not say that one of the aims of prudent taxation is to so engineer the matter, if it is humanly possible, as to enable wealth creation to continue, so that funds are made available for the better provision of money to the Government in subsequent years. The Government consistently fail on that. Indeed, a succession of Governments have shown themselves unable to deal with the issue.
One of the problems that faces a Labour Government is that they cannot get away from the belief that those people who may have money are not justified in having it and that the Government can make better use of it. All the evidence suggests that those who have money are the best redistributors of wealth, because they make use of it to better their fellow men by investing it in business—their own or other people's.
What are we to make of what the Government have done? I shall take just one example, because I want to have time to move to another topic. We are told that stamp duty will be raising £340 million per annum by 2001. It is an easy tax, but it is a straightforward capital tax. It started under previous Governments as a modest charge on the conveyancing of property and leases, but it is rapidly being transformed by the Chancellor into a substantial fiscal instrument.
Those who carry out business will suffer the most. As my hon. Friend the Member for Guildford (Mr. St. Aubyn) rightly said earlier, those who have the most need of houses as capital assets are those who conduct small business. It is a particular disaster that they will suffer the most when they are unable to use such assets easily as collateral, by which they run their businesses. If ever one wanted an example of a form of 567 taxation that was easy and tempting to the Chancellor, but bad and nefarious in its effects, raising stamp duty as he has done fits the bill. When I see such policies, I start to view with considerable suspicion the entirety of what the Chancellor had to say.
In one respect, I awaited the Budget with some excitement. I am a member of the Select Committee on Environmental Audit and I am mindful of the fact that fiscal instruments are one method by which we may achieve changes in people's behaviour to promote environmental goods and prevent what are commonly called environmental bads. However. one has to be careful. If we start inhibiting wealth creation, we have to ask seriously whether we are getting the balance right and succeeding in securing environmental benefit rather than simply putting an extra burden on those who are being taxed. The proposals in the Budget are, I suppose, intended to put the environment at the heart of government, as the Government promised, but the results are exceptionally disappointing.
I commend the Government on the climate change levy. It is a difficult matter, but if the Government get it right—we shall have to wait and see whether they do—they will have taken an important step towards promoting the efficient use of energy in industry and preventing wastefulness. I am happy to welcome that and to congratulate the Government on introducing it. However—I hope that hon. Members will excuse my cynicism—I see that the Government have said that the measure will be fiscally neutral and that there will be no extra burden on benefits by the cutting of national insurance charges. A 5 per cent. cut has been suggested. I am not in a position to judge whether that will be sufficient to balance out the impact of the levy, but the measure had better be fiscally neutral, because otherwise business will see it as a betrayal. Subject to that caveat, I am happy to welcome the measure.
The picture is far less happy on the other instruments that are designed to achieve environmental improvements. Let us consider the levy on fuel. There is absolutely no evidence that raising fuel taxation is having any impact on diminishing motor car use. The reasons are simple. Motor cars are ubiquitous, they are essential in modern society and for millions of people there are no reasonable alternatives to their use. The point has been made about rural areas, but the same applies in many urban settings.
Viewed as a separate item, the decision to raise taxes on petrol appears to be simply a device for raising money. I do not believe that it will create any of the environmental good that the Government say they desire. We are told that it will be balanced by a reform of vehicle excise duty, but it does not require much intelligence to see that if raising petrol taxes has no impact on motor car use, reducing vehicle excise duty as a compensation is nonsense. The truth of the matter is that unless one is using one's car on a limited basis, a reduction in vehicle excise duty will come nowhere near removing the extra burden that the fuel escalator will place on individuals. There is no point in putting escalators in place and encouraging people to climb higher and higher in their transport costs if there are no proven environmental benefits in doing so. Only when the Minister can persuade me that there are will I be willing to consider that measure, but there is no evidence that it works, and on that basis it is seriously flawed.
568 Similarly, I have some anxieties about the landfill tax. It is not that I disagree with the principle of trying to reduce landfill—heaven knows, landfill takes up a major part of the acreage of my constituency and anything to reduce it would be welcome. However, the evidence from my constituency is that fly tipping is increasing. I also find it difficult to see that landfill is in less demand. The reason for that is that the Government do not have a strategy for waste disposal. It is all very well to raise the landfill tax to discourage people from landfilling, but landfilling remains the easiest way of disposing of waste. Until the Government produce concrete suggestions and say whether they support the growth of waste incineration on a grand scale, for example, increasing tax does nothing except raise money to go into the Chancellor's pocket. That brings me to my final conclusions on the matter.
The Budget is an ingenious piece of money raising. All the decoration that is placed upon it—the promises that it will produce all kinds of benefit—does not convince me otherwise. In reality, it is a tax-raising Budget and it is a great pity that the Chancellor has failed to be frank with the House and the nation about its underlying intention. The best I can say about the Budget, looking at its environmental aspects which I had hoped to welcome, is that it is a real beta double minus Budget. As such, the Government should go away and think again. If they wish to impose environmental taxes they must produce a total package instead of nit-picking, which serves only to conceal tax raising by the Chancellor of the Exchequer.
§ 5.4 pm
§ Mr. Robert Syms (Poole)
Having listened to the Budget debate this afternoon, it is a pleasure to contribute to one of the most important debates of the year. It provides an opportunity to discuss matters about which our constituents care deeply.
Let me start with inheritance—the Government's inheritance from the previous Administration, which was a golden legacy in terms of the economic management of the country. In 1992 the economy emerged from recession. It grew consistently year on year and when the present Government took office, they inherited a growing economy, falling unemployment, stable inflation and a situation that most Governments since the war would have considered well blessed.
As a result, our economic outlook and ability to withstand shocks are far better today than 10 years ago, or 20 years ago, before the Thatcher Government. The previous Government took many tough decisions that were not popular but were for the national benefit. That is reflected in the fact that we are now the world's fifth largest economy.
From the moment they came to office, the Government started raising taxation: an extra £40.7 billion in this Parliament. One of the major areas of increase was in advance corporation tax and dividend tax credit, hitting pension funds. One of the previous Government's greatest achievements was the development of private pensions and private responsibility. At the end of that Government, there were more private sector pension funds here than in all the other European countries put together; but one of the first acts of the Labour Government was an act of political vandalism, taxing many of those funds and taking £5 billion a year out of them.
The changes in dividend tax credit have hit many pensioners. I have had letters from pensioners, many of them too poor to pay tax, not believing that the 569 Government, as a deliberate policy, had changed the tax system so that their income was cut. I am afraid, as the hon. Member for Dudley, South (Mr. Pearson) said in an interesting speech, that the Government have not addressed that problem, and that many thousands of poorer pensioners are struggling because of the changes to the tax system.
We have heard about the Government's stealth tax. This year, an extra £7.2 billion will be raised in taxation; next year, £10.5 billion; and the year after, £9.3 billion. There are certain matters for which collective action and raising money through taxation for the common good are justified, but as a general principle, taxing people, families and businesses takes choice out of their hands and says that Whitehall or the council chamber spends money better.
I have always believed that people spend their own money better when they make choices for themselves, their families and their communities. If we continue to raise the tax take as a percentage of gross domestic product, and to raid people's budgets, we will take real choices and decisions out of families' hands, which is not good for a nation.
One of the headline topics over the past six to 12 months has been the problem with manufacturing. Hardly a day goes by without jobs being lost in manufacturing, but the Budget did not really tackle the problem. It is expected that manufacturing output will drop by 1 to 1.5 per cent., and the National Audit Office report said that the presumption is that unemployment will rise over the next two years by 400,000. That is very bad news, and I do not feel that the Government have taken the issues on board, especially in the west midlands, where I fought a seat in 1992.
§ Mr. Hayes
My hon. Friend mentioned the National Audit Office prediction on unemployment. That is supported by the Chancellor's estimate in the Red Book of an increase in welfare spending, principally because he knows—in my judgment—that the Government will have to bear the extra cost of unemployment.
§ Mr. Syms
My hon. Friend makes a good point. Despite what the Chancellor said, welfare spending is still growing strongly, and I am sure that he will have to eat his words as the consequences become clear over the next year or two, especially when we consider the trajectory of the economy, see how fast it slows, and learn whether the Government's prediction of 1 to 1.5 per cent. growth is realistic or whether the private predictions of less than 1 per cent. are realised.
The Budget certainly increased taxation. MIRAS was scrapped, and I am afraid that I cannot agree with my right hon. Friend the Member for Fareham (Sir P. Lloyd), who welcomed that. MIRAS helped those who were on the margin of being able to buy a property and wanted to get on the property ladder. By scrapping the relief, we are restricting people's choice to own a property, which many aspire to do.
Married couples allowance was abolished. I agree that in its current state it did not mean much, but that is after a systematic reduction, for which the previous Government must bear some responsibility. As a state we should give 570 a signal to the public about what we believe in. The fact that the tax system is neutral on marriage is not a good thing.
Company cars have been hit. Little has been said about that, but many people will pay substantially more for their company cars after the changes in the Budget. We hear much about the Kyoto summit, but as my hon. Friend the Member for Beaconsfield (Mr. Grieve) rightly said, there is no evidence that increasing fuel taxes reduces motoring use. However, it does take money away from people who have to use cars, especially those in rural counties such as Dorset. If parents have to take children five miles to school, they do not drive four miles and make the children walk a mile because the tax has gone up. People still have to go all the way to Sainsbury's, and to see the doctor. Many rural dwellers have to visit local towns to use services because those services are not available in the villages.
The Government are cynical about fuel taxes, as they are about the smoking tax. They know when they put petrol tax up that it will raise the revenue and that is why they do it. Before the Budget changes, £9 billion was raised and, according to the Automobile Association, £8.50 of every £10 now spent on fuel goes in tax to the Government. Almost all the food that is sold in supermarkets and all the other goods we buy travel by road. If the Government keep on putting up diesel and petrol taxes, the cost of living will increase.
If the Government were really serious about Kyoto and reducing pollution, they would tackle the issue through the tax system by making people buy newer and more fuel-efficient cars that had better technology, such as catalytic converters. They would not do it by raising fuel taxes. The other problem with raising fuel taxes is that it is regressive. If someone is wealthy and drives a Jaguar—
§ Mr. Syms
If someone drives two Jaguars, he can probably afford fuel taxes, but for many less-well-off families living in rural areas—who need a car—it is a large part of their family budget. When fuel taxes are raised, other parts of their budget suffer. They may have to go without a family holiday or trainers for the children.
The landfill tax was increased and that will affect the budgets of local authorities. Poole borough council is struggling to pay that tax. It has not had the best standard spending assessment settlement from the Government, and rising landfill taxes are a constant annoyance. In effect, the landfill tax is a tax on local authorities which have a limited amount of money.
§ Mr. Grieve
Has anyone suggested to Poole council how else it should get rid of its rubbish, with the Government's approval?
§ Mr. Syms
The council is examining all options, but sometimes it does not have a great choice. The landfill tax is costing my constituents dear.
The Chancellor said in his Budget statement that enforcement measures on smuggling would be increased. However, market forces are at work. If people can travel to the continent, buy beer and cigarettes cheaper, sell them back here and make a profit doing so, they will. The way 571 to combat that is not to have more customs officers, but to address the problem of price. That means not a freeze but a reduction.
This is a consequence of the single market. If people can cross boundaries, the Government have to address differential pricing by introducing a competitive price structure for tobacco and drinks; otherwise rolling tobacco and beer will be smuggled in large quantities and cost us billions of pounds a year. The consequence is that British jobs are lost and British companies are affected.
I am sorry that this Budget has been introduced. It is not good for Britain and I shall vote against it on Monday.
§ Mr. Derek Wyatt (Sittingbourne and Sheppey)
I apologise for having been in and out of the House this afternoon, Mr. Deputy Speaker, but as I am sure you will understand, I have had one of those days.
Private Eye may give me the order of the brown nose for this, but I should like to say how brilliant the Budget is, and to congratulate my right hon. Friend the Chancellor of the Exchequer and his Front-Bench team on it. Around my kitchen table, we believe in two things—stability and fairness. Stability and fairness seem to shine from all that the Budget has introduced.
We want low inflation and low borrowing, and those are being delivered. We want a child-centred approach to the United Kingdom's future, and that is being delivered. We have been unreasonable to our old age pensioners, and that is being addressed. My family wants good schools, better health services, a friendlier business attitude and a better environment. The Budget stimulated me, and it will stimulate the country. I congratulate the Treasury team once again on the Budget.
The most sensational announcement was about the 1,000 computer centres, which beggars belief. I wonder, however, whether the Treasury team might reconsider the proposal because it may be that different communities will establish different centres with different practices, different technologies and perhaps even different purchasing systems or teaching mechanisms. My right hon. and hon. Friends might join Peter Fanning at 4PS in considering a private finance initiative system.
Such a system might include Tesco, which has a long history in the area, and McDonald's, which has a long history in the internet and computing. It could create a kind of public service company that might be the buying and delivery agency for the 1,000 centres without taking away from local authorities the opportunity to design something to suit their libraries, post offices, village halls or schools. It would give purchasing power to the centre, which might achieve better value for money.
A few weeks ago, I was the first Member ever to have an Adjournment debate on libraries, and it is fantastic that our schools are being given £2,000 for libraries. Many schools are information poor, even before we start talking about computers or the internet. I have been to 33 of my 44 schools. Some have no librarian, one or two have libraries in halls and aisles on the way to classrooms; and some have books that are 20 or 30 years old. That is not fair or reasonable. The gift of £2,000 is most generous, and my schools are thrilled about it. I congratulate the Treasury team on that gift.
Giving teachers an opportunity to get on the net at home, through laptops, is a terrific idea. It is a real sea change. Teachers do not find technology easy and they 572 are sometimes uncomfortable with it. It is not life-threatening, but they do not find it easy to deal with. The opportunity to get on the net at home and to upgrade their skills is a double plus.
May I ask Treasury Ministers to reconsider the risk element mentioned in relation to the university fund for venture capital? Some books and economic forecasts name the UK as the seventh largest economy, with California the eighth. However, 0.5 per cent. of our economy is driven by venture capital, while in California the figure is more than 35 per cent. Of the 0.5 per cent. in the UK, most is accounted for by mergers and acquisitions. It is not risk capital.
Although we have put more money into universities, I wonder whether we might do so differently. Would Ministers consider creating a fund that could be shared between chambers of commerce and universities? The amount could be increased, and we could say—as with the £2,000 for libraries—that a set amount of £1 million or £2 million should be given to each chamber for venture capital. Then they, in association with the universities, could develop brand new, scientifically based software industries to increase at a local level our knowledge of how capital works and our understanding of the modern business world—its model is set by California, not Europe. In that way, we could improve our whole knowledge base.
A good example of how that might work is the Prince's Trust, the only fund in the UK that has given small amounts—£2,000 or £5,000—to kids who understand pop music, design, internet access, web architecture and much more. Three of their companies were so successful that they sought listings on various markets. That is a sensational success story. We should build on what the prince has done and borrow from that model so that, at the bottom level, sums of £5,000 or £10,000 get to the community and to the sort of garage entrepreneurs who created companies like Apple and Intel in America 25 years ago.
Lastly, I make a plea. I have a port in my constituency, Sheerness, which is the fifth largest in the country. North Kent is affected by the tunnel and the ferry and by the differences in the prices of two commodities: alcohol, and diesel and petrol. The new 40-tonne lorries from France have flat-bed petrol holders. Instead of holding the petrol in a designed area at the back, it is held flat along the bottom. That has more than doubled the amount of petrol that they can take. In consequence, they come to Kent, and instead of going back, they can take business off us.
I understand that it is a competitive world—but hang on. Our hauliers have to pay a licence of £10 a day in France and Germany to travel on their roads. Their hauliers pay nothing, but they add to our pollution, and now they are taking our business away. It is a serious problem. I was briefed by one of my companies, WH Hunt, whose turnover is £8 million. However, that is at the margins; it is making not a 10 per cent. return on capital but 4 or 5 per cent. It is a family company and it will get through; but many people are involved in road haulage in every constituency. It does not matter what party one is in; the problem affects the way in which they do business.
§ Mr. Hayes
I hear what the hon. Gentleman says about haulage. His point has been made by hon. Members on 573 both sides of the House. The Government knew about this before the Budget. The hon. Gentleman described the Budget as marvellous and wonderful, but why did the Government not do something about this? They have exacerbated the problem.
§ Mr. Wyatt
I agree with much of what the hon. Gentleman says, but I am trying to mark the Chancellor's card for the next Budget.
In the same way, it is ironic that the £6.50 bottle of Chapel Down wine that I bought in Tenterden on Saturday costs £1.90 in Calais. There is no logic in that. People will go to Calais to buy it. It is the same with beer. Shepherd Neame, a family company, is in a neighbouring constituency but has 60 pubs in mine. It has gone on and on about a level playing field for beer tax. It is ironic that its beer is cheaper in Calais than in Sittingbourne or Sheppey. It has tried hard with its lobbying and may get permission to go to the House of Lords to appeal.
The business of Britain is with family companies. In Germany, they do not go to the market; it is the middle stratum companies that make the wealth in communities. We must enable middle order companies. It is important to reconsider on haulage and on the beer and wine trade. Despite what the hon. Member for South Holland and the Deepings (Mr. Hayes) said, this was an otherwise cracking Budget.
§ Mr. Julian Brazier (Canterbury)
On a point of order, Mr. Deputy Speaker. Have you had notice from the Minister for Agriculture, Fisheries and Food that he will make a statement to the House about the important announcement that has been made on European Union farm reform?
§ Mr. Deputy Speaker
That is not strictly a point of order. The answer is no, but the hon. Gentleman might have regard to the usual practice in these matters, and it is possible that a statement may be volunteered in due course.
§ Mr. Donald Gorrie (Edinburgh, West)
I apologise to the House for not having been unable to attend the whole debate, but I have heard many speeches. I will not follow the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) in his eulogy of the Budget. It is good in parts. I take the position of the curate rather than the enthusiast.
My first point is perhaps naive. Can we have practical action to put into effect all the rhetoric about transparency in Budgets and clarity about figures? The habit of recycling figures and confusing the public, whether deliberate or not, does not help people. It creates such confusion that the Secretary of State had to intervene in the speech of my hon. Friend the Member for Bath (Mr. Foster) to satisfy him that some of the money involved was new money. It would be helpful if we could have some arrangement such as a letter N beside a figure so that we knew what money was new and what was recycled.
Surely the essence of civilised debate is that we agree on the facts and then argue about what they mean and how we achieve what we want. If we are confused about 574 the figures, we will not have a civilised debate. I urge the Government to set out the figures in a consistent way so that we know whether we are working on one or three years, what baseline we are working from and whether the money is new.
Members of the Government do not yet accept that, despite the welcome improvements in some areas of funding, there is a big black hole at the centre of local government expenditure, not only on education but on many other services. There were fairly persistent cuts for the many years of Conservative Government and they have continued in most cases in the first two years of Labour government. To take one example, the welcome increased expenditure on books, as far as I can find out from the figures, which I am still exploring—getting accurate figures is very difficult—does not fill the gap in expenditure on books caused by cuts year on year. The increased expenditure helps a bit, but it does not recover the many losses of the past. In many areas, there is still a major reduction in education and associated services. By funding attractive individual programmes, the Government have still left a big black hole in the core funding of councils.
For example, the Government do not adequately fund pay increases. It is a shibboleth—if that is the right word; it is a false notion, in any case—to say that pay increases can be funded out of productivity or improved efficiency. If pay increases are not adequately funded, it merely means that councils sack some staff or are compelled to fight fiercely to keep pay increases down. So the pay of teachers and those in further education, whom my hon. Friend the Member for Bath mentioned, has been held down. Welcome improvements are being made in some public services based on the slave labour of those employed therein. That is not a civilised and acceptable practice. The Government should adequately fund pay increases. If the resulting Budget means that there must be a cut, it should be a clear and open cut. The failure to fund pay increases adequately is, to use a Conservative word, a sneaky or stealthy cut.
There are ways in which the Government could achieve good value for money. The Scottish Accounts Commission has said that if both human and computer administrative support was better in schools, we could save the equivalent of 1,500 full-time teachers. So if the Government invested—it would be a substantial investment—in more administrative staff and more computers, it would cost less than the salaries of 1,500 new teachers, but they would get the equivalent. Surely such well-targeted investment would be profitable.
The Treasury should set up a bumf-busting committee, or anti-bureaucratic paperwork committee. Wherever one goes—schools, colleges, local authorities or enterprise companies—one hears complaints of too much paperwork. I am sure that other hon. Members have heard such complaints.
§ Mr. Hayes
Does the hon. Gentleman agree that paperwork has increased because of the initiatives, particularly in schools, that the Government have taken in their two years in office? Teachers tell me—as I am sure they have told him—that they have initiative fatigue. So 575 many initiatives and bits of paper are coming from the Government that the paperwork problem has been exacerbated during Labour's tenure, not countered.
§ Mr. Gorrie
I partly agree. However, the Tories seem to think that all evil things started with the election of the current Government. The Conservative Government, too, produced masses of paperwork. Nevertheless, setting aside any party points, paperwork is an issue. If the Government could have a task force—if that is the language that they prefer—to reduce paperwork, they would receive huge financial benefit, and we would get more bangs for our buck.
As my better-informed hon. Friends tell me, even with the new computers, over 90 per cent. of teachers will still not have a computer. It is also most important that the Government should fund the charges for computer access to the internet. That issue has not yet been properly addressed. Although we welcome the Government's interest in computers, and obviously everything cannot be put right in a year, help with funding computer access charges would be very helpful.
The cuts in local authority funding made by both the previous Government and the current Government have reduced expenditure in the community on services such as community education and social work, and especially on the services provided by voluntary organisations that provide the type of support and help needed by families who live in deprived areas and suffer from social exclusion. If we could put more money into supporting the community and supporting those people in the community, we should do a great amount to improve pupils' attitude when in school, and thereby achieve much better results in schools. Most education happens outwith, not within the school. The cuts have had a very serious effect on youth clubs and other excellent activities that help to create the right frame of mind in pupils.
On a technical point, the Government persist in treating local authority self-financed expenditure as within the control total. The Government are therefore preventing councils from developing enterprise in spending their money sensibly.
The Budget has also neglected the issue of student finances. Many students are experiencing a real crisis in their finances. The Government have to address the issue, either by putting more money into altering the student fees regime or by putting more into helping students with living costs, which could be done simply by giving universities and colleges more for hardship and access funds.
The 1p income tax reduction that we have been promised for next year is not what is wanted by most people in Scotland. They would prefer to keep tax at the current level, and to have the money invested in better services. It will be very interesting to see whether the Scottish Parliament addresses the last two issues: student poverty and using tax money for investment rather than for a small tax rebate.
§ Mr. Tony McNulty (Harrow, East)
It is a great pleasure to follow the usual Liberal Democrat whinge of the hon. Member for Edinburgh, West (Mr. Gorrie). I have not heard the hon. Gentleman—either when I was watching the debate on television, or since I have been in 576 the Chamber—manage to say one kind word about the Budget, which, in line with the previous two Budgets, is yet further evidence of the direction in which the new Labour Government are taking the United Kingdom. The Liberal Democrats, who are always whingeing and dancing on the head of a pin, should know better.
It is very clear why the Conservatives do not know any better. In last year's Budget debate, Conservative Members had difficulty in grasping some basic concepts which are, in essence, completely alien to them. The first concept—I shall say this nice and slowly so that they will perhaps understand—is long-term stability. They have never heard of it; that concept is completely alien to the Conservatives, in or out of Government. They struggle with stability—even short-term stability, which, for the last Government, ran from October to October and from Blackpool, to Bournemouth, to Brighton or to wherever else the blue rinse brigade met once a year to harangue them and occasionally wave handcuffs by way of developing policy. The Conservatives, in or out of Government, have not heard of long-term stability. They do not have a clue.
The second concept underpinning this Government with which the Conservatives have great difficulty is economic prudence and responsibility. The Conservatives and, to a lesser extent, the Liberal Democrats—it is always a lesser extent with them—now come to the House and whinge about politicising the economy. It is not as though the Conservative's actions over 18 years were somehow clean, pure and independent from any vexatious notion of political intervention in the economy. This and the previous two Budgets have demonstrated a real concern for prudence, economic responsibility and competence. Political considerations have played no part.
§ Mr. Gareth Thomas
Does my hon. Friend agree that the decision taken early in the Parliament to give operational independence to the Bank of England has been of major strategic importance because it has engendered an environment of stability that is the absolute antithesis of the boom-and-bust cycles that were prevalent under the previous Government?
§ Mr. McNulty
I thank my hon. Friend for that comment because nothing could be more true. The Conservatives have no idea of the strategic economic importance of that single decision—and why should they? After all, for 18 years, they played proverbial golf with only one club in their bag. God alone knows how the Conservatives would survive in government now that the Bank of England is independent.
§ Mr. St. Aubyn
I am very grateful to the hon. Gentleman. Does he regret the fact that the majority of City economists and commentators believe that, as a result of this week's Budget, we are far less likely to see the interest rate cuts that the economy needs?
§ Mr. McNulty
As ever, the hon. Gentleman—whose family I believe owns half of Cornwall—has demonstrated clearly that he has, first, more front than 577 Harrods; and, secondly, amnesia to the nth degree in political terms. The Conservatives presided over an economy in which inflation shot up to well over 20 per cent. and interest rates rose past 15 per cent. We will take no lectures about economic competence and management from Guildford or anywhere else.
That is the key to my point about economic stability. The Conservatives have no licence to complain because they messed things up so badly—my constituents will certainly never let them anywhere near power again, either locally or nationally. The Liberal Democrats—that sixth-form debating society—have had no sniff of power since Lloyd George. They have had no chance of power, at least in a national context, for ever and a day thereafter—not least because of the endless, mindless witterings of those who parade as the Liberal Democrat economic and Treasury spokespersons, whom I would not trust with an abacus, let alone a calculator.
§ Mr. Caplin
I know that my hon. Friend is in touch with the Liberal Democrats about many issues. Has he had an opportunity to ask them whether 1p will now become 2p or 3p?
§ Mr. McNulty
I thank my hon. Friend for that intervention. There was a wonderful comedy show on television the other night called, "Despatch Box", on which a certain young gentleman from Kingston, and on, and on, and Surbiton, and on, and on—or was it the hon. Member for Kingston and Surbiton (Mr. Davey)?—waxed lyrical on that subject but never answered the question. All he would say was, "One penny equals £2 billion and all we want is £2 billion." When it was pointed out to him that there is a £2 billion hole because we have taken a penny off income tax, and he was asked "Does not two billion plus two billion equal four billion?" he said, "No, we only want £2 billion."
The only conclusion that we can draw is that the Liberal Democrats would put up income tax by 1p to get £2 billion, but they would not fill the resulting £4 billion hole, so there would be even more cuts, which is typical of the Liberals. That is why they were so severely kicked out of Harrow last year. They did not have a clue. They are lovely when it comes to call my bluff, silly little party games and sixth-form debating, but when it comes to real power and decisions that impact on people's lives, they are utterly useless.
§ Mr. Gareth Thomas
Before my hon. Friend leaves the subject of the Liberal Democrats, will he tell the House whether he agrees that part of their problem is that they have not formed a Government in living memory, so have not been subjected to the disciplines of a major party in rationally formulating policy?
§ Mr. McNulty
I entirely agree with my hon. Friend. If we have regional balance, we can say the same of Plaid Cymru and the SNP—the Scottish nobody party.
I return to my serious point about concepts. On economic stability, the Tories were found wanting. They could not even recognise that concept. The evidence of 18 years demonstrates that they have no regard for the notion of some degree of financial redistribution to 578 poorer people, which is my third concept. They cannot contemplate that—it is sacrilege and blasphemy to them. Yet we have achieved much in the better deal for families, the working families tax credit—the Conservatives will all be up on their hind legs railing against that next week—and the £3 billion package for pensioners. They have no answer to that.
The Liberal Democrats whinge that there should have been more money and announce their own Mickey Mouse Budget—the one that they announced last week—which says nothing. As my hon. Friend the Member for Clwyd, West (Mr. Thomas) implied, that is wonderful, back-of-a-fag-packet stuff drawn up by people who think that if they call someone an economic spokesperson, he will suddenly become imbued with economic knowledge. That does not work for the hon. Member for Kingston and Surbiton and on and on or the hon. Member for Gordon (Mr. Bruce). Mickey Mouse "Brucean" economics do not make serious economic considerations.
§ Mr. Foster
Is the hon. Gentleman aware that the views of my hon. Friend the Member for Gordon (Mr. Bruce) on the 10p rate of income tax are supported by a large number of bodies, including the Institute for Fiscal Studies? Does he ever take note of what such bodies have to say?
§ Mr. McNulty
I was almost going to take the hon. Gentleman seriously until he mentioned the Institute for Fiscal Studies.
My next point calls for a plague on both the houses of the Opposition. Starting with our first Budget and continuing through to this Budget, we are restoring not only public services but the professions that work within them and ensuring that their morale is second to none. The hon. Member for Havant (Mr. Willetts) had the cheek to stand at the Dispatch Box and say, "Well, there was £19 billion for education in the comprehensive spending review but nothing in the Budget." That is complete effrontery and, at the very least, does a disservice to his constituents and those of other Conservative Members. The restoration of public services in health, education and other areas that we are achieving would not have happened under the Conservatives. One has only to project their public expenditure figures from the last Budget of the right hon. and learned Member for Rushcliffe (Mr. Clarke) to realise that.
What the Liberal Democrats say about our not doing enough is equally facetious and entirely malevolent, but it is rooted in their fundamental lack of any knowledge of reality and responsibility in Government.
Our Budget takes a long-term view of the economy, works towards stability, provides money for those with less ability to enter the workplace and will achieve a fundamental revamping of public services. It is not rhetoric, and there are no back-handers or brown paper bags or brown envelopes for ex-Ministers from the previous Parliament to sit on boards of directors with fat salaries. The Budget provides genuine and substantive structural support, especially for small businesses. There 579 is reality behind our rhetoric about full support for enterprise. That is another concept that the Conservatives do not understand at all, not least because some of them have a perverse understanding of what are the most important sectors of business and an even more perverse background of how they earned their own money. Because those five key concepts are completely alien to Opposition Members, I feel quite sad about the paucity of any intelligence or substance in their contributions to the Budget debate. They speak empty-headed rhetoric. There is no substance, joy or pleasure in their suggestions for the people of this country. They present no genuine critical opposition.
§ Mr. Gardiner
Following my hon. Friend's remarks about the empty-headed nature of the Opposition, does he recall the opening comments of the shadow education spokesperson, the hon. Member for Havant (Mr. Willetts)? When asked whether he appreciated that the effect of the lack of support for the windfall tax and the £5.2 million fiscal tightening—
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. Will the hon. Member please sit down? His intervention was too long.
§ Mr. McNulty
I am sure that, had my hon. Friend the Member for Brent, North (Mr. Gardiner) been allowed fully to elaborate, his intervention would have been entirely appropriate. I fully agree with what he says about the Opposition's approach to the new deal, and shall end there.
§ Mr. Howard Flight (Arundel and South Downs)
I apologise to the House for not being present for today's debate. I was serving on the Committee considering the Welfare Reform and Pensions Bill.
In overall macro-economic terms, it looks as if the Budget is about right. Whether this economy stays on smooth track will—I fear—depend not on the Budget or even the Bank of England, but on what else goes on in the world, especially in the United States of America.
Many Labour Members have referred to the praise of the Organisation for Economic Co-Operation and Development and the International Monetary Fund for the success of British economic management. As they well know—to ensure that the record is set straight—this country has been given such praise since 1992, and the recovery, which has continued to this day, got going in 1992, mainly on the back of all the major supply-side reforms of the 1980s, analogous to what has happened in the United States, and our escape from being locked into continental European interest rates via the exchange rate mechanism when Europe's cycle was different from ours. Let it be a warning to this Government that, if they proceed with their euro ambitions, they might face precisely the same problems.
§ Mr. Flight
No, I will not give way. I have only 10 minutes to speak.
The Budget was unnecessarily complex and tinkering. A great deal of its objectives could have been achieved simply by raising personal allowances. It was clearly an 580 electioneering Budget. The Chancellor achieved the sort of publicity the next day that he wanted and obviously felt extremely clever presenting all the good news and concealing all the bad, but I shall point to one or two groups of people in my constituency who are not so happy.
§ Mr. Caplin
We are trying to engage in a debate, but the hon. Member for Arundel and South Downs (Mr. Flight) seems to be of the opinion that he has just 10 minutes to speak. My understanding of the House's rules is that extra time—
§ Mr. Flight
Thank you, Mr. Deputy Speaker. I am sorry that your time was wasted.
I shall comment on three groups of people in my constituency who have approached me. One is what I would call the post-war baby bulge generation—people typically aged from their late-40s to their mid-50s. When those people were bringing up their children, they suffered from the abolition of income tax allowances for children and from the fact that the last Conservative Government failed to transfer personal allowances. Just as their children are off their hands, these people are now losing their married couples allowance. They are not pleased about that. Those are just the sort of people whose votes Prime Minister Blair has been so keen to get.
The second group is pensioners of the future. The worst example of deviousness in the Chancellor's presentation was the fact that he said clearly that pensioners would continue to receive the married couples allowance. What he meant was current pensioners. People born after 1935 will not get the married couples allowance in the future.
That is grossly unfair. Many people have planned carefully for their retirement. They are not rich, and they assumed that they would get the married couples allowance. The change will cost them several hundred pounds a year. What the Chancellor did was just as bad as stealthily abolishing the widow's pension, except on a means-tested basis. People have taken the married couples allowance into account in their financial plans for the long term.
§ Mr. Flight
No, I will not be giving way.
The Chancellor will not reap the success that he had hoped for, in terms of winning votes. The Budget was supposed to be family-friendly, but the total being taken back through the abolition of MIRAS and the married couples allowance is some £600 million more than is 581 being given out in total to families through the new child credit and the increased child allowances. It is not a family-friendly Budget.
§ Mr. Flight
It was an act of stealth to abolish the married couples relief this year, before the new family credit comes in next year. The abolition of the married couples allowance is wrong in principle. The Chancellor brushed it under the carpet with a few feeble excuses. The institution of marriage should be buttressed by both tax and welfare facilities.
§ Mr. Flight
I am not giving way. In Britain, as elsewhere, children are brought up better with two parents in a married family unit.
Let us consider entrepreneurship and another example of the Chancellor's deviousness. It sounds extremely attractive to reduce the rate of tax on small companies to 10 per cent., but the overwhelming majority of small entrepreneurs are not companies—they cannot afford to be. They are ordinary sole traders, who will still be liable to existing standard rates of income tax, and certainly will not be paying 10 per cent only.
In my constituency small businesses are howling at me to try to reduce bureaucracy and red tape. They find that they cannot compete and comply.
§ Mr. Flight
The introduction of the European social chapter measures was the last straw. Small businesses faced with the possibility of having to pay out £50,000 if they make a mistake in the way that an employee is dismissed will go bust as a result.
I spent part of my career in the United States of America. I welcome US-style measures to get entrepreneurship going in this country. However, those were not the measures in the Budget. The most crucial requirement is to abolish an excessive 40 per cent. rate of capital gains tax.
§ Mr. Flight
There is clearly a regressive element in the tax on cigarettes and petrol. Speaking on behalf of rural constituents, as other hon. Members have done, I can tell Ministers that the 4p a litre increase on petrol will hit hard all levels of society in rural areas, especially pensioners.
I was interested to note that the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) began his speech by saying that he was brown-nosing. I suggest that this was a Brown-nosing Budget, designed, somewhat early, to win votes in the next general election. It was an immoral Budget, because the one thing that it did nothing about was charities.
The Government have increased taxation on charities by £500 million per annum as a result of the abolition of advance corporation tax recovery. I have been 582 corresponding with the Treasury on this matter for some time and was assured that something would be done in the charity review that would be announced in the Budget, but what is in there? Absolutely nothing.
The Prime Minister prides himself on being the moral and spiritual leader of half the world and yesterday I asked him about tax changes for charities. Why is he imposing the greatest taxation ever on all the charities in this country? I suggest that Labour Members should pause to think about the morality of the Budget and all the charities that will suffer as a result of it. Yesterday, I was at a meeting of one of the charities with which I am involved. It will be cutting expenditure by £500,000 per annum as a result of these measures. It has been lobbying the Government for some time in order to achieve some form of compensation, but in vain.
§ Mr. Flight
I am about to conclude my speech.
This Budget, like all the Chancellor's other Budgets, sounded clever and wonderful when it was announced. All the nasties were left unsaid or hidden away and there are one or two measures that it was wrong not to have made clear, such as the treatment of the married allowance for old-age pensioners. As one constituent said to me, "Well, it sounded all right, but I don't trust him at all." I believe that that, substantially, will be the reaction of the middle classes, whose votes the Prime Minister is after and, as all the papers have pointed out, which continue to be treated negatively, as they were in previous Budgets. This is not a bad Budget for the economy as a whole, but it is not nearly as clever as the Chancellor would like to think.
§ Mr. Gardiner
Is it in order for the hon. Gentleman not to take interventions, because he fears that he will use up his 10 minutes, and then not to use his full 10 minutes? Does he not realise that the clock stops when an intervention is received?
§ Mr. Deputy Speaker
Order. Perhaps the hon. Gentleman did not hear my response to a previous point of order, which was in similar vein. It is up to each hon. Member to decide whether to take an intervention and the reason for refusing to take an intervention is absolutely nothing to do with the Chair.
§ Mr. St. Aubyn
On a point of order, Mr. Deputy Speaker. My point of order is slightly different. Will you clarify whether the time taken to respond to an intervention is included in the 10 minutes allowed for a Member's speech?
§ Mr. Deputy Speaker
The time taken to reply to an intervention is taken out of a Member's 10 minutes. I might add that the clock stops only at the discretion of the Chair. The rule clearly states that the Chair may allow time for interventions.
§ Mr. Bowen Wells (Hertford and Stortford)
We all owe it to the House, to our constituents and to the country to speak the truth as far as we can possibly know it. The truth is that the Budget is very good in many aspects and we should acknowledge that.
Although we would have liked to have achieved an inflation rate of 2.5 per cent. much sooner than we have, it is a matter for congratulation that the Government have managed the macro-economic situation in this country and conducted tax affairs in such a way that we are able to keep to such a rate. However, our inflation rate is twice that of France and of Germany, and I should have liked the Budget to have aimed at a rate lower than 2.5 per cent.
The hon. Member for Harrow, East (Mr. McNulty) criticised the Conservative Administration for not aiming for a stable macro-economic framework in which to conduct the public finances. In fact, that is the reverse of what the Conservative Government aimed to do when they came to power in 1979. The introduction of a medium-term strategy was one of the measures that were designed to reduce inflation and interest rates, and to keep the economy stable and predictable so that there could be growth in the economy, along with real, sensible, non-inflationary investment, to increase our productivity and output—in other words, our gross domestic product.
The Conservative Government succeeded in their aim for a large part of their 18 years in office, but did not do so during the late 1980s and early 1990s, when the economy—not just in this country, but throughout Europe and indeed the world—was stricken by recession. Counter-cyclically, the Government introduced extra spending, and had to raise interest rates by much more than they would otherwise have done.
Unfortunately, the hon. Member for Harrow, East has disappeared, having had his rant. He did not even show the normal courtesy of staying for the duration of the speech that followed his. I hope that such traditions will nevertheless continue in the House. The hon. Gentleman was, however, right in saying that we should all be aiming for a stable financial background to our Budget, and, by extension, to the Government's tax and spending plans.
I congratulate the Government on keeping the macro-economic framework under control. Interest rates are lower, and I hope that they will fall further before long: they need to do so. I also hope that we shall aim not for the Government's objective of a 2.5 per cent. inflation rate, but for the rate of between 0 and 1.5 per cent. which obtains on the continent and in the United States.
Having said that, I must add that I have never felt more ashamed than I did during yesterday's exchanges about the Budget during Prime Minister's Question Time, which reduced the politics of public finances to the level of pantomime. We had to endure a vituperative and meaningless trading of statistics between the Dispatch Boxes. At one point, the Prime Minister said that everyone in the country had experienced tax cuts.
In answer to my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), he said:There is a net tax cut for everyone—direct taxes of £9 billion.My right hon. Friend asked the Prime Minister to explain. Two answers later, the Prime Minister said:There is a net tax cut of £4.5 billion."—[Official Report, 10 March 1999; Vol. 327, c.358.]584 In the space of two answers, the cut had been reduced by a half.
The House proceeded to further unseemly exchanges, in which hon. Members swapped statistics of a totally meaningless character, which thoroughly misled the House and undoubtedly confused the public. That is no way in which to conduct public debate on these matters. Sensible inquiries should be made by the Prime Minister and the Leader of the Opposition about exactly what statistics they are discussing; that would avoid the "No, I'm right", "No, you're wrong", exchanges.
Anatole Kaletsky explains the Budget extremely well in his article in The Times today. There is an increase in taxation, and I do not think that the Prime Minister, having imposed that increase on the British public, should apologise for it if that is what he wants to happen. But it is no good telling the public that there are not increases in taxes when there are.
I welcome some of the additional expenditure that the increased taxation will enable the Government to make. I welcome the increase in the international development budget over three years to—it is hoped—£3.5 billion in the final year of the increases so far announced. I also welcome the increases in spending on education and health. However, I do not believe that, when we have taken into account the effect of the minimum wage and of wage increases to nurses and teachers, the amount of money in the classroom will increase. The schools in my constituency will be worse off in real terms. The test must be: what effect does the Budget have in classrooms, hospitals and GPs' surgeries in our constituencies? At the moment, the answer is that they will receive less money, not more.
Although those increases in spending seem very great, they are not much greater than the increases that Conservative Governments managed to achieve, year on year, for much of their time in office. There is more work to be done, and more increases are needed to provide the type of public health care that the Government have promised, and which I believe we should aim for. There are good points about increasing taxation to pay for such things. If we believe in better public services, we should recognise that taxes must go up.
However, taxes have gone up, essentially, on middle-income people, who have saved and worked hard throughout their lives. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) drew attention to the attack on married couples allowances, on pensions and on savings. It is important, as we consider the Budget, to note that United Kingdom savings levels have decreased significantly. That is very serious, because it prevents capital formation and prevents investment from going into productive areas of the economy. The Chancellor of the Exchequer rightly believes that investment is vital to increase the productivity of this country, which again lags behind that of its European partners. I strongly believe that we must increase productivity so that we are competitive in order to get the jobs, because the economy is starting to contract too fast and we are starting to fear—and, in many places, experience—increases in unemployment. That would be the worst imaginable outcome of the Budget.
§ Mr. Gardiner
The hon. Gentleman's speech has been extremely thoughtful, and there is much in it with which 585 I agree. I wanted to pick up his remarks in relation to middle-income Britain bearing the burden of tax increases. Has he had the opportunity to see the Institute for Fiscal Studies report that shows that every decile of the population has benefited from the Budget? Obviously, there are some losers in each decile, but every decile of the population has benefited overall, especially the lower deciles.
§ Mr. Wells
I admit that I have not had a chance to focus on the IFS analysis of the Budget, and if we start to talk about deciles of the population, we shall soon lose the attention of most of our constituents. I believe that our constituents must experience what happens in their schools, what happens to bus and train fares, what happens to food prices and, if they have a car or a motor cycle, what happens to the cost of petrol, before they decide whether the Budget has been a good thing for them. That is the sort of thing that they understand, although I am sure that those in the IFS will—
§ 6.9 pm
§ Mr. Gerald Howarth (Aldershot)
Thank you, Mr. Deputy Speaker, for calling me to speak in the debate. I apologise to the House for not having been present throughout the debate, but I have been in my constituency with the Minister for the Armed Forces. The Minister cut the first sod, which required the tearing up of the tarmac on the old Mons barracks parade ground, for the creation of a brand new, world-class swimming pool and sporting complex for the Army in Aldershot and for wider public use. I was pleased to entertain the Minister in my constituency.
It is significant that, on my return to the House about an hour ago, I was astonished to find that the Chamber was so empty. I had been reading in the newspapers about what a fantastic Budget this was and about how it was being lauded by Labour Members. The tabloid newspapers were swooning over the Chancellor's extraordinary munificence to the British people. I thought that if it was so good, there would be many more Labour Members wishing to participate in the debate. I was shocked to find that there were not.
§ Mr. Caplin
I understand that the hon. Gentleman had an important constituency engagement, but if he had been present at half-past one, he would have seen a much more crowded Chamber. There have been about 15 speeches on either side, so it has been a well-attended and well-received debate.
§ Mr. Howarth
There may have been 15 speeches, but I understand that the majority of contributions have come from the Opposition Benches.
§ Mr. Howarth
My hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe), who has responsibilities similar to those of the hon. Gentleman, tells me that that was the case.
586 However, I wish to move on, because this is an important Budget. My hon. Friend for Faversham and Mid-Kent said to me on Tuesday while the Order Papers were fluttering and huge cheers were going up on the Labour Benches, "Do you remember when we last witnessed this?" It was in 1989, during the Budget of my noble Friend Lord Lawson. We had cause subsequently to reconsider the impact of that Budget. My hon. Friend said to me, "They will experience the same thing." We have not had to wait months or years for this Budget to unravel: it has done so within a couple of days. This was a Budget of presentation and appearance: it was not a Budget of substance.
I am happy to acknowledge that I agree with one or two measures in the Budget. Some of my hon. Friends felt that mortgage interest tax relief could be allowed to wither on the vine. Indeed, that was the policy of the previous Conservative Government, and we welcomed that. It was inevitable that it would disappear in the natural course of events.
However, the substance of the Budget is much more damaging. It has been presented as a tax-cutting Budget when it is no such thing: it is a tax-increasing Budget. It is old Labour coming back—the tax and spend party. It is astonishing that the Labour party fails ever to acknowledge the sound basis on which the economy was left when the Conservatives left office in 1997. [Interruption.] The hon. Member for Warrington, North (Helen Jones) may laugh, but the truth is that, although we got things wrong in the late 1980s and early 1990s, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) did a superb job in putting the economy back on track.
It is deeply distressing when Ministers go to the City and say, "Aren't we good, aren't we prudent? We have stuck to the Tories' spending limits." When their hon. Friends ask for more public spending, they say, "I'm sorry, we can't do that, because we are stuck with the Tories' spending limits. We've inherited them." If the economy is in such sound shape, it owes a great deal to the way in which the Conservative Government, under my right hon. Friend the Member for Huntingdon (Mr. Major), managed to restore it and put it once more on a sound footing. Labour Members never acknowledged the achievements of the Conservative Government, such as the conquering of inflation and the reduction in interest rates. It is about time that they did so.
§ Mr. McNulty
Given that the hon. Gentleman is renowned as one of the Conservatives' economic experts, will he remind us of the level of debt that the Conservative Government had got us to by May 1997 and the projected level of debt for this year? If he thought that the right hon. and learned Member for Rushcliffe (Mr. Clarke) was such a genius, did he vote for him in the leadership election?
§ Mr. Howarth
The great advantage of our party is that we have an extensive range of talent, of which my right hon. and learned Friend is a very good example. We had a rich array from which to choose.
I am well aware of what the hon. Member for Harrow, East (Mr. McNulty) is saying. We allowed the public sector borrowing requirement to grow. Many of us were critical of the fact that we had got to that position. 587 However, my right hon. and learned Friend had got the problem under control. What is happening now is the natural corollary of the policies put in place by the previous Conservative Government. This Government have continued those policies by sticking to the previous spending limits. I praise them for that, but the policies are Tory, not socialist. They said that they would stick to the spending limits because they wanted to ensure that they did not frighten the middle classes at the election. The best way in which to make themselves appear prudent was to pretend that they were Conservatives. That is how they won the election.
One of the most galling characteristics of the Government, after their lack of respect for the House, is the way in which the Prime Minister repeatedly dismisses the facts put forward by my right hon. Friend the Leader of the Opposition as wrong—and therefore as lies—when it is the Prime Minister who is guilty of misleading the House. My hon. Friend the Member for Hertford and Stortford (Mr. Wells) mentioned Anatole Kaletsky's article in The Times today. It would be instructive if I mentioned some of the points in it.
Mr. Kaletsky reminds his readers of the question that my right hon. Friend the Leader of the Opposition asked the Prime Minister yesterday:'How much has the Government raised taxes in its first three Budgets?' Mr Hague repeatedly demanded. 'We have not raised taxes, we have cut them,' Tony Blair insisted again and again. Yet this was simply false",Mr. Kaletsky maintains. He continues:As shown unambiguously in the Government's own Budget statement, taxes have risen in each of the past two years and will rise even more in the next financial year.The Prime Minister is incapable of differentiating between the truth and falsehood. I have quoted a respected commentator who has analysed the figures and realised that the Prime Minister's claims are false.
§ Mr. Deputy Speaker
Order. No Member of Parliament deliberately misleads the House or is involved in any falsehoods.
§ Mr. Howarth
Thank you for pointing that out to me, Mr. Deputy Speaker. I was simply pointing out what commentators outside the House have been saying.
§ Mr. Deputy Speaker
The hon. Gentleman cannot use someone else's words to defame another Member of Parliament.
§ Mr. Howarth
I am perfectly content to believe that the Prime Minister had not had time to read all the facts and figures in the Red Book. He may wish to make a correction in the House in due course, when he has had an opportunity to study the various press comments. I did not intend to suggest that the Prime Minister deliberately lied to or misled the House, but I hope that he will pay attention to the remarks of commentators.
Let me refer to one other aspect. Yesterday, the Chancellor said that the Government had cut the social security bill. However, according to table B13 on page 159 of the Red Book, social security benefits are forecast to be £93.5 million this year and to rise to £99.1 million in 1999–2000. That is an increase of twice the rate of inflation; it is not a cut in social security benefits—
§ Mr. Edward Leigh (Gainsborough)
I speak on behalf of my rural constituents in Lincolnshire for whom car ownership is not a luxury, but an absolute necessity. Some 80 per cent. of householders in rural Lincolnshire need to own a car. My constituency, at 700 sq miles, is the same size as Greater London, which comprises some 70 constituencies. What are those people supposed to do? Many of them are self-employed or pensioners, who will now have to pay £3.13 for a gallon of petrol. They have been hit by the Budget.
I have sat in the Chamber and listened to 15 or 16 Budgets and I have become rather cynical about them. The general rule of thumb is that Budgets tend to increase public spending or the money available to consumers by about 1 per cent. in the two years running up to a general election. In the first two years of a Parliament, they tend to take 1 per cent. from consumers and give it to the Treasury. What the Chancellor gives with one hand he takes back with the other. We live in the real world and we all understand that. However, this year, we have to be aware of the particular hit that has been made against rural people who are utterly reliant on their cars. It is quite disgraceful for the Government to suggest that, in pursuit of some general environmental aim which may or may not be worth while, they can load escalators on to fuel and hit rural people so very hard.
§ Mr. Leigh
No. I have only five minutes, and I know that others wish to speak.
The next category of person to be affected by the Budget, apart from pensioners, farmers and people who live in rural areas, is the self-employed, who will be hit very hard indeed by the increase in class 4 national insurance contributions. As the Federation of Small Businesses says, this is hitting thereal entrepreneurs and risk takers".Road hauliers are also heavily represented in rural areas. We have all received a large number of letters from them, but the Government have ignored their representations. There is a real danger that the flagging-out process will continue apace. It has happened in the past when Britain lost its Merchant Navy. I know of a business that was based in Lincolnshire and has now moved to France because of the far lower costs there. The Road Haulage Association has calculated that, on average, the Budget will cost its members £20,000 extra a year. As fuel accounts for some 36 per cent. of a haulier's budget, one can appreciate the devastating effect of an increase of this magnitude in fuel duty. It is no surprise that the Road Haulage Association referred to the "anger and disbelief' among its membership and the death knell for some 56,000 jobs.
I apologise for having missed the earlier part of the debate, but I was in Committee all afternoon considering the Welfare Reform and Pensions Bill. It is extraordinary that the Government should argue in favour of giving people a wider choice of pensions—the stakeholder pension and the second pension—when they are attacking the contributory principle. Very few people have commented on the fact that the Chancellor is increasing the minimum income guaranteed for pensioners in line with earnings, but not the basic state pension. The basic 589 state pension is no longer withering on the vine; the Government are pouring poison into its roots. It is a direct attack on the contributory principle. One already needs about £40,000 in a private pension fund to make it worth while continuing to invest in a pension; otherwise, one is better off on income support. As the minimum income guarantee increases, there will be less and less incentive for ordinary people to put money aside for their old age, and that is a disaster for our country.
§ Mr. Andrew Tyrie (Chichester)
One of the most important things to remember about the Labour Government's handling of the economy is that they were elected not to run an alternative economic strategy, but to continue with the one that they inherited. If they had proposed an alternative strategy, as they did in the 1980s, it would again have been rejected by the electorate. A key reason why Labour is in power is that it committed itself lock, stock and barrel to carrying on with almost every aspect of Conservative economic policy, including, for the first two years, sticking to Conservative spending plans.
§ Mr. Caplin
I realise that the hon. Gentleman has not been in the Chamber all afternoon, but I can inform him that Conservative Members have been complaining about our windfall levy. They cannot have it both ways.
§ Mr. Tyrie
I am sorry, but I missed part of that point because one or two other people were talking to me at the same time, so I cannot answer it as thoroughly as I would like.
The hon. Member for Harrow, East (Mr. McNulty) suggested that the Government had somehow miraculously brought down the huge debt that they inherited from the Conservative Government. The truth is that Britain is the only major country to have reduced the overall burden of debt as a proportion of gross domestic product in the period from 1979 to 1997. Other countries' debts have risen substantially.
§ Mr. Tyrie
I am terribly sorry, but I cannot take any more interventions, as I am told that I have only three minutes left.
That debt reduction was a dramatic and remarkable performance by the Conservative Government over those 18 years.
When the Labour Government came in, they were given the task by the electorate of continuing broadly with the policies that they inherited. Initially, to their credit, they did so. I supported their decision to make the Bank of England independent, although they did not do it in the manner that I would want. They made a bit of a botched job of it, although it seems that they are getting away with it. Further reforms may well be needed to make independence work properly.
The Budget represents some first steps away from the Conservative inheritance and towards picking away at what has made Britain outstandingly successful in the 1980s and 1990s. In the 1960s and 1970s, the United Kingdom economy grew at about two thirds of the 590 European Union average; in the 1980s and 1990s—on any reasonable projection for the remainder of this decade—it grew at slightly more than the EU average. That dramatic transformation in the performance of our economy took place because we got taxes down, deregulated, freed up the economy and brought in a culture of free enterprise.
I am worried that the first salami tactics on those policies are being undertaken by the Labour Government in the Budget. There are large rises in taxation by stealth. If taxes go up, there will be a reduction in our enterprise culture. If regulations are imposed, businesses will be less profitable and less successful.
The Government have introduced a raft of schemes in the Budget, allegedly to improve supply-side performance, that will simply clog up the system with distortions and excessive regulation. The spending on research and development is very hard to justify from the perspective of the economy as a whole.
The absolute heart of the Budget will be whether it promotes growth. On growth, above all other issues, it represents the triumph of hope over probability. The Government say that growth will be strong in the years ahead, when almost every other outside forecaster says something different. With astonishing cheek, the Government have published a table purporting to contain alternative economic scenarios, but it contains only one alternative which is even more upbeat than the Government's forecast of 2.25 per cent. growth in the long term. The Government should have published something more realistic and more in line with what outside forecasters have said. The Government will be judged on long-term growth, and they may well be found wanting.
§ Mr. John Whittingdale (Maldon and East Chelmsford)
This has been an excellent debate. One of the reasons for that is that 48 hours have passed since the Chancellor delivered his Budget and we have all had the chance to see past the gloss of his speech and have a look at the small print. That has been obvious from the quality of the speeches today, especially from Conservative Members. It has been noticeable that there have been more speeches from Opposition Members than from Labour Members. That point was made by my hon. Friend the Member for Aldershot (Mr. Howarth), but it was questioned by the Whip. Therefore, I wish to place on record the fact that we have heard 18 speeches from Opposition Members compared with 12 speeches from Labour Members. I understand that this is the second day running on which the Government have been unable to find sufficient numbers of supporters to defend the Budget. That is extraordinary when one considers that there are 417 Labour Members of Parliament. Only 12 could be bothered to come to the Chamber today to defend the Chancellor's proposals.
§ Mr. Gardiner
Does the hon. Gentleman accept that while Conservative Members wish to attack the Budget, my hon. Friends are more concerned about basking in its glory with their constituents?
§ Mr. Whittingdale
I would have hoped that Labour Members would have Parliament as their first priority, but recent experience shows that that is no longer the case.
§ Mr. Fallon
While my hon. Friend is on the subject of the morale of Labour Members, would he care to 591 comment on the news that the German Finance Minister has had to resign for attacking business and championing tax harmonisation? Is not that an example that might be usefully followed here?
§ Mr. Whittingdale
It is a good precedent, but if it was followed by the Government there would not be very many Ministers left.
My right hon. Friend the Leader of the Opposition did a superb job on Tuesday in highlighting some of the obvious flaws in the Chancellor's Budget, but he was handicapped by having to rely only on the actual speech delivered by the Chancellor. As we have come to expect from the Chancellor, he spent much time highlighting measures such as the £20 million start-up funding for high-tech venture capital funds, but he made no mention of the £240 million increase in national insurance contributions for the self-employed, a measure that we discovered only when we looked at the Red Book. It is in there under the heading, "Increasing Employment Opportunity". The Chancellor talked a lot about the new starting rate of lop, which was rightly described by the hon. Member for Bath (Mr. Foster) as perhaps the biggest gimmick in the Budget. We discovered later that it will apply to only the first £1,500 of income. The raising of the rate on the next £2,800 of income from 20p to 23p was not mentioned by the Chancellor at all.
§ Mr. Caplin
I do not wish to stop the hon. Gentleman in full flow, but I consulted Hansard this afternoon on that point and my right hon. Friend the Chancellor told the House in his speech on Tuesday that income tax rates would be 10p, 23p and 40p.
§ Mr. Whittingdale
That is correct, but the hon. Gentleman confirms that the Chancellor did not say that the 20p rate will, from this Budget, be abolished. It would have been nice to hear that from the Chancellor's lips, instead of having to read the Red Book to discover it.
The Chancellor told us that the married couples allowance would be replaced by a new children's tax credit. However, as my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out, he glossed over the fact that the married couples allowance will disappear next year, but the children's tax credit will not be introduced until 2001, with the result that families will have a full tax year without either relief. Even when the children's tax credit arrives, it will cost the Exchequer £1,400 million compared with £2,050 million taken in tax as a result of scrapping the married couple's allowance.
Pensioners were told that they would keep the married couples allowance. It transpires, however, that that will be the case only for those who reach retirement age before April next year. If one's children have grown up, and if one is unfortunate enough to have a 65th birthday after April 2000, one will be hit by the full tax increase with no corresponding benefit.
The Chancellor also made no mention of the 11 per cent. rise in duty on diesel, a measure that is a kick in the teeth for the British haulage industry. It will put at risk more than 53,000 jobs.
The Chancellor and the Prime Minister have tried to pretend that the Government are cutting tax. As my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) said yesterday, and as my hon. Friends the 592 Members for Aldershot, for Surrey Heath (Mr. Hawkins) and for Hertford and Stortford (Mr. Wells) have said today, the truth is precisely the reverse. As a result of the Chancellor's three Budgets, an extra £7.1 billion will be taken in tax this year, an extra £10.5 billion next year and an extra £9.3 billion in the year after that. According to the House of Commons Library, the total increase in tax as a result of the Labour Government's actions will amount to more than £40 billion.
As my right hon. Friend the Member for Fareham (Sir P. Lloyd) pointed out, the tax system will also be made far more complicated. The Chancellor has built on what he did last year to capital gains tax. He has made it so complex that most people believe that he will have to correct his changes in due course. This year, he has made direct taxation more complicated. The one group of people in the community who really will gain from the Budget will be the accountancy profession.
There were some notable omissions in the Chancellor's Budget. There was no help for savers, despite the fact that the savings ratio has fallen by more than 30 per cent. in just two years, a point highlighted by my hon. Friend the Member for Hertford and Stortford.
§ Mr. Whittingdale
If the hon. Gentleman will forgive me, I shall not, as time is moving on.
It is a direct consequence of the Government's attack on savings that the ratio has fallen. The Government have taxed pension funds and scrapped personal equity plans and tax-exempt special savings accounts, which will be replaced with an unattractive and inferior product. It is hardly surprising that billboards all over London are telling people to put their money into a PEP or a TESSA during the next three weeks before the Government abolish them.
Instead of encouraging saving, the Government have introduced, for the first time in 20 years, differential tax rates for earned income and savings income. I shall not use the phrase "unearned income", because the truth is that savings accumulate as a result of extremely hard work by people up and down the country. In future, the new 10p tax rate will apply only to earned income. The old 20p rate will still apply to savings income.
My hon. Friend the Member for Arundel and South Downs (Mr. Flight) pointed out that the Budget speech contained nothing to relieve charities of their extra tax burden as a result of the abolition of dividend tax credits. Nor was there anything to reverse the most mean and spiteful measure introduced by the Government—tax on dividend income of non-taxpayers. That measure will cost more than 600,000 people on the lowest income an average of £75 a year. Despite all the reassurances from Ministers during last year's Finance Bill Committee, and despite protests from pensioners up and down the country, the Government are going ahead with that measure. The hon. Member for Dudley, South (Mr. Pearson) thought that pensioners would be disappointed that nothing had been done to correct that. They will not be disappointed; they will be very angry indeed.
I shall now deal with individual measures in the Budget. Many groups in the community have been hit badly by the Budget. House purchasers were hit twice over by the abolition of mortgage interest relief and the 593 increase in stamp duty. Those measures come at a time when the housing market is unsettled, and there was a fall of 0.5 per cent. in house prices last month.
As my hon. Friends the Members for Guildford and for Beaconsfield (Mr. Grieve) have pointed out, the real burden of the increase in stamp duty falls not on house purchasers but on business. Commercial property is an enormously important asset in the economy, contributing about 10 per cent. of gross domestic product. Yet the increase in stamp duty will immediately reduce the capital value of commercial properties, making it harder for companies—especially small and medium-sized companies—to secure loans to meet their needs. The hon. Member for Cambridge (Mrs. Campbell) made an interesting point when she noted the measure's damaging effect on high-tech companies dealing in intellectual property rights. That again is a direct consequence of the Budget.
Business faces a new threat in the form of an energy tax. The Chancellor claims that it will be revenue neutral, as he intends to cut employers' national insurance contributions. My hon. Friend the Member for Beaconsfield pointed out that it is vital that he makes it so, but the fact that it will impact most severely on manufacturing industry just when it is in recession and facing huge competition from overseas has been ignored. The additional encouragement for energy efficiency is welcome, but hardly likely to offset the extra burden that the tax imposes. Because it is levied downstream rather than upstream, it cannot affect the type of energy consumed and is likely to result in little environmental benefit. Its effect on the competitiveness of British industry is potentially devastating. The most likely consequence of its introduction is more business closures and lost jobs.
In one area, the Chancellor did not raise tax. He froze duty on beer, wine and spirits. That was a belated but welcome recognition of the huge damage done by the smuggling of alcohol into Britain from abroad, which is a direct result of the enormous differential in duty rates. A freeze will do little good. The present level of duty led to a 25 per cent. increase in smuggling last year alone. On the Government's own figures, that led to a revenue loss of £220 million, a figure which will go on increasing unless something is done. My hon. Friend the Member for Surrey Heath pointed out the effect that that will have on the brewery in his constituency. The hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) recounted his experience of the differentials.
The smuggling and loss of revenue resulting from differential alcohol duty rates pales into insignificance compared with that resulting from tobacco duties. The Chancellor ignored that and increased the rate of duty by a further 5 per cent. That means that the tax on a packet of cigarettes has gone up by 62p under this Government. A packet of 20 now retails at £3.82 compared with less than £2 in France. Last November, the Government estimated the loss of revenue from smuggling at £1 billion. On Tuesday, only four months later, the Chancellor provided a new estimate of £1.5 billion, which is still only half the amount estimated by the industry.
Of course, the Minister will point out that the escalator in duty was introduced under the previous Government. However, there is now overwhelming evidence that it is 594 not working. Tobacco is now smuggled not by opportunists filling their vans, but by organised crime, which has discovered that more money can be made from smuggling tobacco than from hard drugs. Smoking is no longer declining, and a worrying number of young people are taking up the habit. The ability to prevent under-age smoking is being undermined because those who are refused cigarettes at the corner shop can now get them for half the price in the pub car park.
The Red Book shows that despite the increases in duty, revenue from tobacco duties was £8.4 billion in 1997–98, is estimated to have been £8.3 billion in 1998–99 and is forecast to be £7 billion in 1999–2000. We have only to consider the experience with hand-rolling tobacco to see what is likely to happen. While consumption has grown steadily, the proportion taken by UK duty-paid hand-rolling tobacco has fallen year on year, so that more than 70 per cent. of the market is now non-UK duty paid. We are in real danger of the same thing happening in the market for cigarettes.
The Budget measure that has caused most anger, particularly in my constituency, was mentioned by my hon. Friends the Members for Christchurch (Mr. Chope), for Ludlow (Mr. Gill), for South Holland and The Deepings (Mr. Hayes), for Beaconsfield, for Poole (Mr. Syms), and for Arundel and South Downs. The hon. Member for Brent, North (Mr. Gardiner) said that it was synthetic anger but that merely demonstrates that he represents an urban constituency. I refer to the increase in road fuel duties.
I have no doubt that the Minister will say again that the road fuel escalator was introduced by the Conservative Government, but the Labour Government have increased it and brought it forward so that we shall have had three increases in two years. We introduced it when road fuels were cheaper than on the continent. We now have the highest petrol prices in Europe and perhaps the world. The Chancellor has made the escalator steeper, yet for many people, especially in rural areas like mine, there is no alternative to the car. Those people are an easy target for the Chancellor, who is much more interested in raising money than cutting emissions.
One particular group does have a choice, and that is people in the road haulage industry. They have suffered the most as a result of the Budget. Just a few days ago, hundreds of lorry drivers came to Westminster to express their anger at the damage that diesel duty is doing to the British haulage industry. Instead of listening to them, the Chancellor has increased the rate not by 6 per cent., but 11 per cent. It is hardly surprising that the Road Haulage Association has said that hauliers reacted to the Budget with anger and disbelief.
As my hon. Friend the Member for Sevenoaks (Mr. Fallon) said, it is an old rule of thumb that Budgets that receive the greatest plaudits from the press the next morning usually turn out to be the most unpopular and damaging in the long term. The Chancellor certainly got good coverage on Wednesday, but already the shine is coming off, and I have no doubt that as time passes more and more people will come to see that this is a tax-raising Government who achieved office only by lying to the British people.
§ The Financial Secretary to the Treasury (Mrs. Barbara Roche)
I start on one note of agreement with the hon. Member for Maldon and East Chelmsford 595 (Mr. Whittingdale). This has been an excellent debate, with many good speeches from the Opposition Benches. However, I thought at one stage that we were about to have a big policy announcement. The hon. Gentleman proudly announced the number of speeches that there had been from the Opposition Benches. Of course, he forgot that three Liberal Members had spoken. Perhaps we are about to see a new Conservative/Liberal Democrat pact. He failed to mention a number of other things, such as the fact that 96 per cent. of properties would be unaffected by the changes in stamp duty.
The hon. Gentleman spoke about the escalator. It is amazing how the Conservative party has collective amnesia, as if the past 18 years had not happened at all. Conservative Members were there. The hon. Gentleman was a Member of Parliament, but he takes no responsibility. Presumably, he just trooped into the Government Lobby then without thinking. Presumably, too, he predicted that his party would lose the next election so that he could disown the Conservative Government's actions as promptly as possible.
I understand what the hon. Gentleman had to say on alcohol and tobacco smuggling. Again, let me sound a note of agreement with him. I agree that we are talking about very serious organised crime. It is worrying, and I know that it worries the police and the law-enforcement authorities. However, if one followed the hon. Gentleman's logic, we would give in to organised crime. Is that really what Conservative Members are saying? I do not think so.
We also had many passionate and good speeches about education from my hon. Friends. We had a very honest admission from the hon. Member for Guildford (Mr. St. Aubyn), whom I remember well from our university days. I think we have debated against each other in the past, although he may have been a member of a different party at the time. [HON. MEMBERS: "Tell us more."] I am well known for my discretion so I will say no more. The hon. Gentleman said that his business went bust as a result of the previous Government's failure of policy.
§ Mr. St. Aubyn
I am sorry to be reminded tonight that my youthful mistakes were corrected, but the hon. Lady's were not. Perhaps I can help her see the light by making it clear that when a business goes bust, the cause is to do with the business and little to do with the Government of the day. However, under the previous Government, there was always the opportunity to come back and win back, and many of us took that opportunity. There will be far fewer of those opportunities under her Government because of higher taxes and more regulation.
§ Mrs. Roche
I really do not want to add to the hon. Gentleman's distress. He will, understandably, have ambitions in this place and in the Conservative party, and I should not like to add any further to his discomfort because of his admission. He also mentioned in his speech the huge growth in private pensions under the previous Government he did, however, not mention that the previous Government presided over the pensions mis-selling scandal, which my hon. Friend the Economic Secretary has done so much to correct—for which I pay tribute to her.
Tuesday's Budget was another step on the road to delivering a stronger economic future for Britain. It is a Budget that builds on a strong foundation of economic 596 stability and offers a better deal for business. It is a Budget that delivers a better deal for Britain by rewarding work and, most important, by supporting families. We are locking in economic stability to achieve those aims.
§ Mr. Gerald Howarth
The Minister said that the Budget will support families. In the Chancellor's entire Budget speech, not once did he mention the word marriage. Marriage and married couples are the big losers in Budget.
§ Mrs. Roche
I am surprised at the hon. Gentleman—and I was about to say something reasonably nice about him. I still shall. He was absolutely right when he made some very encouraging remarks about our handling of the economy.
An appreciation of families and of children was expressed throughout the Chancellor's speech on Tuesday. When the Chancellor quite rightly said that children are not 20 per cent. but 100 per cent. of our future, the resonance of the remark was felt not only in the House but across the country. The Budget promotes families. Net tax cuts—worth £4 billion—are targeted at working families. [Interruption.] Opposition Members may sneer, but they are sneering only because, on Tuesday—as Labour Members clearly saw—their faces dropped and dropped, becoming ever gloomier as the Chancellor continued his speech.
We heard today some very important speeches. I did not understand the point on families made by the hon. Member for Arundel and South Downs (Mr. Flight), but I should give him a little credit—he said that it was not a bad Budget for the economy overall. He made a point on charities, but I should tell him that United Kingdom charities already receive more than £2 billion a year in tax relief. The Government are extremely proud of that record.
As the debate was opened by my right hon. Friend the Secretary of State for Education and Employment, there has been a great concentration on education in the debate. Some incredibly valuable points were made by my hon. Friend the Member for Bristol, West (Valerie Davey) on the importance of books and poetry. Hers was a moving speech. I was glad that, at long last in our House, someone is speaking up for literature and poetry.
My hon. Friend the Member for Warrington, North (Helen Jones) quite rightly spoke about Tory failure in education and the legacy that we have had to put right.
The hon. Member for Harrogate and Knaresborough (Mr. Willis) made some points on education. An Education Minister was in the Chamber at the time, so I am sure that the hon. Gentleman's points will be taken into consideration.
Although the hon. Member for South Holland and The Deepings (Mr. Hayes) is not in the Chamber, I should say that he made some interesting points. I did not agree with them all, but he was very kind and courteous and paid tribute to the speech of my right hon. Friend the Secretary of State for Education and Employment.
The Government are making work pay, with a new 10p tax rate and a cut in the basic rate to 23p. We are, of course, giving more support to our pensioners, with a rise in the winter allowance to £100. In the debate, some Opposition Members mentioned pensioners. I tell them that I know, both from what I have seen in my own 597 constituency and from what I have heard elsewhere, that our package for pensioners will be warmly welcomed across the country.
We are giving a better deal to lower and middle-income families, with a new children's tax credit and a rise in child benefit, which is very important.
There was also discussion during the debate of macro-economic policy and public finances. The Chancellor was able to deliver such a positive Budget on Tuesday because the Government have dealt prudently with public finances.
§ Mrs. Roche
The hon. Gentleman has misunderstood. [Interruption.] It is good to ask questions, but it is also sensible for Conservative Front Benchers to listen to the answers. Our national insurance reforms will help to ease low-paid workers into the employment market. As a result of those reforms, 9,000 people will no longer have to pay national insurance. The Government have implemented some of the recommendations of the Taylor report and provided a real incentive for working families in this country.
The hon. Member for Hertford and Stortford (Mr. Wells) made a thoughtful speech in which he raised several valuable points about public finances, as did my hon. Friend the Member for Harrow, East (Mr. McNulty)—particularly regarding macro-economic policy. The hon. Member for Poole (Mr. Syms) mentioned savings. The worst enemy of savers in this country is high inflation, which is why the Government have introduced the relevant fiscal measures.
I remind Opposition Members that the savings ratio collapsed to just 3 per cent. in 1988—that is a record of which they should be really ashamed. The hon. Member for Aldershot (Mr. Howarth) made some welcome remarks about public debt. I thought that the hon. Member for Chichester (Mr. Tyrie) would congratulate the Government on clearing up the Tory mess, but he failed to do so. [Interruption.] I live in hope that the Conservatives will come to their senses, realise why they are in opposition and try to improve their fortunes.
598 My hon. Friend the Member for Cambridge (Mrs. Campbell) made an excellent speech about the importance of science and the science base. She raised several valuable points—she always does—and I pay tribute to her great expertise in that area.
My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) also made a valuable contribution about the importance of information technology. He referred also to venture capital and productivity. The Government are attempting to reduce the productivity gap—which stands at 40 per cent. vis-à-vis the United States. That is why the growth measures in the Budget that the hon. Member for Chichester attempted to denigrate are so important.
§ Mrs. Roche
I am sorry, but I have only a short time left to speak. I have been generous in giving way.
My hon. Friends the Members for Hove (Mr. Caplin) and for Lewisham, East (Ms Prentice) made some interesting points about the film industry with which I agree absolutely. I should point out that my constituency is well known in London as the setting of the wonderful film "Truly, Madly, Deeply". The film "Fever Pitch" was also filmed in my constituency.
There were many contributions about the small business measures, which were warmly welcomed by my hon. Friend the Member for Brent, North (Mr. Gardiner). The hon. Members for Bath (Mr. Foster) and for Sevenoaks (Mr. Fallon) also made some generous comments. I was disappointed that the hon. Member for Christchurch (Mr. Chope), who I know takes an interest in these matters, did not welcome the measures more warmly. The hon. Member for Surrey Heath (Mr. Hawkins) cast some doubt on the business expertise on this side of the House.
§ It being Seven o'clock, the debate stood adjourned.
§ Debate to be resumed on Monday next.