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Mr. Mellor : The essence of what is being said is that, far from doing nothing, the Government have produced a Budget which has been welcomed by the Association of British Chambers of Commerce in the quotations that I employed. The Association of British Chambers of Commerce has welcomed the Budget in unequivocal terms.
Mr. Colin Shepherd (Hereford) : Before my right hon. and learned Friend leaves the subject of what the business community has said, will he accept that the cider industry is delighted at the Government's robust attitude? The many people whose jobs depend on that industry will look with great gratitude upon the Government's robust approach.
Mr. Mellor : I had many more quotes, including one from the cider industry. It is simply that, after a while, the barracking from the Opposition gets to the point where it may be sensible to move on. There is a proliferation of quotes from many of the affected industries, making clear how much they welcome the measures introduced by my right hon. Friend.
Also, it was a Budget for people--21 million taxpayers gain £140 a year, there will be a 20 per cent. cut in the marginal rate of tax for 4 million taxpayers, including 570,000 single people and 1.3 million pensioners, and 5 million poorer pensioners will see increases of £2 or £3 per week from October.
Again, the House should not just hear that from me. Let us hear what Help the Aged had to say :
"All too often we find ourselves grumbling after Budgets but this time we have something to cheer about It is a positive Budget that will make a positive difference to older people."
We also heard a contribution--
Mr. Battle : Will the right hon. and learned Gentleman give way?
Mr. Mellor : If the hon. Gentleman, who is a Whip--although Whips are not subject to vows of silence--
Mr. Mellor : Was the hon. Gentleman dismissed? I shall give way.
Mr. Battle : I am grateful to the right hon. and learned Gentleman. What will he say to my constituent who is on £120 a week and has worked out that, with what he will
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lose in family credit, he will gain 19p a week as a result of the tax changes? When the tax changes are put together with the loss in family credit, is it not a fact that many people will not gain the sort of money that the right hon. and learned Gentleman is trying to con them that they will?Mr. Mellor : That sounds like a desperate plea in mitigation for the Opposition's foolish decision to oppose that change. I shall give the hon. Gentleman the figures.
Mr. Mellor : I am about to deal with that--it is not true. Of the £1.8 billion in tax reductions due to that 20p move, only £18 million is taken back under the family credit arrangements, which is less than 1 per cent.
I am sorry that I accused the hon. Member for Leeds, West of still being a Whip. I appreciate that he was one of those who was honourable enough to resign from the Front Bench because he disagreed with policy.
Mr. Derek Fatchett (Leeds, Central) : Will the right hon. and learned Gentleman give way?
Mr. Mellor : No. I shall push on-- [Interruption.] I do not think that the Labour party wants to listen to this speech, Madam Deputy Speaker-- [Interruption.]
Madam Deputy Speaker (Miss Betty Boothroyd) : Order.
Mr. Mellor : The Leader of the Opposition delivered the wrong speech about the wrong Budget yesterday. Notwithstanding the fact that the shadow Chancellor, the right hon. and learned Member for Monklands, East, had supplied him with the wrong speech for the wrong Budget--whether deliberately we do not know--astonishingly the Leader of the Opposition decided to plough on anyway. I wondered what was going on. Was this the first human brain to be affected by the Michelangelo virus? In case that may be thought to be unfair, let us consider what Mr. Matthew Parris of The Times had to say about the performance of the Leader of the Opposition. He said :
"Mr. Kinnock decided to read the speech anyway. Who can blame him! We have all experienced moments of intellectual panic and at such times there is comfort in having in one's hands a speech, even if it isn't the right speech.
But it wasn't the right speech, and, on the faces of his party around and behind him, it showed. John Smith, tight-lipped and (in Richard Page's phrase) knee-deep in shot foxes', looked as though his mouth was full of live spiders."
It was not that much different last year. In a sense it is a shame that the Leader of the Opposition was not away from the House yesterday, as he was from Twickenham on Saturday when, perhaps, he was the only Welsh penalty that was not missed.
During his speech, the right hon. Gentleman said that it was all "a panic- stricken pre-election political sweetener."
The only thing that was panic-stricken was the look on the right hon. Gentleman's face when he realised what the Chancellor of the Exchequer was saying, matched only by the even more panic-stricken look on the face of the right hon. and learned Member for Monklands, East, the shadow Chancellor, when the Leader of the Opposition chose to give way half way through his speech. The right hon. and learned Gentleman knew that a question would be asked that his right hon. Friend would be unable to answer.
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Mr. Paul Boateng (Brent, South) rose --Mr. Mellor : The hon. Gentleman seems very frisky. Let us see if he has got something worth saying that matches the smug look on his face.
Mr. Boateng : The chairman of the Conservative party has said that debt is deferred taxation. Which taxes have been deferred and by how much will they be increased?
Mr. Mellor : I do not think that that has anything to do with the point. [Interruption.] At least it is one thing in life if one can satisfy oneself and the hon. Gentleman is satisfied that he made a very clever intervention, but it was not.
I want to know why the Leader of the Opposition was unable to tell us straightaway the attitude of the Labour party to the 20p tax reduction. Instead, the right hon. Gentleman came out with a feeble excuse. When the history of feeble excuses comes to be written, it must appear as one of the feeblest and also one of the longest ever uttered. He said :
"We have been treated for months with teases about the Budget. We have been treated to the sight of the Chancellor of the Exchequer and other members of the Treasury team saying that they could not disclose anything. I think that, in the name of reasonability"-- that word is a good argument for more expenditure on adult education--
"they could at least give us another six days to produce our own statement in opposition to, an alternative to, what we have heard this afternoon." [ Official Report, 10 March 1992 ; Vol. 205, c. 763-65.]
That is what the Budget debate is for and that is why the right hon. Gentleman was supposed to make his speech. After all, one could say that they have had 13 years to get their attitude straight on such matters. Why the delay of six days? The answer is that the launch of the shadow Budget was designed to happen the morning after the Budget debate was due to finish, in order, of course, to avoid proper scrutiny.
Why have neither the Leader of the Opposition nor the shadow Chancellor been able to produce for us now, at this historic moment when the election has been announced, what they intend to do? Why can we not know now? I have got the back of an envelope here and the shadow Chancellor could do that for us now. After all, most of the calculations that the Labour party has made and has had to move away from, had to apologise for and give contrary explanations for in the past eight weeks, all seem to have been worked out on the back of an envelope. [Interruption.] The hon. Member for Workington (Mr. Campbell-Savours) is being extremely noisy, particularly about my electoral prospects in Putney. He might ask the Labour party why it has not targeted it as a seat that it expects to win, because it knows a bit more about Putney than he does. I shall give way to the hon. Gentleman and then, I hope, he will shut up for the rest of my speech. What has he got to say for himself? [Hon. Members :-- "Up, up."] The hon. Gentleman has one of the most remarkable bodies that I have ever seen. His mouth works when his bum is on a seat but not when he is standing on his feet.
Sir Donald Thompson (Calder Valley) : Will my right hon. and learned Friend explain why, after 13 years of Conservative rule, my constituency and most constituencies are spending 30 or 40 per cent. per pupil more in real terms than in 1979? Why is Calderdale the best area health authority, universally accepted by people of all sides, not
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just in Great Britain but in Europe? Why do we have massive land grants from the Government in a non-selected area? How have the motorways, railways and roads been improved after 13 years' Conservative rule?Mr. Mellor : My hon. Friend points to the Government's remarkable achievement of making substantial increases in public expenditure, while bringing down the taxation rate for so many people. That is what happens when an economy works successfully, as the British economy worked for most of the 1980s, when we had eight years of continuous growth.
Mr. Fatchett : Will the right hon. and learned Gentleman give way?
Mr. Mellor : No, I wish to push on.
Mr. Fatchett rose --
Mr. Mellor : The Labour party does itself no credit by trying repeatedly to disrupt my speech.
Madam Deputy Speaker : Order. The Minister has made it clear that he will not give way. The hon. Gentleman should not persist.
Mr. Mellor : The right hon. and learned Member for Monklands, East told us last night that he intends to oppose the reduction of the basic rate to 20p for the first £2,000 of earnings. That was said at about the same time as the hon. Member for Great Grimsby (Mr. Mitchell) was telling me on Sky that he intended to vote for it, and the same time as the hon. Member for Norwich, South, who has unfortunately now left us, had obviously been telling a Lobby correspondent--it was reported in this morning's press--that it was a good idea because it would help the poor.
The truth is now out about the right hon. and learned Gentleman's plans-- Labour would soak not only the rich but also the poor.
Mr. Michael Brown (Brigg and Cleethorpes) : I am appalled and amazed at what my right hon. and learned Friend has just said. The hon. Member for Great Grimsby (Mr. Mitchell), in a radio interview on Radio Humberside just before I was interviewed, told the people of south Humberside that of course the Labour party would support the Government's proposals for a 20p tax plan and of course the Labour party would not reverse it. I cannot understand how the shadow Chancellor could oppose what the hon. Member for Great Grimsby said. Several Hon. Members rose--
Mr. Mellor : We shall come to the explanation for that. We have an absurd spectacle of the Labour party proposing a minimum wage as an imperative to help low earners, while proposing to fund the cost of that minimum wage by increasing the marginal rate of tax on those same low earners back to 25 per cent.
Dame Elaine Kellett-Bowman (Lancaster) : Is my right hon. and learned Friend aware that 4,600 people are employed in the hospital service in Lancaster, the vast majority of whom will gain immensely from the 20p rate of tax? They will be incensed beyond measure if the Labour party undoes that reduction in their taxation.
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Mr. Mellor : Obviously. I cannot think of a more ludicrous position for Labour Members to get themselves into. Over the years, they have got themselves into more ludicrous positions than those in a Jane Fonda workout, but to propose a minimum wage and express compassion for the low paid and then propose to claw back 25 per cent. in taxation must be the most ludicrous of all.Mr. Campbell-Savours : Will the Minister give way?
Mr. Mellor : The marvels of medical science.
Mr. Campbell-Savours : Who will gain most out of the 20 per cent. concession--a Member of Parliament or someone earning £70 a week? Will the Minister give an honest answer?
Mr. Mellor : The answer is that everyone--21 million people--will gain.
Mr. Campbell-Savours : Answer the question.
Mr. Mellor : The hon. Member for Workington is abusive beyond reason. The answer is that everyone who is within the tax bracket gains. The impact of the 20p band means that those who gain more are those within that bracket and anyone who is outside the tax system gains because of the increase in social security benefit, income support, family credit and so on. That has been announced.
Mr. Patrick Thompson (Norwich, North) : The hon. Member for Norwich, South (Mr. Garrett) was reported in the Eastern Daily Press this morning as welcoming the 20p tax band that we have introduced. What does my right hon. and learned Friend say to the hon. Gentleman and the Opposition Front Bench?
Mr. Mellor : The Labour party is in a muddle and a mess, and I think that I know why. Is this a pamphlet that I see before me? Was it not published in February 1992, which is quite recent, even for the Labour party? Is it not a Labour party publication entitled "Pocket Policy Guide"? -- [Interruption.] As the hon. Member for Workington will rely on it to mislead the citizens of Workington, he should at least open his ears and close his mouth.
Do I not see a section marked "Fair Taxes", and does it not say : "Labour's plans--a move towards a starting income tax rate of 20 per cent."?
We have already moved there, so perhaps the right hon. and learned Member for Monklands, East will tell us what the problem is--[ Hon. Members :-- "Answer."] What is the problem? It is interesting to see that the Opposition Front-Bench Members, who are supposed to represent the party, sit mute while the Opposition Back Benchers shout their heads off from a sedentary position.
Mr. John Smith : The Minister will have heard my speech earlier. He may not have comprehended it, but he must have heard it. I made it clear that we oppose any tax cuts that are financed by borrowing. Will the Minister explain what the Chancellor had in mind last night when he drew our attention to people on £70 a week who will receive 19p out of that great concession?
Mr. Mellor : I shall not deal with that evasion, as I have already said.
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Is the right hon. and learned Gentleman's excuse the fact that he does not think that we should reduce tax through borrowing? May I remind him of what happened when he was a Minister in 1977? After the International Monetary Fund had intervened, the public sector borrowing requirement was down to 4 per cent.--Mr. Campbell-Savours : Here we go again.
Mr. Mellor : Indeed, here we go again. Notwithstanding an improvement in the economy, the Government of which the right hon. and learned Gentleman was a member drove up borrowing to 5.5 per cent. to finance tax cuts of tuppence off income tax and reductions in VAT. The right hon. and learned Gentleman was in no danger of resigning, so what is the difference? There was no difference whatsoever.
Mr. A. J. Beith (Berwick-upon-Tweed) : Will the Minister give way?
The Labour party was enthusiastic about a 20p tax band. Not long ago, the Leader of the Opposition said on television :
"I'd like to introduce a lower rate band so that people don't leap immediately into what's called standard rate."
I think that the 20p band is a bit like the exchange rate mechanism--it is advocated by the Labour party only when it thinks that we are not going to implement it.
Many Labour candidates now have lots of words to eat. They have no need to go to Luigis, but can have a satisfying meal eating their own words about the 20p band.
Mr. Beith : Why did the right hon. and learned Member for Surrey, East (Sir G. Howe) speak so clearly against the reduced rate band when he led Conservative Members to oppose it? Why did the present Minister of State, Department of Education and Science, the hon. Member for Enfield, North (Mr. Eggar), say that the reduced rate band was not the way to help the low paid and was
"a measure forced upon a reluctant Labour Treasury team by the TUC as part of the pay-off for an incomes policy ... a price that was too high when it was introduced, and too high now?"--[ Official Report, 2 June 1980 ; Vol. 985, c. 1161-62.]
Mr. Mellor : The reason is that this band is intended ultimately to remove the 25p band. That is a good reason, and another is that we had to endure criticism from the hon. Member for Berwick-upon-Tweed, (Mr. Beith) and others that we were not serious about the 20p income tax. Our proposal is the best way to demonstrate just how serious we are so that people are offered a real choice between this Government who cut taxation and, among other options, the Liberal Democrats who say that they will put up the basic rate. At least they are honest in saying that they will increase that rate ; the Labour party seems to think that it can increase spending and it will not have any impact on taxation.
Mr. Ian Bruce : Will my right hon. and learned Friend give way?
Mr. Mellor : No, I must push on--I think that my hon. Friend has intervened a couple of times.
The Leader of the Opposition talked about bribes. He should learn one lesson : taxation is a takeaway, not a giveaway. He seems to assume that the state has some moral right over everything that anyone earns, and that it
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is an act of magnanimity by the state to allow people to keep some of their earnings as pocket money. That is not how it is. The right hon. Gentleman came out with a remarkably ill-judged comment that I do not think that he will be allowed to forget, when he likened the reduction to"borrowing to go away for a day at the races."--[ Official Report, 10 March 1992 ; Vol. 205, c. 766.]
What about the improved standard of living that the money will buy for many hundreds of thousands of people? The right hon. Gentleman believes that he knows how to spend people's money better than they do, which is patronising and inappropriate, and calls into question all aspects of Labour and tax.
If the Labour party is prepared to claw back from the least-well-off taxpayer, what else might it do to feed its spending ambitions and what price the sanctity of the 25p basic rate, which Labour opposed through thick and thin as it came down to 25p? Why should we expect the Labour party to honour its commitment when it is prepared to increase taxation for those just within the tax bracket? The reason that the right hon. Gentleman thinks that the clawback is acceptable is that he said that it would be spent on public services. He thinks that £1.8 billion is available. One can see how far that would go, given the ambitions of the hon. Member for Oldham, West (Mr. Meacher), the greatest serial spender at liberty, or the hon. Member for Livingston or the hon. Member for Kingston upon Hull, East (Mr. Prescott). That money will be spent more times than even Bob Maxwell would have managed.
The Leader of the Opposition mentioned the health service, and here we come to an interesting fact about the Labour party and the health service. By the time we take account of the money that it will have to spend to honour the minimum wage, which the hon. Member for Livingston recognises to be between £400 million and £500 million, the £365 million cost of abolishing the charges, getting rid of competitive tendering and introducing no-fault compensation, we reach a total of more than £1 billion of public money that is to be spent on the health service without one penny of it going on patient care. Therefore, the assumption that the Government would spend money more wisely than the individuals who have it in their pockets is unsustainable. I expect that a Labour Government would spend the money as wisely as the Labour-controlled councils of Lambeth, Haringey, Hackney and Liverpool. If people want to know the difference between the parties, it is that the Conservatives believe that the public have a right to retain as much as possible of their income and spend it. We do not believe in state direction that penalises everyone, rich and poor alike.
The nonsense is that the Opposition's critique of the Budget proceeds on the assumption that money is not being spent on crucial public services, and that tax reductions are being preferred. Nothing is further from the truth. Capital spending on hospitals next year is up 76 per cent. since 1978-79 in real terms. More than £2 billion will be spent in the next 12 months. The Government have completed 600 major building schemes costing more than £1 million, and there are currently 435 major building schemes in progress, each worth more than £1 million. That is the record of a Government who need no lessons in how to provide for public expenditure on sensitive services from a Labour Government of which the right hon. and learned Member for Monklands, East was then a complacent member, with none of the sparky, critical
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tongue of which we hear so much, enjoy so much and look forward to enjoying from the Opposition Benches in whatever office he is called on to serve. The Government of which the right hon. and learned Gentleman was a Member cut capital funding by 30 per cent.--22 per cent. in real terms--in 1977-78 alone, despite driving up the public sector borrowing requirement during that period.Mr. Harry Cohen (Leyton) : Will the right hon. and learned Gentleman give way ?
Mr. Mellor : No, I shall carry on for a bit.
The Labour party condemns a PSBR of £28 billion, but only £1.8 billion of that is tax cuts. The rest reflects our determination to sustain our public expenditure commitments across the cycle and the fall in revenue. The Labour party criticises us for borrowing, and fails to recognise that that reflects the consequences of public expenditure plans that Labour spokesmen have persistently denounced as inadequate. They think that they do not have to square that circle--
Mr. Dick Douglas (Dunfermline, West) : Will the right hon. and learned Gentleman give way ?
Labour Members think that they do not have to square that circle. The deficit is nothing like--
Mr. Douglas rose --
Mr. Mellor : The hon. Gentleman can catch Mr. Deputy Speaker's eye later.
The deficit is nothing like that of the Labour Government. We have already given the figures. They were running a persistent deficit, which was not due to cyclical factors, but increased as the economy came out of the 1975- 76 recession.
Mr. Douglas rose --
Madam Deputy Speaker (Miss Betty Boothroyd) : Order.
Mr. Mellor : The reality on borrowing is that the Labour party offers no path back to a balanced budget. In The Mail on Sunday, the right hon. and learned Member for Monklands, East did not even claim to try--
Mr. Douglas : On a point of order, Madam Deputy Speaker. The right hon. and learned Gentleman has been lecturing everyone on public sector borrowing requirements. In the heat of the debate I may be in danger of misquoting him, for which I apologise, but I think that he said that it was right to have a £28 billion--
Madam Deputy Speaker : Order. I simply want to know what the hon. Gentleman's point of order for me is, as I must deal with it.
Mr. Douglas : It is a matter of putting the record straight. I think that I am correct in saying that the Chief Secretary to the Treasury has been lecturing the House
Madam Deputy Speaker : Order. I am trying to be helpful. This is an excitable day, and if the hon. Gentleman seeks to catch my eye later, I shall certainly look his way. If he has a point of order with which I can deal, I must do so, but I cannot involve myself in an argument.
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