House of Commons Hansard Debates for 1 Dec 1993

Madam Speaker : I am much obliged to the hon. Gentleman. Of course I accept his apology.

Mr. Mike Hall (Warrington, South) : On a point of order, Madam Speaker. Over the past few months, I have written to the Secretary of State for Social Security with inquiries about Government policy with regard to the operation of the Child Support Agency. I know that other hon. Members have done the same. Those inquiries have been passed to the Child Support Agency for answering, and the replies have been totally inadequate.

Last week, I tabled a question to the Secretary of State for Social Security asking him to list the number of inquiries the Child Support Agency has dealt with since its inception by constituency order. I received a reply yesterday, which states :

"I understand from Ros Hepplewhite, the chief executive of the Child Support Agency, that information in the form requested is not available and could be obtained only at disproportionate cost."--[ Official Report, 30 November 1993 ; Vol. 233, c. 429.]

Is it in order for Ministers to avoid answering questions in this way? What steps can you take to ensure that information requested by hon. Members is provided and that Ministers are accountable to the House on Government policy?

Madam Speaker : I am sure that the hon. Gentleman is aware that the content of answers is not a matter for the Chair. I simply tell him to seek opportunities to pursue his complaint with Ministers. Perhaps I could draw his attention to the fact that there will be an Adjournment debate on that issue tomorrow.

Dr. Norman A. Godman (Greenock and Port Glasgow) : On a point of order, Madam Speaker. It is with reference to your earlier strictures on a somewhat lengthy statement. First, may I compliment you? You called all hon. Members who sought to catch your eye. Nevertheless, I should like to know whether you are ever given any indication of the likely length of the presentation of a statement before the Minister goes to the Dispatch Box.

Madam Speaker : I am concerned not simply about the length of statements but also about the length of replies to statements and the time taken by Back Benchers to put their questions. The whole exchanges during Question Time and following statements concern me. Although I am very anxious to call all Members who stand--I cannot always do that, but I do my best--it is possible only if I have brisk questions and brisk responses from the Minister concerned.

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BILLS PRESENTED

Social Security (Contributions)

Mr. Secretary Lilley, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Hunt, Mr. Secretary Lang, Mrs. Secretary Bottomley, Mr. Secretary Redwood, Mr. Nicholas Scott and Mr. William Hague presented a Bill to increase primary Class 1 contributions payable under the Social Security Contributions and Benefits Act 1992 ; to correct the provisions as to the appropriate national health service allocation in the case of such contributions ; to clarify what reliefs are to be taken into account in assessing Class 4 contributions ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time tomorrow, and to be printed. [Bill 2.]

Statutory Sick Pay

Mr. Secretary Lilley, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Heseltine, Mr. Secretary Hunt, Mr. Secretary Lang, Secretary Sir Patrick Mayhew, Mr. Secretary Redwood, Mr. Nicholas Scott and Mr. William Hague presented a Bill to remove the right of employers other than small employers to recover sums paid by them by way of statutory sick pay ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time tomorrow, and to be printed. [Bill 3.]

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Orders of the Day

WAYS AND MEANS

Order read for resuming adjourned debate on Question [30 November].

AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance ; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide--

(a) for zero-rating or exempting any supply, acquisition or importation ;

(b) for refunding any amount of tax ;

(d) for relief other than relief applying to goods of whatever description or services of whatever description.-- [Mr. Kenneth Clarke.]

Question again proposed.

Budget Resolutions and Economic Situation

5 pm

Mr. Gordon Brown (Dunfermline, East) : Today we are discussing the imposition of tax rises from April next year, which now amount to the biggest tax demand in history.

Tax rises have been imposed not just through VAT and national insurance but three changes in income tax push people's income tax bills up. The Chancellor announced three new taxes : on home insurance ; car insurance ; and holidays.

Those tax rises are the result of promises that have been broken unfairly and without regret, shame or apology. Promises on taxes have now been broken side by side with promises on public spending. Tragically, those promises have been broken merely to pay for the mistakes of the past, in a Budget that has no clear strategy, direction or leadership for our future.

With private investment still falling this year, the Budget now leaves public investment falling next year. The Chancellor now accepts that growth has been lower than forecast and will be lower than forecast next year, as inflation starts to rise again. Despite all his boasts yesterday, the Budget does nothing about the central revelation, admitted by the Secretary of State for Trade only few days ago, that our productivity is 25 per cent. below that of our competitors. But contained in the statement was the Chancellor's admission that 3 per cent. growth in our economy was well above the sustainable growth rate that we can expect.

Let us look at exactly what the Chancellor has done. First, income tax rises will come in March, April and the following April. But let us recall for a minute the promise that the Prime Minister made during the election campaign. He said :

"I have no doubt that we will be able to make further reductions in the rate of taxation. We will make further reductions in the rate of taxation but perhaps not at the rate of a penny per year but we will be able to make reductions year on year at a smaller rate."

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Yet what do we have in the Budget? We have three separate increases in our income tax bills from April next year and from April 1995. First, personal allowances have been frozen for two years at a cost of 34p. Secondly, married couples' allowance has been cut, at a cost of £1.85 this year and another £1.65 thereafter. Thirdly, mortgage tax relief will be cut in 1994 and again in 1995, representing a further £2.24 in the first year and nearly £5 by the end of the second rise, despite the promise in the Conservative manifesto that mortgage tax relief would be maintained.

In total, the income tax bill for a typical family will be £5 a week higher next year, with another £1.65 on top the year after. That is from a Prime Minister who said at a press conference : "All mine, all mine." In his election manifesto he said that lower taxes were necessary to encourage people and create a more productive economy. He said that lower taxes would transfer power from the state to the people and that high taxes kill the goose that lays the golden egg. That is why the country will never trust the Conservatives on tax again. The Budget finally broke any residual trust that even the most ardent Tory could have in the Government over taxation policy. Some 500,000 new taxpayers will be drawn into the income tax net, 300,000 of whom will be women. Some 95 per cent. of British households will lose money as a result of the Budget's cumulative effects. So Conservative Members must explain why they went to the country on election manifestos promising not just no tax rises but tax cuts, whereas the Budget Red Book says that taxes will rise next year from £220 billion, eventually reaching £271 billion in the next few years. I want them to explain their promises of tax cuts year on year, given that taxes will rise from 35 per cent. of national income to 37, 37.5, 38 and then 38.5 per cent.--the biggest share of national income, and higher than under any Labour Government.

Mr. John Townend (Bridlington) : Will the hon. Gentleman give way?

Mr. Brown : I will give way to the hon. Gentleman but he has just come into the Chamber and I shall not give way to other hon. Members who have just done that.

Mr. Townend : I am obliged to the hon. Gentleman. I understand his opposition to tax increases. If the Labour party disapproves of the tax increases introduced by the Government, how would it deal with the budget deficit? Would the hon. Gentleman deal with it all on the spending side? Would that not mean savage cuts? Will he specify in which areas he would introduce cuts?

Mr. Brown : The hon. Gentleman forgets that his party went to the electorate and promised no tax rises. I recall an exchange between my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and the hon. Gentleman in a previous debate, when the hon. Gentleman stood up and boldly said that he had not promised that there would be income tax cuts in his manifesto. So he did not even believe the Prime Minister's comments at the last election. Let us be absolutely clear about what the Budget means for home owners. Mortgage tax relief will be cut as people pay more for their homes ; VAT on fuel will be imposed so that people pay more to heat their homes ; a new tax on

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home insurance will mean that people pay more to protect their homes. None of those taxes were ever mentioned in the Conservative party manifesto.

For car owners, the Budget means more tax on licences, petrol and car insurance, and motorists will soon pay to travel along motorways as a result of the imposition of tolls.

Is it not amazing that even rising crime becomes a tax-raising opportunity for the Government? Home insurance premiums have risen by 500 per cent. because of the rising cost of crime under the Government and now they impose a tax on it as a revenue-raising opportunity. Because of crime, car insurance premiums have risen by 260 per cent. and taxes will put those up a further 3 per cent. as a result of the Chancellor's announcement.

Not only income tax will rise. As a result of the two Budgets this year, we are now being asked to pay more for less because of the rise in national insurance. Let us remember--it should be recorded in Hansard so that people can see it--that on 28 January 1992, before the election, the Prime Minister stated clearly :

"I have no plans to raise the level of national insurance contributions".

During the election campaign, when it became an issue, the then chairman of the Conservative party issued a statement saying that a rise in national insurance would be a "back door stealth tax". Who has implemented a back door stealth tax?

People are being asked to pay more national insurance, but they are to receive less. I can think of no bigger blow to the unemployed than that people in work must now pay more in national insurance contributions knowing that, if they lose their job in future years, the unemployment benefit available to them will be halved.

Mr. Patrick Nicholls (Teignbridge) : As the hon. Gentleman does not even approve of those modest tax increases, what public services would be cut if his party were in office? The public need that information to make sense of his attack.

Mr. Brown : The hon. Gentleman was almost inaudible because of the noise in the House. He went to the electorate and said that he would cut taxes and that taxes would not rise. We should have an apology from the hon. Gentleman.

Mr. Nicholls : On a point of order, Mr. Deputy Speaker. The hon. Gentleman said that he could not hear what I was saying because he was trying to find out from his leader what the answer was. He is now inviting me to apologise. Surely he should give way to see if I am willing to do so.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : That is not a point of order for the Chair. It is for the hon. Member for Dunfermline, East (Mr. Brown) to decide whether he will give way.

Mr. Brown : The hon. Gentleman, as I understand it, asked about what he called modest tax increases, which will mean £10 a week more for the typical family. We will again vote against the imposition of VAT on fuel. We will bring the matter to the House and give the hon. Gentleman a chance to support us. If he is to honour his promise to the electorate, he should vote with us.

Mr. Nicholls rose --

Mr. Bernard Jenkin (Colchester, North) rose --

Mr. Brown : No, I will not give way again.

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Mr. Deputy Speaker : Order. I have heard the hon. Gentleman say very clearly that he is not giving way again. I am sure that hon. Members also heard him say that.

Mr. Bromic policy that will be expounded in the next Labour manifesto will start with the sentence "We will not start from here"?

Mr. Brown : The hon. Gentleman is absolutely right : we will not start from here. We warned the Government about the impact of recession and about failing to take action on unemployment. The hon. Gentleman should warn his Front-Bench colleagues that he made a promise when he stood at the general election for Colchester, North. He said :

"There are 10 good reasons to vote Conservative."

And what was reason number four? "Low taxes". We can see what has happened to his promise.

Let us recall what was said about VAT :

"We have no plans and no need to extend the scope of VAT." What about the council tax? The Chief Secretary admitted on "Newsnight" last night that council tax bills were likely to rise as a result of yesterday's announcement. There will be rent rises as a result of the cuts in housing that were announced yesterday. What about all the promises that the Conservatives made about taxes and charges during the election campaign? The Chancellor, in his own personal manifesto, said in Rushcliffe :

"Only the Conservatives believe in keeping tax down to give incentives to enterprise and investment."

The Chief Secretary said in Enfield :

"The Conservatives want to cut your taxes."

People would not know that from what has been done in the last few months.

The Chief Secretary is nodding because he obviously believes it. He also said :

"Higher tax and national insurance would hit those who work harder and do overtime."

So why is he imposing rises in national insurance and breaking all the promises that have been made? [Hon. Members :-- "Tell us why."] When the Chief Secretary goes back to his constituents in Enfield to answer their questions about his failure to keep his promises, will he remain seated there?

The promises that have been broken by the Government are not only on income tax, VAT, and national insurance, but on public services. We are witnessing, in the public spending announcement that came with the Chancellor's budget yesterday, some of the biggest cuts that we have seen in our public investment and public spending budgets. What did the Prime Minister say about that at the general election campaign ? I have gone through the transcripts of the Prime Minister's many press conferences during the election campaign. I have no doubt that Conservative Members will want to discuss with the Prime Minister the views that he put to the electorate on the question of public services. Cutting public spending, he said, would not be "economically right" :

"If we were going to cut public expenditure we would have done it before and I don't believe it's economically right. I have said that in the past, and there is no need to do it whatsoever. So you can rule out any prospect of that."

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He said that it was not possible that public spending might rise or fall, and that there was no prospect of the public spending cuts that we now have as a result of Government decisions.

Is it any wonder that the country will never again believe the Conservatives ? Those are broken promises, not only on tax but on the fabric of our social services.

At another press conference during the election campaign, the Prime Minister said :

"We will stand by the figures in the Red Book. I see no reason why we should not meet our promises as we have allocated our reserves. We have seen these concerns in the past, and it will not be necessary to change plans."

I do not think the Prime Minister will easily forget that, if he survives for another general election campaign. Either the Government were incompetent on a massive scale that beggars belief, or they were deliberately misleading us throughout the general election campaign. The Government could plead guilty to broken promises and ask for their incompetence to be taken into consideration, but how could they make the commitments in the election manifesto that have now been overridden by yesterday's statement ?

In 1992 the Government said :

"Over the next three years we are committed to the biggest investment in Britain's infrastructure in our history."

Why was that commitment followed by an 8.3 per cent. cut in the transport budget ? They said :

"We believe that the railways can play a bigger part, and are investing accordingly."

Why has the external financing limit of the railways been cut ? The Government said :

"The Conservative party's commitment to the environment is beyond doubt."

Why was the environment budget reduced by 13 per cent. yesterday? Why is it that local government is down 1.8 per cent., employment down 3 per cent. and housing down 8 per cent., with the accompanying risk to many homes and construction jobs?

It is not only the promises made during the election campaign that have been broken. At the time of the last autumn statement debate, the Chief Secretary said :

"I believe the protection of investment within the public spending round is the best way to boost private investment, the best way to create growth in the short term and in the long term as well." Why has public investment been cut from £23 billion to less than £22 billion as a result of the announcement made today?

What about compensation for VAT? When the country realises that a family of four on income support will receive only 45p per week to make up for a fuel bill that every expert estimates will be more than £1.20 a week, and when single pensioners understand that they will get only 50p a week although their fuel bills will be much higher than that, no pensioner or family will accept that they have not been short-changed by the Government as a result of yet another broken promise.

Mr. Michael Bates (Langbaurgh) : Does the hon. Gentleman agree with the remarks made 11 days ago by the Opposition's social security spokesman, who said that 50p per week on top of the pension would be adequate compensation? Does he agree that 70p per week, which is what we have put forward for single pensioners, will be more than adequate?

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Mr. Brown : That is not what my hon. Friend said. Let me put a challenge to the Conservative Members who signed the early-day motion calling for compensation for all pensioners. They said that compensation had to cover in full the VAT rise. Why is it not doing that?

Hon. Members : Answer the question.

Mr. Deputy Speaker : Order. It is no use hon. Members shouting "Answer the question" if nobody can hear the hon. Gentleman attempting to do so.

Mr. Brown : We should also be clear about what has happened to invalidity benefit. The country and a wider audience should know that invalidity benefit will be cut. A faxed document issued by mistake by the Department of Social Security to the Press Association a few months ago said that the assessment--that is, of the people who would lose benefit-- would include a retired builder with heart disease and angina, who gets pain in the chest after excessive bending, is unable to walk on the flat for more than 200 yards before he has to stop and cannot climb stairs. These are the types of people who will lose their invalidity benefit.

If the Chancellor announced today that the business expansion scheme was to be closed, and no more tax shelters created for people to make money out of the miseries of repossessed homes, he would save £100 million before Christmas.

What is the choice that the Government must make? Is their priority to close the tax loopholes that I have identified, or to hit people on invalidity benefit?

What is the Chancellor's record? At the Department of Health he picked a fight with the ambulance workers : at the Department for Education he picked a fight with the teachers ; and at the Home Office he picked a fight with the prison officers. But when he was a Minister at the Department of Trade and Industry, did he pick a fight with the City establishment and tax avoiders? Now that he is at the Treasury, is he more likely to be toughest with the weak--strongest with the least able to defend themselves--or will he stand up to people who have been avoiding tax systematically for a long period?

Mr. Nigel Forman (Carshalton and Wallington) : Will the hon. Gentleman give way?

Mr. Brown : I will not give way again.

That is the Chancellor : strongest against the weak, fearless with the disabled and tough on invalids. That is the message that comes from the Budget. As for the Chief Secretary--

Mr. Forman : Will the hon. Gentleman give way?

Mr. Brown : I will not give way again. I have given way on numerous occasions, and on each occasion I have to remind Conservative Members of their own manifesto commitments, which they have broken. Mr. Forman rose

Mr. Deputy Speaker : Order. The hon. Member for Dunfermline, East (Mr. Brown) is clearly not going to give way. I will ensure that both Front Benchers and Back Benchers on both sides of the House are given a fair hearing in reasonable quietness.

Mr. Brown : Let us examine the Chief Secretary's record. He now tells us that he supported the Prime

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Minister in the leadership election, not necessarily because the right hon. Gentleman was his personal choice. In a Sunday newspaper, he commented :

"The recommendation of Mrs. Thatcher was very clear"

moving away somewhat from the idea that a decision was made very quickly.

What happens when the Chief Secretary makes statements on tax?

Mr. Jacques Arnold (Gravesham) : Will the hon. Gentleman give way?

Mr. Brown : I will not give way again. I have given way a number of times, and were I to do so again I would have to remind the hon. Gentleman of his own election manifesto commitments.

What did the Chief Secretary say in his Enfield manifesto? He not only said that national insurance payments should not rise ; he said :

"I offer you a vision for the 1990s. It is a society prosperous enough to provide for those in need and invest in public services." That is the Chief Secretary who has made some of the biggest cuts in public services that we have seen.

What has the Chief Secretary said about tax in the past? He is the man who told us that the poll tax would be an election winner for the Conservative party. Let us remind ourselves of what he said : "Far from being a vote loser, with your help the poll tax will be a vote winner."

A few months after the tax was introduced, he said in a speech : "If this is what the community charge can do for the Conservative party after just one month, think what it can do for us after one year."

The Chief Secretary is a man of few words on tax, almost all of them wrong.

I consider, however, that the Chief Secretary's highest point on the question of tax was reached when he published a pamphlet--only a few months ago, before he became Chief Secretary. It was entitled "A Vision for the 1990s", and one of the main chapters was entitled "Towards an Ultra-Low Tax Economy"--not a low-tax economy, or a very low-tax economy ; an ultra-low- tax economy. [Interruption.] The hon. Member for Rutland and Melton (Mr. Duncan) cheers the idea of a low-tax economy. I assume that he will be voting against the Budget on Tuesday.

The Chief Secretary said that lower taxes were "a total political commitment". It might be thought that, if that political commitment was not being met by the Government in which the right hon. Gentleman served--given that it was a total commitment--he would give up, saying that he could not be part of that Government any longer. He said : "Our European competitors lack the political willpower to introduce low-tax policies."

What about the Prime Minister, the Chancellor of the Exchequer and the Chief Secretary himself? Do they not lack the political will power to deliver low-tax policies now?

The right hon. Gentleman also said--I believe that this will resonate throughout the country as we move towards election time-- "There is no point in going through a Parliament delivering every little promise you made and failing on the big promises." What are those little promises? Promises about income tax, about national insurance, about VAT on fuel, about public services and about the social security budget? Those are

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