House of Commons Hansard Debates for 1 Dec 1993

Mr. Rendel : I shall come to that point later.

The important point is that the imposition of VAT has been rejected wholesale by the people. As I was saying before I was interrupted, people have made that rejection clear in the council by-elections since May, in which the Conservative party has succeeded in losing two thirds of all the seats that it fought. That is an unbelieveable and unprecedented record of electoral failure.

It is true--we have said it plainly and we have been extremely honest about it--that we believe that there should be fuel tax increases ; but they should be introduced in the right way. Time and again, the Liberal Democrats have made it plain that they are prepared to support energy taxes when they are aimed at reducing pollution and not simply at cutting the Government's deficit. Such taxes should be introduced in a way that would help those who are worst hit by them.

The second of the indirect tax increases is that on petrol tax, which was introduced yesterday. That was the second huge increase in nine months. I well remember at the last general election the Conservatives in my constituency, and no doubt elsewhere, putting on the frighteners and saying that people should not vote Liberal Democrat because we would increase petrol tax by as much as 10p a year.

We had honestly and openly said that we believed that there should be a petrol tax increase of 10p a year. We did not believe in an increase of 30p in a year, which is what we have had from the Conservatives. That is a huge increase, which will bear most heavily on those in rural communities, who have suffered from bus deregulation and who have now lost all public transport services and are totally dependent on the use of their private cars for transport.

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

Mr. Rendel : I have already given way once, and that should be sufficient for the hon. Gentleman.

Column 1082

Those who have lost their public transport services in rural areas will be those most hard hit by the increase in petrol tax. In the last general election campaign, the Liberal Democrats made it plain that we would introduce a scheme to help such people before any petrol increases were introduced by our Government. Such a promise was notably absent from the Chancellor's statement in spite of the fact that he must know, as we all do, how hard people in the rural communities will be hit.

Thirdly, the Budget introduced an indirect tax on insurance premiums. One would have thought that insurance premiums were close to the heart of the Conservative party. Have not the Tories said that people should stand on their own two feet and look after themselves? Surely one way in which members of the public can look after themselves and make sure that they do not rely on the state to finance them when disaster strikes is through insurance policies, but here are the Government discouraging people from insuring themselves.

Fourthly, there is the tax on air passengers, with all the disadvantages that that will bring to those who are trying to export and those who wish to travel abroad to get more sales for our goods in foreign parts. Again, one would have thought that the Government would do their best to encourage rather than discourage exporters. It is important to add that, in the past, the Liberal Democrats have said--I come here to the intervention of the hon. Member for Gravesham (Mr. Arnold)--that we support a carbon tax. Recent figures on the European proposals for a carbon tax show that, as they now stand, they would cause a petrol tax increase of about 6p a gallon --a great deal less than the increase that the Conservatives introduced yesterday.

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

Mr. Rendel : I have already allowed the hon. Gentleman to intervene, and I have now answered his question.

Let me now deal with direct taxes. While the Conservatives have always claimed that the one thing they would not do was increase direct taxes, whatever happened to indirect taxes, that is what they have done. Not only did the last Budget effectively introduce a 1 per cent. increase in tax on everybody's wage packet through the increase in national insurance contributions--an increase that hits all except the super-rich who do not pay national insurance on the top slice of their earnings--but personal allowances have been frozen. In real terms, even if not in cash terms, that effectively means an increase in the income tax take.

There will also be the reductions in mortgage interest relief, which will take place both next April and the following April, and a similar decrease in the married couple's allowance and in all the allowances that go with that. Those will mean real cash losses for many families. All the direct tax increases--which the Government promised they would never introduce-- will hit hardest the public sector employees who have no extra money with which to pay them because of their zero increase in pay next year. Is the Conservative party a tax-cutting party, as it has suggested? Frankly, what hypocrisy. The Conservative party has raised tax more quickly than has ever been done before.

Column 1083

For what are all the tax increases intended? First, of course, they are intended to reduce the Government's debt which has resulted from their gross mismanagement of the economy. We have heard a lot about the Government getting public sector finances right. Are the Government really going to pretend that they were aiming at sound public finances when they ran up a public sector debt of £50 billion? Again, what hypocrisy.

The Government, despite their tax-raising measures, are not investing in our future by investing in education. We heard nothing about investment in nursery schools, despite the fact that we have been told time and again that, for every £1 which is invested in nursery schools, the state will eventually reap £7 in terms of reductions in crime and social security pay-outs and the increased profitability of our economy. That £1 would release £7, yet we heard nothing about investment in nursery education in the Budget.

Mr. Iain Duncan Smith (Chingford) : The hon. Gentleman has made clear his opposition to the £50 billion deficit. Given that at the previous general election his party said that it would put one penny on income tax to pay for education--therefore, that must be taken out of the equation--will he tell the House exactly what other taxes he would levy to get rid of the deficit?

Mr. Rendel : My party said at the election and has said recently that we would raise income tax by one penny to make sure that the educational needs of the country were met. We have produced also a number of further proposals to put people back into employment. That is the most important way in which we can reduce the deficit in future, as I shall show later in my speech.

There are other areas of expenditure where the Government have failed to make the necessary investment. We are seriously under-investing in our infrastructure, our public transport, our roads and our housing.

It is also highly significant to examine the public sector net worth. Figures produced recently by Gavyn Davies, one of the Government's advisers, show that the public sector net worth increased year after year until the early 1980s. By that time, it had reached--depending on how one calculated the figures--between 70 per cent. and 100 per cent. of GDP. The net worth increased consistently under both the Conservatives and Labour until that time. Since then, it has fallen consistently, until it is now only 10 per cent. of GDP and is still falling. Indeed, in a few years the net worth is likely to become negative. In practice, we would then have a Government sector with a net worth of zero--effectively bankrupt.

A result of that can be seen in a survey by the World Economic Forum of 22 modern industrialised countries. Britain comes 22nd in infrastructure investment, 20th in quality of education, 21st in commitment to research and development, and 22nd in number of qualified engineers.

There was some good news in yesterday's Budget statement. I commend the Chancellor for his promise to study the matter of interest on late payments. That excellent idea was produced in the Liberal Democrat manifesto at the election and has, like so many of our good ideas, been pinched. Sometimes it takes the other two

Column 1084

parties some time to pinch our best ideas. On this occasion, it has taken the Government two years even to get around to thinking about it.

It is a pity, perhaps, that the idea was not in the Government's manifesto at the election. Come to think of it, that might have been the kiss of death, as they have turned over most of the other things which were in their election manifesto.

I will now talk about housing. The Budget statement contained a cut in the housing budget of over £500 million, or about 10,000 new homes between the Housing Corporation and the local authorities. Of course, the construction industry has been particularly hard pressed during the recession. There are few better ways of bringing us out of recession and into recovery than by investing in housing to get the construction industry off its knees.

There is another important reason for investing in housing. The Conservatives claim to be the party of the family, in spite of the Chief Secretary's admission just now that he did not know what an average family was. Housing is one of the main causes of family break-ups. A lack of housing and poor housing are two of the main reasons why parents do not stay together.

I should like to tell the House about one family in my constituency, and perhaps theirs is the saddest case I have yet to come across. The family has six children. The parents and the youngest daughter were living in one of the three bedrooms. Four children lived in the second bedroom. I was told that the four children shared a couple of bunk beds. I assumed that there were two pairs of bunk beds, so each child could have one bed, but that was not so. When I went upstairs, I discovered that the four children shared one pair of bunk beds. In a third room, another daughter who was married lived with her husband and their one son. Needless to say, the family was under considerable stress. I fought to get them rehoused, or at least the eldest daughter and her husband and child. Sadly, I was not successful and eventually the parents had to evict them. [ Hon. Members :-- "Was it a Liberal council?"] At that time, the Liberal Democrats were not in charge of Newbury district council. We have been since, perhaps as a result of the incident about which I am talking.

The young couple were evicted by the parents. The couple were, of course, temporarily housed as an emergency priority case by the council and they eventually moved into other accommodation. Sadly, that was not before the family had broken up. The husband could stand it no more, and moved out. The Conservatives call themselves the party of the family. Yet they refuse to put money into housing which is needed to make sure that such terrible cases of family break-up do not continue.

Local government is the other area for which I have special responsibility for my party. Standard spending assessments have increased this year by 2.3 per cent., a level far too low to allow local government policies to remain even at the levels they are at now. Services will have to be cut again next year. The services which will be cut will be especially those which councils are not statutorily required to provide, because it is those that the councils will find easiest to cut.

One of the services which I suspect will be cut first is crime prevention. That is not at present a statutory requirement, but it is a service on which the best local councils are trying to concentrate. That service will be almost certainly cut and, as a result, we can expect crime

Column 1085

to increase. The Government have claimed that they want to do something about the rising crime rate. Why will they not give local government money to invest in criment capital receipts have not for the most part been fully used. Certainly many are in the hands of local government but cannot be used for further investment or revenue spending. What a contrast, then, between what local government is allowed to do with capital receipts and what the Government allow their Departments to do with them. Yesterday we heard that the Ministry of Defence will sell a lot of its housing. The money will go directly into reducing the amount of net revenue spending. That is not something that it will be allowed to do ; it is something that it will be forced to do--in complete contrast to what happens in local authorities.

It is not just that there will be a huge hike in taxation ; there are also huge cuts in spending. How will that help us to recover from the recession? What should the Chancellor have done? He should have cut unemployment, not unemployment pay. That, surely, is the main answer to his problems. Unemployment costs nearly £10,000 per head per year. Instead of cutting unemployment by means of the investment measures necessary, he attempted to balance his figures--just as, he told us, he did at the general election--by some fanciful forecasting, instead of getting the figures right, and by cutting other parts of the social fabric.

This country needs a Government who are prepared to invest in our future, our children's edcucation, in housing, infrastructure, public transport and all the other areas of Government spending where investment has been so low in the past. This Government have consistently disinvested. That is why the Chancellor's Budget is a failure and why the House should reject it.

6.21 pm

Mr. Alan Howarth (Stratford-on-Avon) : My right hon. and learned Friend the Chancellor of the Exchequer has mapped out the path to restore balance to our public finances and, of course, he had to do so. Otherwise, our public indebtedness would have driven us back into high inflation and high interest rates, which would have meant a harsh future of worse unemployment and poverty.

My right hon. and learned Friend has sought to be fair in his tax increases. He has recognised that the strong should help the weak. Substantial tax increases are to be laid on the better-off. The thresholds for higher rate income tax, inheritance tax and capital gains tax have been held. The measures against avoidance, against people who get paid in gold bars or pretend that a sale is an exchange to avoid stamp duty, are right, particularly when the Government are also, rightly, tackling social security abuse. The insurance premium tax will fall progressively on the better-off. Although the Government have had to announce spending cuts that we would not ideally have wished, notably in the housing programme, my right hon. and learned Friend has found substantial savings in planned expenditure while protecting the welfare state. He has been able to reduce the contingency reserve because of the fall in inflation, which means that a smaller cash sum is needed

Column 1086

to purchase a given volume of activity and enables the cost of debt service to be reduced. These are rewards of the disciplined approach to economic management that the Government have pursued and that the shadow Chancellor of the Exchequer and, these days, even the Tribune Group know to be necessary.

I am pleased that my right hon. and learned Friend ignored some of the more draconian counsel offered to him. He has not cut spending programmes massively. He has increased taxes, but he has also somewhat eased monetary policy, and he is strongly placed to ease it further if growth should falter. I hope that he will be disposed to do so. He has stressed his commitment to growth. That is the only way to restore balance without pushing us back into recession and all the social damage that goes with it.

Above all, we need to generate jobs, more jobs and better jobs. My right hon. and learned Friend's macro-economic strategy is well designed to enable that. There is also a series of micro-economic measures which will support job creation.

My right hon. and learned Friend stressed the crucial role of small businesses in generating new jobs. I welcome his raising of the profits limit for small businesses paying corporation tax, his significant increase in the turnover threshold for VAT registration, his measures to encourage venture capital, and his help for small businesses on late payments.

I also welcome the reduction in national insurance contributions for employers in respect of lower-paid employees. Although our objective should be not low pay but high pay well earned, above all, it is important to help people to get jobs. The human as well as the economic waste of unemployment is a basic challenge to our society and to the Government.

My right hon. Friends are right to be troubled by the size of the social security budget, not because we should not support people in poverty as generously as we can, but because high spending on social security is an indicator of systemic failure.

A large proportion of social security expenditure derives from unemployment. A decent society and a properly functioning economy aim to involve everyone--all our people--and not to leave some of our people isolated on the margins of society, eking out a meagre existence on benefits. Moreover, the more we spend on the relief of poverty, the less we have available to spend on other decencies and necessities--better health care and better education.

I am pleased, therefore, that my right hon. Friends are seeking to tackle the roots of the problem of high social security spending by setting out to remove the obstacles to employment. I am very pleased that my right hon. and learned Friend the Chancellor yesterday declared unequivocally his commitment to the welfare state and reassured us that the Government do not intend to dismantle it. He has found extra resources for training and education. I welcome the new apprenticeship scheme and the Government's commitment to extending opportunities in further education. The French, too, have responded to economic difficulties by increasing their investment in education. If we are to be competitive, we can do no less. I particularly welcome the disregard for child care costs of up to £40 a week that is being introduced into family credit, disability working allowance, housing benefit and council tax benefit. The Government have already made

Column 1087

significant advances in reducing the poverty and unemployment traps. We need to go considerably further still.

However, for many people the costs of child care have been the final and decisive obstacle to getting into paid employment, thereby achieving the release that they want from dependence on benefits. My right hon. Friends have done the right thing here, and I am glad that they dismissed, as of course they must, the harsh fantasies with which some toyed, about cutting benefit for children of lone parents.

With this measure of support for child care costs, my right hon. and learned Friend has shown that he is willing to spend more money in the short term to recoup public expenditure in the medium and long term. He is fully justified in that approach. There is no reason to think that the markets will not tolerate borrowing to finance public expenditure, which is part of a convincing programme of investment. I welcome the new presentation of figures in the Red Book, which separates borrowing for purposes of current expenditure and borrowing for investment. The figures presented as borrowing for investment represent sums intended to be spent on physical capital investment. For me, the most interesting section of the Red Book is contained in paragraphs 5A.15 to 5A.19 on page 111. In paragraph 5A.15 it is acknowledged that

"some spending that is conventionally considered as current, such as that on education and training, research and development, or health care, can be considered to produce a stream of future benefits in much the same way as purchase of physical assets."

Very fairly, the Red Book continues in paragraph 5A.17 : "assessing the investment element of such spending raises some extremely difficult measurement questions."

However, the conclusion which so much encourages me is in paragraph 5A.18, which states :

"it is important to bear in mind that future productive capacity in the economy is supported and developed by spending that is not covered by the normal capital spending definitions."

My right hon. and learned Friend is right to pursue with determination a policy which eliminates borrowing for current expenditure, which is just that, particularly if it is wasteful expenditure. He should also be prepared, however, to increase investment in human capital. As rapidly as, in his judgment, the understanding and tolerance of the markets will allow, he should invest not only in child care, but in high-quality play facilities and well-trained play workers.

Recent terrible events have underlined the horrors of what children's play can mean in circumstances of trauma and neglect. Conversely, good play facilities and guidance offer enormous benefits to early learning and to the development of personality. I hope that the Government and local authorities will provide more support for such provision, particularly in areas of social deprivation. We should also invest on a larger scale in nursery education. I was encouraged to gather that my right hon. Friend the Prime Minister personally attaches importance to that. We should invest more fully in the whole of our education system, building on the progress that we have made. In particular, we need a proper system of support for part-time students. The Government are right also to maintain their support for civil science and technology.

My right hon. and learned Friend the Chancellor should maintain a sizeable programme of investment in so-called

Column 1088

human capital. The Government are justified in borrowing to invest in that programme, in the same way as a private enterprise borrows to strengthen the capacity of its work force and its ability to create wealth. Investors will support investment of that type in the public sector in the same way as they support private sector investment. I do not like the term "human capital", any more than I like the term "consumer". Those economist's metaphors suggest a limited view of humanity. I prefer to think in terms of us acting together to support our fellow human beings to develop their strengths and to enable them to contribute more to our society.

In that spirit, I hope that my right hon. Friends, as they consider the future of the welfare state, will not feel constrained, either by economic imperatives or by their social vision, to place further emphasis on means testing. In a year in which employees' national insurance contributions are to rise, I am sorry that contributory benefits will be cut with the proposed introduction of the job seeker's allowance and incapacity benefit.

I hope that my right hon. Friends will proceed cautiously and sensitively on the issue of invalidity benefit. I know that they have commissioned research into the operation of invalidity benefit, and I believe that they have yet to receive its findings. Therefore, I am not clear on what basis my right hon. Friends contend with confidence that significant sums are being paid in invalidity benefit to people who are not genuine invalids. In eight out of 10 claims referred to the Benefits Agency medical service, I understand that the general practitioner's decision to certify eligibility has been upheld. The Department of Social Security commissioned research by Erens and Ghate, which makes it clear that the reason for the growth in the numbers of invalidity benefit claimants is not that more people are coming on to the benefit, and it finds no evidence of extensive abuse. It shows that it is difficult for people to get off invalidity benefit.

The rational policy response is then to help employers to keep chronically sick and disabled people in work, and to encourage employers, particularly previous employers, who are the most likely to do so, to recruit them back to work. I fear, however, that the measures on statutory sick pay and the previously announced requirement that employers should pay 50 per cent. of the cost of specialist equipment for disabled people, will tend in the opposite direction.

I fear that they will frustrate the Government's intention to reduce their spending on invalidity benefit and incapacity benefit. Will the Government also consider carefully the case for legislation to outlaw discrimination against disabled people in employment? Against the background of plans to reduce expenditure on invalidity benefit, I am glad that my right hon. Friends have considered other ways to help disabled people into work. They have removed disincentives--the loss of free prescriptions and help with dental care--which have prevented take-up of disability working allowance. They have also applied the child care disregard to disability working allowance recipients. That is good.

At no extra cost, the Government could also allow social services departments to make direct cash payments to severely disabled people instead of providing help in services. In that way, disabled people, through their added independence, would have a better chance of entering employment.

Column 1089

I urge my right hon. Friends to reconsider the virtues of universal benefits as against targeting. The arguments have been rehearsed many times. Means-tested benefits are complex for recipients and administrators ; they create unemployment and poverty traps ; their take-up is poor ; and they fail to provide security. The uncertainty that attends them means that they discourage efforts at self-help. Unhappily, a stigma goes with them. With little constituency of support among the better -off for improving means-tested benefits, those benefits are less than generous. By contrast, universal benefits are secure. They provide incentives to work, since there is no penalty of withdrawal. They are easy and cheap to administer, and take-up is high. Contrary to what is often said, they are also targeted, as they effectively redistribute income from better-off taxpayers to people on middling and low incomes, and redistribute income over the life cycle to help people in times of greater need. Some 75 per cent. of expenditure on child benefit goes to families on incomes of less than £200 per week. Most importantly, universal benefits give all of us a stake in a shared system. For the same reason, we should not erode the contributory system, which is the most effective way to commit us all to support each other through decent benefits.

The welfare state is affordable. As Mr. John Hills recently explained in "The Future of Welfare" :

"even if benefit levels kept up with overall living standards, the total net effects on public finances over the next fifty years would add up to an addition of about 5 per cent. of GDP--no more than the increase (mainly due to the recession) over the past three years." We cannot, indeed, afford not to sustain and strengthen the bonds of our society.

I do not, of course, argue that everything must be provided directly by public expenditure. I do not argue at all against reform of the welfare state. I congratulate my right hon. Friend the Secretary of State for Social Security on his willingness to promote a rational debate on the future of the welfare state. I agree with him that welfare provision should not be monopolised by the state, and that we should think, as Beveridge did, in terms of a welfare society. We should promote the generous virtues, not only through the agency of the state.

I welcome the sensible and overdue decision to encourage the participation of private capital in public works--not only roads, but hospitals and schools. I want the Government to develop this philosophy of mutual support and cohesion.

Their vision of the role of the voluntary sector remains to be developed. I welcome the new provision that a person on incapacity benefit will be able to do 16 hours of voluntary work without losing the benefit. Could the Government bring that provision forward ahead of 1995? Are the Government applying a similar concession in relation to unemployment benefit and the job seeker's allowance?

I was sorry, however, that my right hon. and learned Friend the Chancellor did not have something to say in his Budget speech about the role of the voluntary sector. While I appreciate that this is not an easy time for the Government to provide more fiscal relief for the voluntary and charitable sector, if the Government want that sector to work in partnership with statutory services--sharing responsibility for programmes in the public interest--they

Column 1090

must develop a clear and consistent set of principles for enlisting it. They must not load an extra tax burden on that sector, as both this year's Budgets have done.

I offer these thoughts in a constructive spirit, which I hope matches the generosity of spirit of my right hon. and learned Friend the Chancellor. He balances intolerance of what he characteristically calls "nonsense" with a recognition that the Government exist to help us all achieve the good purposes that we cannot achieve either individually or in private groups.

Wealth does not simply trickle down : we have learnt that, I take it. The rebalancing of our public finances should also be the rebalancing of our society, between public and private, and between rich and poor. To balance competition with mutuality, discipline with compassion, and the individual with society, is the true Tory tradition.

6.38 pm

Mr. John Hutton (Barrow and Furness) : It is a pleasure to follow the hon. Member for Stratford-on-Avon (Mr. Howarth), who made a sensitive and--I do not want to embarrass him--thoughtful speech. I was sorry to hear that he intends to support his right hon. and learned Friend the Chancellor of the Exchequer in the Division Lobby. I was unable to detect much by way of support from the hon. Gentleman for the proposals from the Government Front-Bench team. Of course, that is a matter for the hon. Gentleman. He made some thoughtful and enlightened comments, especially about the need for public sector welfare provision.

I shall not pursue the hon. Gentleman's line in support of the Budget, because I and my hon. Friends intend to oppose it. It does not provide a strategy for future economic growth ; the Budget is about paying for previous Government mistakes.

Some aspects of the Budget can be given a modest welcome. For example, the efforts to close tax loopholes are welcome, although the Government could have gone significantly further. We also welcome the increase in tobacco duty, but the Government's credentials on health issues would have been substantially advanced if they had also proposed a ban on tobacco advertising.

The new child care allowances are a welcome step, and I was intrigued to hear that the Government are to introduce proposals to boost investment in the west coast main line. That issue directly concerns everyone in the north-west, and we look forward to hearing from the Secretary of State for Transport about a specific timetable for that investment. We have heard many promises and we have pressed the Government on previously publicised private-public sector investment programmes, but we are still waiting for progress on many of them.

The Government's overall strategy is fundamentally flawed, and the Budget strategy reflects that fact. I doubt whether it could be said that the Budget has any overall strategy, other than short-term and immediate political imperatives. The proposal about compensation for VAT on fuel bills has caused considerable concern. Careful news management has created the impression of great generosity towards pensioners and those on benefit, but it is undeniable that the measures still will not cover the full increase in electricity and gas bills. People should be aware of that reality.

The hon. Member for Stratford-on-Avon said that the imposition of a tax on insurance premiums was

Column 1091

progressive. It is regressive, and will have a bad impact on families and householders on fixed incomes. It will be a serious penalty on families who have the misfortune to live in high-crime areas, and particularly in inner cities.

It could be described as a tax on the victims of crime, because people who live in high-crime areas constantly worry about their insurance on home contents. As people who live in inner cities will testify, through no fault of theirs, the cost of that insurance is extremely high, and a tax on the premiums is a tax on the innocent victims of crime. That is extraordinary when viewed against the background of the Government's much-trumpeted policy on tackling law and order and, in particular, the Home Secretary's claim to put the victims of crime at the centre of that policy.

The Opposition have welcomed a limited number of measures in the Budget, but, as I have said, the Budget is not a comprehensive strategy for growth, investment and jobs. The limited measures that we have welcomed are helpful but, sadly, they lack any overall shape or strategy. The Government do not have a policy to boost investment in the public and private sectors, and it is not clear which part of the Budget will stimulate economic growth. Such growth seems merely to be assumed rather than underpinned by any specific, concrete measures.

According to estimates from the National Institute for Economic and Social Research, capital spending by the public sector has slumped from over 9 per cent. of GDP in 1975 to an unbelievable 1.5 per cent. in each of the past two years. Nothing in the Budget addresses that fundamental decline in investment.

The Chancellor said much about the merits of public and private sector collaboration. That is a welcome development : we have been pressing for such schemes for many years. However, we need to recognise the valuable contribution that the public sector can make in that field. Sadly, the Government are intent on pursuing their familiar prejudices against all things public.

Business investment is also in a bad way. There should be further capital allowances to bring forward new private sector investment decisions. The Budget should have built on and advanced some of the measures in the previous Budget. The Engineering Employers Federation called for that. I noted the comments of Graham McKenzie, the president of the federation, who said today that he regretted that the Government had wasted an opportunity to improve on the measures in the last Finance Act.

The proposed new measures to help businesses are strictly limited. The proposed enterprise investment scheme and the venture capital trusts will have to be carefully monitored if they are not to become devices for tax evasion. The budgets for key Departments such as Trade and Industry and Employment, contain further evidence of the Budget's contradictions.

According to the Red Book and the other literature that accompanied the Budget, the budget for the Department of Employment is to rise by £145 million next year, and £117 million of that is accounted for by transferring the careers service to the Department. On my figures, that means an increase for the Department of only £28 million, which represents a real-terms cut in the Department's budget for the next financial year of 3 per cent.

Column 1092

How will the new and much-heralded apprenticeship training scheme be financed from that dwindling budget? Have consultations started on implementing it, when will it start, and what will the trainees be paid?

I have a particular interest in that issue because of the collapse of apprentice training in my constituency. The VSEL shipyard used to employ 400 16-year-old apprentice trainees every year to learn vital engineering skills. The shipyard has not done that for nearly three years, and that is a ruinous waste of skills and talent. I hope to have some assurance from the Government that they will start to replace those lost skills. I hope that the Government's proposal is not another bogus trailing of a scheme that will fail to materialise.

If I am right, and the Department of Employment's budget is to fall by 3 per cent. next year while at the same time we are promised 30, 000 additional engineering apprentices, where is the money to come from? The scheme needs to be properly supported, and there is no evidence whatever in the Government's documentation that proper financing will be provided.

Many hon. Members have expressed concern about the attack on social provision that is at the heart of the Budget. The hon. Member for Stratford -on-Avon reflected some of the concern among Conservative Members. Some of the Budget measures will have an extremely serious effect on the social fabric of our society.

The hon. Member for Stratford-on-Avon spoke about the reduction in the value of unemployment benefit. People have been paying into a national insurance scheme for many years, and their contributions are soon to rise. It is extraordinary that those people have now been told by a Government who have always prided themselves on their handling of public sector finances, that because they are in such a hole, the pay-out from the scheme is to be halved. That is a betrayal ; there is no other word for it.

I understand that nearly £1 billion will be cut from the grant to the Housing Corporation over the next three years. That is bound to have a dramatic impact on the provision of social housing, and it is an appalling and cynical measure. If the Government are able to maintain the delivery of social housing to the extent that they have promised, that cut in grant is at least bound to affect rents, and that is greatly to be regretted.

The taxing of invalidity benefit is incomprehensible. It is an unfair extension of the tax base, and I agree with the hon. Member for Stratford- on-Avon that the Government have not made any credible case for saying that there is irregularity or fraud at the heart of the scheme. That case has never been made.

For years and years, GPs have been applying the regulations that the Government have laid out for access to the invalidity benefit scheme. There is no suggestion, I hope, that local doctors and consultants are somehow conniving in a conspiracy to defraud the taxpayer, which is what, ultimately, the Chancellor of the Exchequer implied yesterday. There is nothing irregular about access to the invalidity benefit scheme ; in fact, many of us would argue that the eligibility criteria are far too strict.

The increase of the state retirement age for women to 65 is another significant and serious issue. It is estimated that that will save the Exchequer nearly £5 billion. Perhaps it should have been a priority for the Government to use that £5 billion to improve the range of pension benefits that are

Column 1093

available to our senior citizens, and not to regard the harmonisation of the pension age as an excuse to cut public spending.

An opportunity was wasted on increasing the state retirement age. It would have been far preferable to discuss a more flexible approach to retirement, which would have reduced the age at which there was access to the state pension to 60. It is a mistake, and it will be shown to be so in the years to come.

It has been said--the hon. Member for Newbury (Mr. Rendel) drew attention to it, rightly in my opinion--that the Budget conceals a significant cut in grants of nearly £1 billion to local authorities, which will clearly have an impact on a range of important social services, including education, housing and social services. That is another matter of serious concern, and it should be to Conservative Members.

Today, the Association of Metropolitan Authorities, the Association of District Councils and the Association of County Councils have all predicted serious consequences of that cut in support to local authorities. I shall return to that subject when I discuss the new child care allowance, because it will have an impact on that provision as well.

The Budget also proposes further changes to the student loans scheme. That is a sneaky way for the Government to raise extra financial resources. That too will hang around the necks of Treasury Ministers in the run-up to the next general election.

I wonder how we can take seriously the Chancellor's assertion that he will not dismantle the welfare state against the background of evidence such as that. Why does he allow the Chief Secretary to continue his tirade against public welfare provision, unless he shares the same basic agenda and is quite prepared for someone else to make the running? There is a particular risk that those wider cuts will also negate the effects of other measures in the Budget. I now return briefly to the subject of the proposed child care allowance. There must be a worry, because nursery education is a non- statutory provision, that it will bear the brunt of any reduction in local authority spending. There can be little doubt about that. There is no doubt, at the same time, that nursery education, properly planned and properly delivered, can form a coherent part of an overall strategy for child care provision. If there is, as a result of those cuts in local authority grant aid, a reduction in the availability of nursery places in our communities, what then are we supposed to make of that £28-a-week allowance for child care? I wonder whether anyone has properly advised the Chancellor about the true cost of child care for many families. Of course £28 a week is better than no provision at all, but it will not meet the realistic cost of child care provision for many working parents. If we add that to the possibility of a decline in the number of nursery places, we get a better flavour of the Government's commitment in that area.

In essence, it is once again the sick and those who are out of work and on benefit who will ultimately pay the price for the Government's economic mismanagement. Some things never change.

There must also be concern throughout the country--because of the enormous tax hike that those two budgets reing the next three years,

Next Section

Home Page