House of Commons Hansard Debates for 1 Dec 1993

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The cuts in maintenance grants may not affect the numbers, but they will certainly change the type of student who can enter higher education.

There has been a shift in class structure among university students. It is very difficult for young people--and even more difficult for mature students--to go into higher education at a time when grants are being cut, and local authorities are being squeezed so that discretionary grants are almost a thing of the past. In describing the reason for the cuts in student grants, the Chancellor of the Exchequer said yesterday :

"Why should the bus driver pay higher taxes to finance all the living costs of tomorrow's lawyers?"--[ Official Report, 30 November 1993 ; Vol. 233, c. 929.]

Why should not today's lawyers, and for that matter, today's trust managers and quango directors, pay through income tax to finance, help and invest in the skills of tomorrow's generation?

As well as the extra burdens on the household budget, we heard in the Secretary of State for Social Security's statement that the shift is not merely from taxing income to taxing spending. It was a remarkable effort in combining hefty increases in tax and spending with hefty increases in taxing income.

There is no doubt that taking £10 billion out of total public spending over the next three years will have a disastrous effect on many areas of our quality of life. The opening remarks of the Secretary of State, in which he placed great emphasis on targeting welfare benefits, were interesting. He mentioned that hon. Members such as himself would be concerned with

"those for whom the welfare state was designed"

I am not as young as the hon. Member for Erewash, but I have always believed that the welfare state was designed for every one of us who may want to use the library or who may want to send our children to state school, who may want to use the state health service, or who is concerned about the cleanliness of the environment.

As soon as the welfare state becomes something that is available to that mythical "those", who are not all of us, it will decline in quality and will not operate in the best interests of all the British people. That is a central element of the irresponsibility with which the Government approach the whole issue of public finance for the future welfare of us all.

The Budget did nothing for jobs and manufacturing in my constituency, and it points to the worrying way in which the Government intends to serve the British people, in whose interests they were supposed to design the Budget.

7.53 pm

Mr. Bernard Jenkin (Colchester, North) : I feel sorry that the hon. Member for Sheffield, Hillsborough (Mrs. Jackson) does not feel that the Budget will do anything to improve manufacturing in her constituency. I may follow up those comments later.

The hon. Lady also mentioned family values. Anybody who starts to talk about family values should be heard because we need more of a consensus in the House about what family values should be and how we should sustain them. But it is a little churlish to lead family values against VAT on fuel after the announcement of such an incredibly generous package of measures that is certain to protect poor families, not only because of the special measures that

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will be announced, but because all possible commodity price rises are already reflected in the retail prices index. That index affects the annual uprating of all social benefits.

The hon. Lady also mentioned the impact on higher education of reducing student grants and converting them to loans. There is no evidence whatever that since the Government have introduced loans, people have been discouraged from entering higher education. On the contrary, we are ahead of the Government's target of getting more people into higher education. We hope to get one in three into higher education by the end of the century and we shall easily beat that target.

Speaking as an hon. Member who represents a university constituency, I realise that our system requires more generous provision for student maintenance, whether through parents, state grants or loans. It is more expensive for the average British student to attend university because the average student lives away from home. That is not the norm in most other European countries and often not the norm in the United States, but the introduction of loans has not discouraged people from taking on the liability of higher education because they know that it will improve their earning power in the long term.

I declare an interest in the debate as an adviser to the Legal and General Group plc and congratulate my right hon. and learned Friend on the presentation of the Budget. I choose to call it the hush puppy Budget--not that the hush puppies and the softness of their step should deceive us of the weight and stature of the man that fills the shoes, or conceal the heaviness of the task that he has borne or the toughness of the decisions that he has had to make. I wish to comment on two general areas : the steps that the Government appear to be taking towards a comprehensive reform of our welfare system and the lessons that we can draw from the extraordinarily successful anti-inflation policy pursued by the Government that has created excellent prospects for the United Kingdom economy.

There are several aspects of the Budget that I have always considered most important for Britain's economic health. I am delighted with my right hon. and learned Friend's plans to eliminate the PSBR by the end of the decade. That is the dividing line between the Conservative party and the Opposition parties. There has been absolutely no evidence in any of the debates from either the Opposition Front Benches or Back Benches that there is any strategy whatever to deal with the deficit.

It is no good merely throwing around false charges about election pledges. I am perfectly happy to stand by any pledges that I made about the Conservative party being a party of low taxation. Compared with any of the Opposition parties, that is certain. It is rich of those on the Opposition Front Bench to pretend that somehow they will not raise taxes as high as the Conservative party.

Even better in the short term is the Government's plan to end borrowing for current spending, which is wholly unproductive and merely robbing tomorrow to pay for today.

Contrary to the out-dated fears of the few remaining monetarist commentators, those steps will provide a powerful boost to the economy that will increase employment and create wealth. From the rises in the gilt market and the stock market we have already seen that the financial markets have every confidence in that statement.

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The Government have successfully demonstrated their determination to manage their finances prudently and live within their means. We should pay tribute to the tough decisions made in the March Budget because they laid the foundations for yesterday's announcements and my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) should not be forgotten or dismissed for his role. However, the March Budget left a question mark over the determination to deal with the deficit--one with which I am sure that my right hon. Friend the Member for Kingston upon Thames would have dealt.

The figures were serious. I refer briefly to a written answer given by the former Chancellor to a question tabled by my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) in which the projected out turn of the national debt as a proportion of gross domestic product was described. The answer said :

"This ratio fell from 49 per cent. at the end of 1978-79" when we were first elected--

"to 27 per cent. at end 1990-91, but has since risen to an estimated 33 per cent. at end 1992-93. The PSBR projections in table 1 of The Budget in Brief' imply a ratio of 49 per cent. at end 1997-98."--[ Official Report, 29 March 1993 ; Vol. 222, c. 17.] That was an indebtedness in excess of what we had inherited from the last Labour Government. It was clearly unacceptable. That Budget was clearly an interim arrangement, pending strengthening economic performance, before my right hon. and learned Friend the new Chancellor had a chance to put his stamp on the proceedings. We now have a much improved scenario. The consequence of mounting up less debt is much less debt interest. It is a virtuous circle. The less debt, the less debt interest and the lower the public sector borrowing that ensues the following year. So we have reduced debt interest by a billion and more in all the forward years.

Conservative Governments are nothing if they cannot live within their means. Amid all the manifesto pledges that we made at the last general election, one of the most pre-eminent surely was and remains that we should see the budget return towards balance as the economy recovererd. I am extremely pleased to see that the manifesto pledge will be fulfilled. No matter how many manifestos the Labour party signs up to, it is business that creates wealth while Governments' efforts to redistribute wealth tend to undermine the wealth-creating process.

I welcome the tight cap kept on public spending. My right hon. and learned Friend is to modest when he talks of

"a real terms freeze in the new control total over the next two years".-- [ Official Report, 30 November 1993 ; Vol. 233, c. 924.] By insisting that next year's reserve should not be sprinkled around the various Departments, the Government have ensured that the control total for 1994-95 represents a real terms reduction against the expected outturn for the current year. Over the summer, while Parliament was in recess, a few of us put ourselves into the line of fire by insisting that that would be possible. We gained much criticism from the "Today" programme and the Labour party and all the other people who said that it would not be possible. I am extremely pleased that it has been possible without inflicting great pain on our public services.

Simply because we are in a less inflationary environment, it is easier to manage the public finances, and

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it is right that the Government should seek to take advantage of lower than expected inflation by lessening the burden of public expenditure. The control totals in the March Budget were already tight, but the futher reductions are entirely reasonable, given that inflation and public sector wage costs have turned out lower than expected.

The Government still take too great a share of national income. Those countries in which public spending is a lower proportion of national income are best placed for economic recovery. We ought to take more active steps to reduce our public spending. The public sector pay freeze is a good start. I welcome the comments made by my right hon. Friend the Chief Secretary today about the administrative cash limits that have been put on Government Departments. There are plenty of instances in the folklore of Whitehall and Westminster of vast waste and extraordinary Byzantine practices around the corridors of power. One special adviser--a little while ago, I have to say--working in the Department that one would imagine would be the most cost-conscious of all Departments, the Treasury, told me that, if he was preparing a document, it first had to be sent down to the typing pool. If it was sent back, he could make up to seven corrections on his computer on his desk. If it needed more than seven corrections, he was required by civil service rules to send it back to the typing pool to have the corrections made.

I know a similar story from the Department of the Environment. A trainee was sent off to do some jobs which included some photocopying. She asked where the photocopier was. The reply came, "Oh no, you don't do the photocopying. That goes down to the fourth floor. Len does the photocopying." She asked when she would get her work back. She was told that Len was on holiday and would not be back for two days. I can give chapter and verse on a personal basis, but perhaps I should do so off the record. I am sure that the competitive testing programme is designed to take heed of such practices. Perhaps some of the best news in the Budget is what did not happen. Income tax rates did not rise. While we see the benefits to the Conservative party of a 20 per cent. basic rate of income tax--increased incentives to work hard and encouragement for those with the lowest earnings--we are right to increase national insurance contributions to fund the deficiency grant of the national insurance fund.

Another move that was clearly needed was the first step towards abolishing the remnants of mortgage interest tax relief. That will remove a distortion in the economy, which was ably described by my hon. Friend the Member for Bury St. Edmunds (Mr. Spring), and help prevent another property-based boom like the one in the late 1980s. People will be less encouraged to invest in non-wealth-creating residential property and more encouraged to invest in productive assets.

Furthermore, by effectively raising the cost of money to domestic borrowers, we make it easier for reductions in the base rate to take place, which benefits industry as a whole. We must still encourage home ownership and make it easier for young couples to buy their first home by means of first-time reliefs. But we do not need to subsidise the rest of the economy. With interest rates at a 16-year low, the typical mortgage payer is some £170 better off already. Now is clearly the time to start the long-needed abolition.

As secretary of the Conservative Back-Bench smaller businesses committee, I welcome the measures to help

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small businesses. Along with the forthcoming deregulation, simplifying the paperwork that the Government require is a great step forward. Not only will taxation forms be simplified, but some 45,000 businesses will be freed from VAT. Many more will no longer be subject to audits. All those measures will allow small and medium-sized businesses to get on with making money rather than enriching accountants.

I particularly welcome the ideas to tackle late payment of small company debts. We look forward to the development of those ideas. Also welcome are the measures to encourage investment in small businesses. The new enterprise investment scheme and venture capital trusts will bring in capital. Allowing angels to take paid directorships will bring in valuable expertise.

While the changes to capital gains tax are welcome, I believe that the Government are missing a trick here. We successfully raise far more revenue from top-rate taxpayers by abolishing special reliefs and cutting the rate from the previously punitive levels. Yet we have set CGT at a relatively punitive level. We find ourselves compelled to introduce an ever-evolving set of special reliefs to ameliorate its damaging effects. There is a better way.

If the Laffer curve, as it has become known, applies to income tax rates, why does it not apply to capital gains tax rates? Two interesting papers have been produced on capital gains tax, which I recommend to interested Members. One is by the Centre for Policy Studies and the other by the Adam Smith Institute. I shall precis the latter document.

The United Kingdom rate of capital gains tax is 40 per cent., although it is adjusted for indexation. It is among the highest in the world. It is far beyond the point of maximum revenue yield. Several academic studies in the United States provide empirical support for the argument that the present 28 per cent. rate of capital gains tax is above the maximum revenue rate. Estimates of the latter vary from 9 to 21 per cent., with 15 per cent. the mid-point of the range.

There is no reason to believe that the revenue maximising rate of capital gains tax is higher in the United Kingdom than in the United States. There is good reason to believe that it may even be lower. The revenue maximising rate of capital gains tax is not necessarily the optimum rate, in that the maximum revenue-raising rate would be damaging to the infrastructure of the economy.

The taxpayer loses from the current system of capital gains tax. The available evidence suggests that the revenue maximising rate of CGT in the United Kingdom is possibly about 15 per cent. Further benefits could be realised if the tax rate were reduced below 10 per cent., and ultimately to zero, as in many other countries, such as Hong Kong.

In the current period of fiscal stringency, I do not recommend abolition, but a substantial cut in the current 40 per cent. rate would release assets, currently imprisoned by the 40 per cent. rate, for more productive uses, there would be a substantial increase in capital gains tax revenue for the Treasury to go towards reducing the PSBR further, and it would substantially improve general business incentives without resorting to the expensive profession-subsidising mechanisms that have been announced in the Budget, welcome as they are.

I particularly welcome the measures to protect those on low incomes from the imposition of VAT on domestic fuel. The Conservative party has made clear its commitment to preserve a functioning welfare state and to helping those in

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need, which the package does. It will benefit 15 million people--one fourth of the population--and we are starting the relief measures before the taxes kick in.

One measure of particular merit is the pensioners income bond, which will provide a guaranteed monthly income, alowing those on fixed incomes to plan their budgets more easily--those reliant on their savings.

I shall now deal with social security. As well as the comprehensive VAT compensation package, there are other items such as the reform of invalidity benefit--the introduction of incapacity benefit, changes to statutory sickness pay, the reform of unemployment benefit, the introduction of the job seeker's allowance and equalisation of the state pension age.

All those measures are part of a clear programme that the Government are developing to improve work incentives and reduce reliance on the state. I shall talk in detail about the job seeker's allowance, which is intended to be, and will be, a single, simple and comprehensive benefit for unemployed people. It will require that the recipient completes a job seeker's agreement, which will set about the conditions to be fulfilled to receive benefits. People who do not look for work will be penalised. That is better than workfare, because it encourages people to find a productive job rather than be stucck in a non-productive job.

There is a strong case for change. At the moment, there are two benefits : unemployment benefit and income support. They do not fit will together and there are inconsistencies between them. The two benefits have different rules, offices and systems. It is too easy for people who are not genuinely looking for work to claim for an indefinite period.

Under the current system, there is no effective penalty for people on unemployment benefit who fail to participate in training schemes. Under the job seeker's allowance, income support will remain unchanged for pensioners, carers and their families. Benefit will be paid weekly with two possible routes of entry : the contributory route or the means-tested route. The new benefit simplifies procedure and will reduce fraud by targeting the help on those who are genuinely seeking a job. The vast majority of my constituents will be delighted that there will be less shirking under the arrangement. I mentioned that that is part of an ongoing plan for reform. I would point out that two of the proposals that appeared yesterday in the Budget : equalisation of the state pension aged at 65 and the reform of unemployment benefit, are broadly explored in a pamphlet that a group of us published over the summer.

I do not take any personal credit for the proposals that were introduced. If the Labour party is honest, it knows that its so-called social justice commission is forced very much to the same conclusions and to explore the same arguments. It is difficult. Anybody studying the problems that we face on the ever-growing burden of social security, is forced to the same conclusions that we have been forced to draw.

Mr. Barry Legg (Milton Keynes, South-Wtroduced : the equalisation of the retirement age ; reforms to the earnings

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related element of invalidity benefit ; the fact that the new benefit that will be introduced in respect of invalidity benefit ; and also the new job seeker's scheme, which will be available for six months.

My hon. Friend should also note the support that the Prime Minister gave to another--

Mr. Deputy Speaker : Order. The hon. Gentleman is, I believe, seeking to catch my eye, but he seems to be making a speech rather than a short intervention.

Mr. Jenkin : I am grateful to my hon. Friend for his intervention, as he makes a valuable point about the influence that we may have had, but I do not claim to have been that influence. Those are natural conclusions to be drawn from the arguments once one explores them. Another point that I wish to emphasise to the Opposition is one made by Beveridge in his original report. We quote it in our document. He said :

"The danger of providing benefits, which are both adequate in amount and indefinite in duration [is] that men as creatures who adapt to circumstances may settle down to them."

That is something to which the welfare state that we have inherited today does not pay sufficient heed. No doubt Labour's Social Justice Commission will have to grapple with that as well.

I shall now move to the second area that I wish to cover to say a few words about our economic prospects with particular regard to the Government's outstanding inflation record. The anti-inflation policies have been remarkably successful in view of the shocks and dislocation to public policy just a short time ago, particularly after the devaluation of sterling, which many commentators--the Treasury, the CBI and the Bank of England--said would lead to higher inflation than has been produced. Last March the Red Book showed a reduction in the forecast that was previously forecast. This week's Red Book shows a further reduction.

Since the pound left the exchange rate mechanism, we have proved ; first, that we can have lower interest rates than the Germans--we are not necessarily inexorably tied to them ; secondly, that a substantial depreciation in the rate of sterling does not necessarily lead to uncontrollable inflationary pressures ; thirdly, that the exchange rate is far more useful as an indicator than as a target. I am pleased to say that the Red Book uses the exchange rate as an indicator and not as a target.

The success of our policy since we left the ERM and the prospects outlined in the Red Book--startlingly high growth prospects rising to a steady 3 per cent. annual growth in GDP--represent the coming of a new golden era, perhaps a second "golden age" for the Conservatives. I shall draw attention to one or two ratios and indicators, which are woefully ignored by hon. Members on the Opposition Front Bench. Central Government fixed investment is far higher now and will remain far higher than ever it was in the 1970s. Let us look at unit labour costs and manufacturing. Unit labour costs have fallen recently, making us more competitive. All the indications on cost competitiveness show that we are gaining competitiveness at the current time, which leads me finally to a brief comment about monetary policy.

We have succeeded in re-establishing a more orthodox monetarist policy that enables such success to take place. Some commentators have been consistently monetarist and I shall draw the attention of the House to one in particular. Tim Congdon wrote on 26 September 1985 :

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"It would be particularly foolish to reject the PSBR and sterling M3 because the figures have generated problems of interpretation. Sterling M3 cannot be meaningless'. It consists of bank deposits and notes and coin, and no one in his right mind can believe that their holdings of these assets do not affect the behaviour of individuals, companies and financial institutions."

On 17 October 1985, he wrote in The Times an article that described how sterling M3 growth accelerated rapidly in the preceding six months. In The Times of 22 November 1985, he was warning that the EMS was no easy option. By 27 June 1987, he was writing in The Spectator :

"Much has gone wrong with the management of the British economy in the last two years. The growth of credit and money is too high, the economy is expanding too quickly and interest rates are too low to prevent the return of inflationary pressures."

If only the Conservatives then had heeded those warnings, we might not have had such a serious recession to contend with, and certainly not such serious inflation.

What is perhaps more interesting is what Professor Congdon is saying now. He was reported in The Daily Telegraph on Friday 26 November as saying :

"We'll be clearly into a proper recovery next year, and we can then look forward to several years of above-trend growth without inflation. There is a real possibility that the underlying growth rate has improved."

In his November review, he recommended :

"There is no doubt that public sector borrowing is unsustainably high and that measures must be taken to reduce it large and early tax increases to reduce the PSBR, accompanied by an offsetting relaxation in monetary policy"

That was his prescription. That is what the Government duly delivered. What did he say about yesterday's Budget? I shall quote from The Daily Telegraph today, in which he said :

"The two budgets of 1993 may well be seen by future economic historians as paving the way for the better phase of Mr. Major's government in much the same way that the 1981 Budget laid the foundations for the good years of the Thatcher administration." We may see a second golden era.

I shall end with a question. If we can achieve the Maastricht convergence criteria as set out in the Maastricht treaty--the Red Book shows that we shall probably achieve them--one wonders why we need to think about re- entering the exchange rate mechanism. What do we need a fixed exchange rate for if we can manage all that with a floating exchange rate? If we can achieve the economic convergence criteria--they are laudable criteria intrinsically, although there is no target for overall public expenditure, and include low inflation, low interest rates and high levels of investment --with a floating currency, why do we need a single currency? I shall leave that one hanging in the air.

8.22 pm

Mrs. Anne Campbell (Cambridge) : As I have listened to the speeches of the past couple of days I have attempted to work out what the Budget is aimed at doing for the Conservative party. Much has been said about reducing public sector debt and something has been said, although not something explicit, about preventing the recovery from faltering, as it seems to be doing in many parts of the economy. I have concluded that the overriding aim behind the Budget is to keep Tory Back Benchers happy, and in that the Chancellor seems to have succeeded.

I should have liked to see a Budget that got people back to work, that boosted investment in industry and that built up Britain's manufacturing base, which has been sadly depleted over the past 14 years of Conservative rule. I should have liked to see a Budget that produced a fairer

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society. I sometimes wonder what sort of society will emerge in the long term if Conservative policies continue. I have a little news for the hon. Member for Colchester, North (Mr. Jenkin). He seems to think that the Conservative party is a tax-cutting party but, under the Conservative Government, taxes will have increased from 34.75 per cent. of GDP in 1979 to 35.25 per cent. in 1994. The Government have also increased the percentage of the average family budget taken by taxes.

More serious than that, over the past 14 years society has become sharply divided. Today, the bottom one tenth is 14 per cent. worse off in real terms and the top one tenth is 62 per cent. better off in real terms. We can see the effects of that throughout our society. People are homeless and unemployed and pensioners and students live in poverty. There are great inequalities. The bottom one tenth of the population is paying 43 per cent. of its income in taxes while the top one tenth is paying 32 per cent. of its income in taxes. The March Budget will make that division in society worse. The micro simulation unit of Cambridge university has estimated that the March Budget will hit the poorest one tenth by a further 3 per cent. while taking only 1.5 per cent. from the richest one tenth. More people at the top end will do extremely well for themselves and benefit from the Chancellor's largesse, while at the bottom end more and more people live in dire poverty. I do not want to live in such a divided society.

Yesterday, the Chancellor announced a package of help towards paying for VAT on fuel--a package obviously intended to keep Tory Back Benchers quiet- -that will cost £1.25 billion, while the imposition of VAT on fuel will raise only £2.3 billion. Does the Chancellor really think that it is worth it, in view of the political backlash? I am glad that pensioners will have some protection, although I do not believe that the package will fully compensate the worse-off for the imposition of VAT on fuel. We have heard today that young families on income support will get 45p a week to cover an average £1.20 of extra cost. That will result in great hardship.

One group of people on extremely low incomes will get no help on the imposition of VAT on fuel. Students will not benefit one iota from the package of help.

Mr. Michael Fabricant (Mid-Staffordshire) : I have been listening with great interest to the hon. Lady. Does she not think that the 18 per cent. fall in the cost of fuel, primarily as a result of privatisation-- that figure goes back to 1983, and the midlands has seen a cut of 5 per cent. in a year--will benefit students as well as older people?

Mrs. Campbell : I am sorry to say that it will not benefit students. Over the past 14 years, the spending power of students' grants has been reduced by 120 per cent. of today's spending power. We have to balance any fall in costs against increases in other living expenses and the general reduction in grants. Students often live in private sector rented accommodation that is badly insulated, with draughty windows and insufficient heating systems. Often, they are in no position to do anything about that. The coins in the meter by which they keep warm will be consumed at an unsustainable rate, throwing more students into debt and poverty.

Students are already badly hit by the fall in the value of the student grant, and an increasing reliance on loans means that students are leaving university many thousands

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of pounds in debt. That will increase sharply over the next three years. I know that it will be viewed with alarm by those students starting their courses this year, and I declare an interest in that I have a son who has started a degree at Imperial college, here in London. Because London living costs are higher than costs in the rest of the country, students in London on a full grant will receive £2, 845.

That is due to fall to £2,067 by 1996-97. That is a reduction of £778 during the next three years, and the Government are expecting students to borrow £778 to make up the shortfall. I hope that the Government have appreciated that that is not a one-for-one exchange. Those students whose parents will be able to make a full contribution--they include my son--will be able to borrow £778, as will those students who receive their grant from the state.

As many more students will take out the full loan than students who will draw a full grant, expenditure will increase. I will benefit from that, if I choose to reduce my son's grant to the same extent that the Government are reducing the grant to students who depend on grants. That is not a fair way of financing students and, although I shall benefit from it, I shall vote against the measure if I get the opportunity to do so in Committee.

Students will also suffer under the Budget from the increase in the council tax. Government Members will say that students do not pay the council tax, but that is not exactly true. I have received a letter from a constituent of mine, Mark Goodrich, who is the welfare officer of the Cambridge university students union. He points out that, in a household consisting of five students, no council tax is payable ; similarly, in a house where five people are unemployed, no council tax has to be paid.

However, let us consider a household in which there are four students and one unemployed person. That household becomes eligible for the single adult rebate, so that 75 per cent. of the council tax is payable. The unemployed person, it is true, can claim back 20 per cent. of his share of the bill. That is one fifth of 75 per cent. which, I can tell Government Members, is 15 per cent. of the full council tax bill. That still leaves 60 per cent. of the bill to be paid by the four students.

It seems desperately unfair that households consisting of either all students or all unemployed people pay nothing, while those live in mixed households pay a high proportion of the bill. I am sure that the Government did not expect that to happen, and although it does not affect many people, it hits some people hard. Some of my constituents who are mature students and who live with

non-students--their partners--are badly hit by that anomaly. I have mentioned that matter twice before in the House, and both times I received the brush-off from Ministers. I hope that, on this occasion, I will get a more sensible answer, because this issue makes a great difference to the students who are affected by it. One way in which Ministers could remove the anomaly would be to make students eligible for council tax benefits. The issue affects very few students, but that measure would wipe out the serious problem cases. I wish to talk briefly about women. The equalisation of the state pension age will lead to a deterioration in benefits for women aged under 44. Those women have been led to expect that they would receive those benefits from the

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state. All hon. Members are aware that the equalisation at 65 has happened because of the £5 billion savings which it will create in the national insurance fund. It is a further reduction in benefits for women, in addition to those which have been already announced. I remind the House that the pension was based originally on 25 per cent. of a person's earnings over the 20 best years of a career. It has been now reduced to 20 per cent. of earnings based on average earnings over an entire career. Periods of low pay are taken into account along with periods of high pay, and that will drag down the value of the pension. That will affect women primarily since, because of family commitments, they spend significant periods in low-paid, part-time employment. Women who have been penalised already by changes in the rules are to be further penalised by having to work until the age of 65 before they draw their pension.

All hon. Members will welcome the £28 a week which has been made available as a concession for child care expenses. I should like to draw the attention of hon. Members to the case of one of my constituents, who wrote to the Prime Minister. As is normally the case, the Prime Minister sent the letter on to me for a reply. My constituent explained that she was a single mother, although she was not alone by choice. Her boy friend became violent and threw her out. She had a good job as a researcher and statistician, but she could not afford child care on her own. She was in a difficult position. She dared not sue her boyfriend for maintenance because she was afraid of his violence, so she gave up her job and claimed income support. That single mother costs the state more than £600 a month. However, she wants to work and does not want to stay at home and depend on state benefits.

My constituent explained that, when she was working, she took home £800 a month after tax, national insurance contributions, and so on. The largest expense by far was child care, for which she paid £450 a month, which reduced her income to £350 a month. She got no tax relief on her child care expenses. She explained that she would now need an extra £200 a month to bring her back to the low standard of living which she experiences at present while living on state benefits.

I am afraid that the £28 a week--welcome though it is--will not be sufficient to help my constituent and many women who are in her position.

Mr. Jenkin : Will the hon. Lady give way?

Mrs. Campbell : I have given way once, and I will not do so again because my time is fairly limited.

The concession is too little, too late, and will not help many women who have professional skills and who could make a contribution to the national economy, let alone those women who are able to earn smaller amounts of earnings. Another problem with the Budget is that 300,000 women have been brought into the income tax net, and women can also be affected by cuts in public expenditure.

There are 1,000 small businesses in my constituency which employ 15,000 people, so they are an important part of the local economy. Many of those small businesses are high-tech and are involved in leading edge technology, but I am concerned that they are not growing as fast as they should. There are various reasons for that, one of which is the lack of available finance.

I welcome the enterprise investment scheme to encourage direct equity investment. We must watch

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carefully to see how that scheme works. The business expansion scheme started well and helped small businesses a great deal in its early stages. However, during the past few years the BES has been hijacked by property developers. Although the scheme has demonstrated that there is a lot of money around for investment, it has not had the effect that was intended when it was introduced.

Another measure relates to statutory interest payments for late debt, and the consultation paper that the Government are introducing on that subject. If a measure is produced to introduce statutory interest payments, it is important that it should be payable for several years after it becomes due.

Businesses often blackmail their customers by threatening not to provide further orders if their customers press for payment of debts that are due. It is important that we should avoid that situation. The Budget has not extended the capital allowances that were introduced temporarily in the March Budget. I know that that would have been a popular measure with my small businesses. There are no further tax allowances for research and development and no proper schemes to improve training and education. Many small businesses in my area will see that as a sustained attack on people who are trying to run small businesses and compete directly with companies abroad. Several measures in the Budget disturb me and I shall vote against some of those that I have talked about tonight.

8.40 pm

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