House of Commons Hansard Debates for 2 Dec 1993

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turnaround in the economy, which, when it is achieved, will take us to a situation similar to that which pertained in 1989-90. That can only be achieved by the fiscal responsibility shown by the Chancellor in the Budget and by holding public expenditure at a tight level. To the dismay of the Labour party, and contrary to all the speculation before the Budget, we have not increased or widened the scope of VAT, with the small exception of putting VAT on insurance premiums. At the same time, there is a generous package of measures to help those who are less fortunate than ourselves--the sick, disabled and unemployed. I did not notice the Opposition giving one cheer of welcome for any of the measures. I have not noticed one shred of welcome for the fact that the Government have managed to fully uprate all benefits for inflation.

I was particularly pleased that the Chancellor announced a package of granny bonds, for which I have called for some time. I have constituents who have worked hard in fairly lowly jobs all their lives and who have saved a small amount which puts them above every benefit. They will take up these bonds with alacrity.

My constituents will also welcome the environmental fiscal measures which the Chancellor introduced in the Budget. The doubling of the home energy efficiency scheme is particularly welcome. The hon. Member for Greenwich (Mr. Raynsford) is present. He and I, along with other hon. Members, have taken part in an energy efficiency inquiry by the Environment Select Committee. Our report said that, if we do not improve our housing stock, and particularly the energy efficiency of the stock, it will be like pouring carbon through a sieve. We must continue to ensure that our housing stock is more energy-efficient. The human element in this is more important. The fuel bills of people on low incomes will be cut, so they will have much more of their income from benefits, or wherever else they get their income, to spend on other things.

I wished to concentrate my remarks on the measures for small and medium businesses. There are 1 million more small businesses today than in 1979. They have been the main contributor to the 1.3 million extra jobs to which the Secretary of State for Employment referred. Those businesses will continue to be the engine for growth in the economy.

I warmly welcome the package of measures for small businesses. I particularly welcome the fiscal measures--the raising of the VAT thresholds, the exemption of small firms from corporation tax, enterprise investment schemes, venture capital trusts and the new apprenticeship scheme which was announced this afternoon by the Secretary of State.

Businesses will be helped by the involvement of the private sector in large -scale public infrastructure projects. My constituents will particularly welcome the upgrading of the west coast main line, in which many firms in my constituency will hope to participate. Even more than the fiscal measures, I welcome the deregulation measures for small businesses. In that respect, my right hon. and learned Friend announced four major measures. First, he said that he will look carefully at harmonising the tax and national insurance arrangements for employers. I would go further than that, and have a Government agent as a link man between all Departments and businesses.

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When the VAT man came to inspect my books the other day, I told him of that idea, but he said that I could not expect a VAT man to be an expert on income tax, employment law and everything else. To which I replied that I was expected to be an expert on VAT as well as many other things. The costs to businesses could be cut by such an arrangement.

Secondly, I warmly welcome the limited audit requirements. As my right hon. and learned Friend has already announced, they mean that, with turnover between £90,000 and £300,000, companies will require an independent accountant's report, and below £90,000 none at all. I have just one caveat which I hope my hon. Friend the Economic Secretary will bear in mind this evening--that creditors could be at risk. When the measure is introduced, I hope that those businesses will be required to add a caveat on their invoices, letterheads and quotations so that all their creditors and customers know precisely with what type of businesses they are dealing.

Thirdly, and most importantly, I warmly welcome the proposals on the late payment of debts. That will be difficult to achieve, but if a workable solution can be found, it will enormously improve the cash flow of many small and medium-sized businesses.

Fourthly and finally on these deregulation measures, I welcome the self- declaration and assessment measures for paying income tax. I particularly ask my right hon. and learned Friend to study other models in the world. I fear that there is a danger of the new system becoming even more complicated than the present system. In particular, I ask him to look at the American model, which is relatively simple and which I believe collects most of the tax due, which is surely the test that the measure will have to pass.

My right hon. and learned Friend has delivered a Budget to restore public finances and enterprise, which drove this economy during the 1980s to such success, and that against a background of low inflation, low interest rates and low unit wage costs. No wonder the markets have reacted so well during the past few days.

Under this Government, the economy will go from strength to strength as it is the only growth economy predicted this year and next year in Europe.

8.42 pm

Mr. Alan Simpson (Nottingham, South) : I was particularly fortunate in having been given a sneak preview of the Chancellor's Budget speech about a week before it was delivered. I happened to be on a tour of a pools company at the time and we had reached the point where it kept its records of the major cock-ups in the industry. I was shown a picture of a spot-the- ball competition which was run in a regional newspaper where, inadvertently, the ball had not been deleted. Fortunately, some eagle-eyed person on the paper had spotted that and alerted the company. Right next to the advertisement was a huge disclaimer telling the readership and the punters that the promoters had made that cock-up, that they were terribly sorry, that they would not be running the competition that week and that they hoped that people would understand.

In the following week's edition of the paper there was a story pointing out that, despite the disclaimer, 10,000

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coupons had been returned--all missing the ball. I realised that I was being given a preview of the Chancellor's Budget statement, one week later.

The Chancellor was presented with a picture on which the ball was firmly planted. Not only that, but in large letters across the ball was written the word "jobs". In case the Chancellor missed that, one could see, hanging on the lips of the crowd behind the word "jobs". But he faced a dilemma because his party had already submitted its coupon and the crosses were all clustered on another part of the picture, so what was he to do? The Chancellor knew that those crosses would be the crosses that were cast in the future leadership election of the Conservative party. But the ball was somewhere else. It did not matter that his party was as disconnected from the game as they are from the real world outside ; he had another agenda. So, like the magician that he is reputed to be, he put another ball in. He put it in the middle of the crosses that mattered, the crosses that belong on the Conservative Benches, and ignored the crosses that his Budget statement will impose on the backs of the British people. I wondered, if the Chancellor had had the vision or the courage to see where the ball was, what he would have said. What would he have said if he had really been prepared to deliver a Budget statement that addressed the issue of jobs?

Well, today he would probably have insisted that we began the proceedings not with a debate which outlined how local authorities would face cuts and capping, but he would have been telling those local authorities, "Look, we are in a mess. I want you to go out and build and improve houses. I want you to go out and take the jobless off the dole so that we can take the homeless off the streets. That's what this country needs you to do. That's what I need you to do. We are going to build our way out of the recovery." That is what a Chancellor who was committed to jobs would have said.

The Chancellor would then have told engineers and designers in manufacturing, "Do us a favour, will you? Build us some buses. I am fed up with these milk floats rattling round our cities, congesting the roads where we used to have decent integrated public transport systems, with buses that we used to build ourselves. We are a Government who are in the business of buying buses and we want a manufacturing industry in Britain that is in the business of building them." The Chancellor would then have gone to the mills and said, "We need some steel. We need rolling stock for the railways. We need rail investment to match that in France, Germany and Japan. That is what the future of a manufacturing base of a Britain fit for the 21st century must be built on."

The Chancellor would have gone to the pensioners and said, not on a token basis but on a comprehensive basis, "We will come up with a plan to insulate your homes. It must be energy efficiency for all or none at all. We need such energy efficiency work because it is labour intensive. We can take people off the dole and give them skills and jobs as well as saving pensioners' lives. And while we are at it, you can forget about VAT on domestic fuel : it was a cock-up of our own, so let us ignore it if we can- -least said, soonest mended." The Chancellor would have gone to parents around the country and said, "You were absolutely right to demand a

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nursery place for every child that wants one, because they found in America that juvenile crime was best deterred in those areas where they invested in pre-school nursery care and education for all children. That is what we know we need to be doing here". The Chancellor would have said, "I can guarantee a Budget that will put books in the classrooms, in schools with roofs that do not leak any more".

As for the national health service, the Chancellor would have said, "We shall not be conducting this argument between the trusts or local hospitals and the district health authority, where they are left making decisions about shoving patients in critical states of health into the back of ambulances and sending them careering round local roads trying to find a bed that has a nurse to go with it. We shall be providing you with additional funding for the nursing staff that is needed to run our intensive care units properly within a properly staffed and resourced NHS."

If the Chancellor had wanted to be an environmentalist and an internationalist, he would have gone to the miners and said, "Look, we are really worried in Britain. Only a month ago the Government of the Ukraine reversed a decision to close down the remaining three parts of the Chernobyl reactor. Why? Not because they thought that it had suddenly become safe, but because they knew that they could not survive the winter without energy from those reactors. They know that they face a major environmental catastrophe. We know that they face a major environmental catastrophe." Three or four more Chernobyls would come across national boundaries and show no respect for Governments who have said, "It's nothing to do with us." The Government should be saying to the miners, "For God's sake lads, get down the mines and dig them some coal." We can afford to give them the coal. We need to give it to them because the choices in relation to environmental catastrophe are also our choices. The Government should also say to the miners, "While you're digging that coal, if there's any left over, pass it out among the pensioners until we get round to insulating their houses."

We did not get any of that in the Budget--instead, it took money out of the economy. Clearly, that will be deflationary and the problems of deflation will be borne by those who have least. It is a Budget under which the majority of people will pay for the recuperation of the rich. The period of unemployment benefit is to be halved, with no jobs at the end of it. The sick are to be taxed because they happen to bes stolen. A Government who purport to be tough on crime will say "Tough" to an electorate who claim that the taxes are manifestly unfair. There is to be no strengthening of the position of the victims of household or car crime. Instead, they are to be punished for being the victims of the very crimes about which the Government wax lyrical when they talk of being tough and cracking down on crime.

The Chancellor tried to pretend a sense of even-handedness in the freezing of tax allowances, as though that was somehow neutral and there was no inflation in the economy. Life goes on and, unfortunately, such hidden taxes also go on. The idea of standing still and being neutral is absurd. It is a little like presuming that if we stood still on the deck of the Titanic we would all be fine. Sooner rather than later, someone would say to the person

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next to them, "It's still going down." That is precisely what is happening in the British economy--it is still going down.

This part of the Budget amounts to little more than a series of windfall taxes for the Treasury. It would have been better if the Chancellor had said that. He will soon find himself the recipient of the deferred taxes that were provided for last year. They will soon start to roll into his coffers. The stand-still taxes will magically appear and fall in his lap. It is not magical, it is not divine and it is not an act of God ; it is the act of a Chancellor who is not being honest about where and how he is raising his taxes. If nothing else, the right hon. and learned Gentleman has come close to resorting to the notion of immaculate taxation as a way of raising money.

I want to be sure that the House is clear about the proposed public spending cuts. There is no fat left on the bone of local government spending. There will be service cuts, which will mean job cuts which will result in rising unemployment and further calls on the Exchequer to pay for that. Goods will be in the shops but there will be no money in people's pockets to purchase them. Even by Tory standards, this threatens to be the shortest so-called recovery on record. In response to criticism, many Conservative Members have asked, "What would Labour do?" It is not for me to offer a Labour manifesto, but I want to offer some ideas that this House and the Labour party should consider. We should not be apologetic about mentioning them. First, we should thank the Chancellor for the unified statement. It helps us to move forward and to deal with the areas on which we propose to spend money while identifying the areas from which to raise that money. It is not just about clearing deficits ; it is about what we could do constructively with the wealth that the Government raise and use on behalf of the people.

However, we must point out that the Government have been forced into that position because after 14 years of their being in power the country is in deep economic trouble. The main conclusion to be reached is that reliance on the free market has been a catastrophe. Inasmuch as it is about putting Britain back to work, it has not worked at all. The Labour party should not collude with the myth ; it should not endorse it as a notion worth considering. Instead, it should point in a quite different direction.

Labour should say quite simply that as a party it is unashamedly committed to progressive taxation. We should ask people to contribute on the basis that the more that they earn, the more they are able to pay. We should ask least from those who are least able to contribute. The progressive tax hand -outs to the wealthiest in society during the 1980s should be first among the targets of an incoming Labour Government. That source of revenue could be better deployed than being given to those at the top end of the income scale who have taken the money and done a runner.

We should begin with the notion of a 50 : 50 tax. All those earning more than £50,000 a year should be asked to pay at least a 50 per cent. rate of tax. That would raise about £4 billion a year. We should also think about what to do with empty properties. The Government like to say that they forced local councils to use empty properties, but we never hear any mention of the empty offices that litter our cities. Their owners get away with writing off money that should be going to the public purse. They should pay 100 per cent. of the unified business rate in the first year.

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In the second, that would be multiplied by itself. In the third year, it would be multiplied to the power of three. There should be a premium on putting the office space in our cities into productive use. Those who are happy to sit on those empty properties and leave them unused while people are scratching around to find premises from which to operate businesses are acting against the public interest. Whenever the Government are in difficulty, they do not tackle the problem-- they simply move the goalposts. A future Labour Government should study how the public sector borrowing requirement is defined. Rather than using local authorities as regulators of the economy, it is time that Britain embraced a different relationship between central and local government--something that is far better understood on the continent. Local government should have a degree of autonomy. Its borrowing should be based on its capital assets, with the requirement only that it balances its revenue accounts. It should function as a municipal enterprise. We should separate local and central Government borrowing and take those figures out of the PSBR. We should also recognise the commitments of our party conference and commit this country to a level of defence spending equivalent to the European average. That would mean a PSBR recycling of £8 billion. Germany, despite its reunification problems, is still the strongest economy within the European Community. Its defence spending is 1.9 per cent. of its gross domestic product. If this country recycled its defence spending in the way that Germany has done, that would release funds equivalent to the entirety of manufacturing investment in the United Kingdom. A sum of £13 billion would be freed for productive investment in our manufacturing base. If Germany can do that from a position of strength, why cannot this country do it from the position of weakness?

I thought that the Chancellor's tax on flights was a novel idea. Bill and Betty on their way to Benidorm will pay an extra fiver, or about 3 per cent. of the cost of their return flight. I thought that the idea had something to commend it. If flights by passengers can be taxed, why not also tax the flight of capital? I asked the Library how much a 3 per cent. tax on that would produce. I was told that it would produce a massive sum, so I scaled down my original figure. No less than £40,000 billion of speculative capital moves through the London foreign exchange market each year. If a tax of one eighth of 1 per cent. were levied on that amount, it would bring the Chancellor revenue of £50 billion. Even a Conservative Government would be hard-pressed to lose all that in one year. Why spoil the summer holidays of ordinary people but be terrified of spoiling the speculative holidays of the City of London?

An incoming Labour Government would need to know that the biggest threat facing planned recovery is the permanently deregulated financial markets-- markets which have the power to undermine any serious, sensible investment programme aimed at delivering economic recovery based on full employment. An incoming Labour Government would need to examine the ways in which capital has restructured itself on a European scale over the past 15 years, and to understand why a Conservative Government no longer needs to rely on finance from manufacturing. Their source of revenue and political support is international capital, which does not give two hoots about jobs in this country.

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The Secretary of State mentioned the concept of jobless growth. At best, that is what faces us now. So long as we rely on the financial markets in the City to determine the pace and direction of economic policy, there will be no jobs in any growth package that emerges from this Chamber.

When the dust settles on this Budget, the British public will realise that the poor will be poorer, the homeless will still be homeless and this country will still be importing goods and exporting jobs. Far from having a Chancellor who is a magician, a one-in-a-million person and a visionary, we have a Chancellor who merely is one of the 10,000--a Chancellor who could not see the ball when it stared him in the face.

9.1 pm

Mr. Peter Ainsworth (Surrey, East) : The hon. Member for Nottingham, South (Mr. Simpson) made a number of points that I would have mentioned, had I more time. The hon. Member for Kingston upon Hull, East (Mr. Prescott) was referred to earlier as neanderthal man. He seemed to take pride in that and was right to do so. By comparison with the hon. Gentleman, neanderthal man was advanced. The hon. Member for Nottingham, South, if not neanderthal man, was certainly homo erectus.

The failure of Oppposition Members to present any constructive ideas is the most distinguishing feature of the debate. We are used to them opposing Government policy, but they owe it to themselves and to their supporters to present a constructive view of their economic policies. We all have the message that they do not like the Budget--that is abundantly plain--but neither we nor the country know what are the Opposition's economic policies and how they would tackle the nation's deficit.

We heard many complaints from Opposition Members about the deficit, but have they ever asked themselves how it was created? It is the result of Government spending in areas that matter deeply to millions of people, including substantially increased health spending and increased expenditure in real terms on education in recent years. The Opposition must come clean : would they rather that money had not been spent? If they wanted that money spent, how can they oppose the Budget? That poses the Opposition with a real problem, and that is why we have not been given their answer.

I hope that in a moment we shall hear some constructive points from the Opposition, but the truth is that in their reaction to the Budget they have shown that they are bankrupt of any ideas for dealing with the deficit.

My right hon. and learned Friend the Chancellor has approached the problem in a balanced and sensible way. If there is a deficit, it is because the Government are spending too much money and therefore it is right that the burden of the Budget should fall on that Government spending. That is appropriate. It is also necessary to raise taxes in order to create a balance and to sustain increased spending on important things such as health, education, and so on. I am sure that Opposition Members would agree with that. So why are we suddenly seeing the most massive volte face of modern political times with Opposition Members failing to approve the Chancellor's tax plans? I shall continue to live in hope that some Labour or Liberal Democrat Member will propose a positive plan for

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dealing with the economic situation in this country. They owe it to us, their supporters and to the country at large to do that. Conservative Members are the only politicians who have answers to the problems that Britain faces today, and the country understands that fact more and more as time goes by.

9.5 pm

Mr. Frank Dobson (Holborn and St. Pancras) : I am glad that the Chancellor of the Exchequer is present. The Budget, as with every Tory Budget, was greeted with glee by Tory Back Benchers. It always reminds me of Walpole's statement that today they may be ringing the bells, but tomorrow they will be wringing their hands.

This Budget, as with every preceding Tory Budget, unravels day by day and week by week. It is becoming increasingly clear that this Budget will force people to pay more and receive less in return. It certainly breaks yet more Tory election promises. Nowhere is that more true than in London. From April this year, London's 1 million pensioners will have to pay VAT on fuel and the Chancellor's compensation will not make up for that--50p is not enough. The cuts in funds for housing associations will mean that fewer houses are built in London so that more families will be left homeless or, almost as bad, left living with their in-laws. The cuts in Government funding for local councils announced today will mean that services will be reduced and council tax bills will rise. Many of London's 500,000 people who are out of work will face having their unemployment benefit stopped after six months having paid in for years on the understanding that they would be covered for a year. That is a case of the Government doing a Maxwell.

Children in London's schools face losing teachers, books, equipment and school dinners as a result of the Government's reduced funding for London's desperate schools. The rents of tenants of councils and housing associations will be forced up. Londoners will pay more insurance tax than people in other parts of the country because the premiums for household insurance are so much higher in London. Those are all examples of people having to pay more and receiving less. It would appear that short changing the public is becoming official Tory policy.

London Underground is becoming a sick joke. Every day passengers experience delays and disruption. Every day they climb emergency stairs because lifts and escalators are not working. Every day somewhere on the underground system the signalling goes on the blink and millions of gallons of water seep into the tunnels. Deep down, tube travellers fear that one day that water will gush in rather than seep in. Last week a cable failed and closed down a substantial part of the system. Parts of the cable were said to be 70 years old. The younger parts, if that is they way to describe a cable, had been there for at least half a century. The average London Transport train is 24 years old. A quarter of the signalling equipment was installed 40 years ago ; and, if people want to put that into perspective, 40 years ago England had never lost to a foreign team at Wembley. The whole system is falling apart. Many passengers get a poor service. Staff are sick to death of taking the blame for all the inadequacies. With maintenance problems rising, fewer staff are being employed on vital maintenance work.

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Things are going from bad to worse, but what do we get in the Chancellor of the Exchequer's Budget statement? The Sir Humphreys worked on it carefully. It was worded thus :

"London Transport's investment programmes will be maintained at levels substantially higher than in the 1980s."--[ Official Report, 30 November 1993 ; Vol. 233 c. 25.]

My only response to that is, "I should hope so," but that is a cut in what was most recently promised. It is also a cut in what was promised in the Conservative party election manifesto, which said that £3,500 million would be invested in the Underground over the next three years. The Chancellor has broken that promise. The most recent promise was to make £964 million available for investment in the tube system. The new figure is down to £900 million, but the real position is worse than that. Most of the money we have heard about will go on new projects. The money that is left to be invested in the existing system--the one that passengers have to use, which is falling apart--has been cut from about £525 million to £325 million. That represents a cut of £200 million, or 38 per cent. I emphasise that that is a cut in spending on the shambolic system that is in existence. Every pound that is removed from that total results in more misery on the misery line, more breakdowns, more delays and more people stuck in tunnels and labouring up emergency stairs. That is what tube travellers face, even if it is not experienced by Ministers going round in their chauffeur-driven cars. It may have been the fear that their chauffeur-driven cars might be delayed that caused even this Government to defer their proposal to deregulate London's buses. Bitter experience in other cities apparently revealed to them that bus deregulation could result in gridlock from Hackney to Hounslow, and would be unpopular with voters. Instead of fully abandoning that crackpot scheme, however, the Government say that they have just postponed it. Instead, they are to force London Transport to sell off its bus operations. Until now, London Buses has had to compete with private would-be franchisers for franchises on various routes, but apparently it has been too successful. In open competiton, it has been winning too many franchises for the routes. That public sector competitor is to be closed and forced to sell its assets. When that happens, assets are always sold off at knock-down prices. I remind the Chancellor that takings for the Treasury from privatisation have been roughly half the book value of the assets of each nationalised industry. It is worth reminding the Government, who say that they are promoting tourism, that today the British Tourist Authority has expressed concern about the possible disappearance of the red bus from London. It says that

"it is a symbol of London, which is recognised all over the world and an immensely valuable promotional tool."

Presumably, in future, brochures sent out by the authority to get people from around the world to come to London will contain photographs of buses of many colours instead of the red bus. Have the Chancellor and the Secretary of State for Transport considered the impact on tourism and tourism promotion of getting rid of the red London bus?

One thing does not come at a knock-down price--the cost of travelling, not only in London but throughout the country. From January, passengers on London Underground, London Buses and Network SouthEast face

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average fare increases of 6 per cent.-- three times the rate of inflation. That is another example of people having to pay more in but getting less back. The same increases will apply to many other railway passengers.

Will those other passengers get a better service? It seems unlikely. On some lines there has been a deliberate deterioration in the service following the introduction of the passengers charter. The journey times in some timetables have been lengthened so that a train that takes one hour 20 minutes for a journey is arriving on time ; under the previous timetable, if it took one hour 20 minutes on that route, it would have meant that it was arriving 10 minutes late. It now meets the charter's requirement, so apparently everything is well.

Somewhere in the Budget figures, the Government will have hidden away the cost to the taxpayer of rail privatisation. They have managed to hide it until now, but it will come out eventually, and it will be money from the taxpayer and passenger, not a penny of which will be spent on improving services. Instead, it will be diverted into the pockets of merchant bankers and motley crews of City consultants.

As my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) said, this is yet another Budget for the City. People in the City have been the principal beneficiaries of the Government's privatisation programme, and they have also done rather well out of our usually abortive efforts to involve private sector finance in railway projects.

All those projects have several things in common. They are announced with a fanfare of trumpets, and then they are re-announced time and again, by press conference, press briefings or official leaks. That is intended to achieve the impression that something is happening, and that Tory Ministers are skilled in negotiations. It would be hard to get further from the truth.

The Chancellor of the Exchequer and the Secretary of State for Transport were at it again yesterday and the day before, about the west coast main line. When the Tories came to power, that line, which links London to the major industrial and commercial centres in the west midlands, the north- west and the west of Scotland, was the most modern electrified railway in Britain. Today it is a national disgrace. It needs to be upgraded, but nothing has been done. In his Budget speech, the Chancellor said :

"the Government are today giving the go ahead to three substantial new transport projects the refurbishment of the west coast main line linking some of the biggest cities in the country--London, Birmingham, Manchester, Liverpool and Glasgow."--[ Official Report, 30 November 1993 ; Vol. 233, c. 930.]

He carefully did not mention that not a penny piece of public money is going into the scheme, or that the improvements might well be confined to the line south of Crewe, or that nothing has been decided, no commitments have been entered into and no contracts have been let.

The Secretary of State for Transport announced yesterday that Railtrack would be "inviting expressions of interest" and that, in late 1994, a competition would be held to select a private sector outfit to modernise the west coast main line, but from Euston to Crewe only. Even if it all goes ahead, therefore, it will be another two years before the work starts on the ground. It will probably be the 21st century before any passengers see any improvements, and the Transport Minister warned yesterday that it will lead to higher fares.

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All that was announced, with the usual fanfare of trumpets, as good news for the passengers, the railway supply industry and the taxpayer. There was the usual talk of its having top priority, competition's doing the work and a great commitment to driving it forward. Everyone who uses the line hopes that the project will succeed, but all this circus has happened before, and people will believe it when they see it.

It really has happened before. Five years ago, in late 1988, the Government and British Rail announced what they called

"first steps towards private sector investment in the Channel Tunnel rail link".

They were "inviting expressions of interest" and they proposed to hold a competition, so that someone from the private sector would build the line.

A year later, the then Transport Secretary, Cecil Parkinson, said that a preferred partner had been chosen--Eurorail, made up of Trafalgar House and BICC. It still needed the Government's final agreement, but Mr. Parkinson said that he was

"encouraged by the clear indications that the link could be financed commercially and brought into operation by 1998." As everyone knows, that scheme fell through. Nothing has been done, and the completion of the channel tunnel link will be delayed to the year 2003.

When, two weeks ago, the Secretary of State announced that he was having another go at getting private investment in the channel tunnel link, we were back to expressions of interest and the idea that the Government might hold a competition.

Five years ago, when Cecil Parkinson made that prediction, the development of the channel tunnel scheme was at exactly the same stage as that of the west coast main line yesterday. Five years later, not a damn thing has been done. To say the least, the Government's track record is poor. They may make that approach work this time, but they may not.

The people, the industry and the commerce that depend on the west coast main line deserve better than that. That line is a major economic artery, and its future should not be decided by a private sector lottery. Strategic decisions are matters for Government. The work is needed and it must be done. How it is financed is secondary--just as the finance for the improvements in the east coast main line was secondary.

Why should people who rely on the west coast line not get the same treatment as those who rely on the east coast line? Clearly a commitment is needed from the Government ; the absence of their unswerving commitment adds the sort of uncertainty that private investors are desperate to avoid.

Then there is the crossrail project for London. That is announced and reannounced with such regularity that it is rumoured that some Transport Ministers now believe that it has been built. But it has not, despite all the Budget promises to the contrary. The project is falling behind, not getting ahead.

Next there is--hallelujah--the Jubilee line extension, which has been on and off for years. Its construction apparently depended on whether the property speculators at Canary Wharf came up with the £400 million that they had promised. That may have sounded generous of them, but we must bear in mind the fact that their speculative

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development at Canary Wharf had already received more than £350 million in subsidies from the pocket of the taxpayer.

In the end, after long negotiations, the Government announced that the developers could manage to come up with a contribution of £300 million. However, that was not as good as it looked, because Ministers had not allowed for inflation. I am a simple soul, and I asked whether inflation had been allowed for.

I found out that the figure of £300 million that the Government had trumpeted--the Chancellor ought to pay attention to this, because it could affect his calculations is to be paid over a 20-year period, starting on the day that the Jubilee line extension comes into operation, whenever that may be.

Its value will not be uprated for inflation, so if inflation averages 4 per cent.--the top of the Government's target range--over that 20-year period, the real value of the private sector contribution will have halved, to £150 million. If inflation averages what it has averaged over the past 20 years--9.7 per cent.--the private sector contribution will be worth about £70 million.

If that inflation rate of 9.7 per cent. were to prevail for 20 years and, because of stupid negotiations by the Government, the money were to be paid in the final year of the 20-year period, the private sector contribution would be worth precisely £20 million of the £400 million originally promised. With that sort of track record, one would not want the Secretary of State for Transport even to sell one's used car.

That is not the end of the story. One of the principal merits of the Jubilee line extension, in all the cost benefit analyses-- [Interruption.] The Chancellor of the Exchequer says that I am being ridiculous. Apparently he believes that it is right for the taxpayer to have to pay for the project at current values when the money is invested, but does not believe that the private sector should have to match that. In that case, he is not fit to be Chancellor of the Exchequer.

Mr. Kenneth Clarke : The Jubilee line extension is, of course, the first major investment in the tube since the Victoria line was built some years ago. We shall invest more than £1 billion in the core London Transport underground over the next three years, and another £1 billion-plus in the Jubilee line.

That is about half as much again as we used to invest in the 1980s, and about seven or eight times as much as used to be spent by that ridiculous body, the Greater London council, which allowed the Underground to decay, and presided over the old wiring, the overmanning and the declining service. Supported by the hon. Member for Holborn and St. Pancras (Mr. Dobson), the GLC preferred to spend its money on buying votes by keeping down bus fares. That was Labour's contribution to transport infrastructure in London.

Mr. Dobson : The Chancellor of the Exchequer in his present role ought to know that the Greater London council asked to invest more money, but was prevented from doing so by the Ministry of Transport and the Treasury. Indeed, the Chancellor may have been one of the Ministers who refused to give the GLC the permission.

One of the principal merits of the extension of the Jubilee line was to be a station at north Greenwich that would have allowed people from south-east London the

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access to the tube system that they are presently denied. Although the north Greenwich station was listed in the Secretary of State's press release, as one would imagine, and featured on the map published with the press release, there was no commitment to build the station. The line will go through north Greenwich, but the station will not be built because it is dependent on raising some other private sector money and the Government have not quite got round to it yet.

There was another attempted con about transport in London in the Budget. The Chancellor said :

"the Government are today giving the go ahead to the extension of the docklands light railway to Lewisham".--[ Official Report, 30 November 1993 ; Vol. 233, c. 930.]

That was partly true, but not the whole truth, because it is not the scheme that was originally announced. It is minus two important stations, which were left out for the most compelling of Tory reasons--they cannot get private sector help to build them. That brings the cost down, but reduces the usefulness of the line. Rail schemes are not the only example of the incompetence of the Department of Transport. Its biggest spending programme is the roads programme and thus where its greatest incompetence is to be found. The recent National Audit Office report shows that money from the roads programme that was spent on motorway widening has been squandered. Since 1989, the cost of motorway widening schemes has shot up by 46 per cent., and the National Audit Office estimates that it is likely to increase by over 78 per cent. by the time that the schemes are completed. Of the 18 schemes completed so far, 10 were investigated in detail by the National Audit Office and, on average, those 10 had cost double the original estimated cost. That is a disgrace.

We welcome the belated decision to reduce spending on the road programme, but call for some changes in its priorities. There is an opportunity for Ministers to be both right and popul the country in the face of desperate opposition from local people, and are not going ahead with some schemes that are vital for economic development, the safety of passengers and would be clearly welcomed by local people. Those vital schemes include converting the A1 north of the Tyne into a dual carriageway and ending the constant deaths that occur there, and to make the final few miles of the road to Dover docks into a dual carriageway. That would be welcomed by virtually everybody concerned, it would be good for the economy of both places and it would be popular. I hope that the Ministers will not use the Budget reduction as an excuse for further delays in those vital road-building schemes.

The Secretary of State for Transport announced today that he will be researching electronic road pricing for motorways. He has been seeing too many re-runs of "Doctor Who". That proposal has nothing to do with transport : it is just another Tory tax racket. I would not be surprised if they came up with a system that exempted Rolls-Royce drivers from having to pay. After all, the Chancellor's new airport tax exempts executive jets, as I am sure he will confirm. If the Chancellor's little friend introduces motorway tolls on the road network, it is worth noting the list of the advantages of coming to Britain that was issued today by the British Tourist Authority. Item four of the 15 strengths

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is the high-quality, toll-free road network. That proposal will not do a lot of good. Did the Department of Transport or the Treasury consult the tourist industry or anyone before they went ahead with these propositions?

There is another aspect which the Chancellor did not mention in his Budget statement. He has raised tax on bus transport. Operators will have to pay the insurance tax, which will be passed on to the passengers. It does not stop there. The Chancellor put 3p a litre on road fuel duties and said that the duties would rise by 5 per cent. each year. What he did not mention--I cannot imagine why--was that the fuel duty rebate to local bus operators is not to be uprated, this year or any other year.

Perhaps he did not consult the Bus and Coach Council on the likely effect of this scam. The council has been in touch with me to say that its members are up in arms. The operators will pay more and more duty. They say that that will hit disabled and elderly passengers, because work to install wheelchair lifts and low floors will become more expensive relative to takings. Services in rural areas will suffer, orders for new vehicles are likely to be put back or cancelled, and fares will rise. It is like putting 2 or 3 per cent. VAT on public transport by the back door. It is entirely typical of the way in which this Government behave.

There is another transport aspect to the insurance tax. It is believed that about 1 million people do not insure their cars. A tax will be added to premiums that people do not want to pay in the first place. I freely acknowledge that such people are law breakers, but I know that we try to discourage and not to encourage law breaking. There is a danger that the imposition of that tax--

Mr. David Hunt : This is feeble stuff.

Mr. Dobson : The Secretary of State says that this is feeble stuff. If he thinks that it is feeble to say that we are in danger of increasing rather than decreasing the number of people driving uninsured vehicles around Britain's roads, there is something wrong with his own feeble mind. But he is only a lawyer, so I suppose that he can be excused. That also excuses the Chancellor of the Exchequer.

The Budget has done nothing for anybody in its impact on transport. It will increase the fares on trains, boats, aeroplanes and buses ; I recognise that that does not rhyme, which is why the words were not used by Burt Bacharach.

The Budget will increase the cost of moving round the country and, as ever, the bulk of the increase will fall on the people who are worst placed to meet that cost. Well-off people will not suffer from those increases. Badly -off people will suffer from the increases, and many very badly-off people will suffer from the transport aspects of the Budget, just as they have been singled out by the Chancellor to bear the brunt of the Government's incompetence to date.

One of the most famous Tory Prime Ministers of all time, Benjamin Disraeli, was born in my constituency. He recognised--and convinced the 19th-century Tory party of this--that there was a danger of having a wholly alienated class of people who felt that they had no stake in the country. He said that it was vital that everyone was given a stake in the country.

The present Tory party is increasingly creating an alienated group, especially an alienated group of young people who feel that they have no stake in the country and

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