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rents, one has on the one hand a shortage of housing and on the other a deregulated private landlord system, which is a recipe for rising rents.

Anyone could have seen that. One did not need the experience of Treasury Ministers and their financial advisors to understand it. A 10-year-old child at school could have understood it if it had been pointed out to him. Apparently, however, the Government do not understand. They say that they are paying too much in housing benefit, and that that must be curtailed.

As a matter of simple common sense, is there anyone in the Chamber--I am willing to give way--who actually believes that anyone who lives in rented accommodation is in a position to bargain with his landlord to get a reduction in rent? Does anybody believe that? There are no takers. The Chancellor said that that is what would happen, but, apparently, no Government Member is prepared to back him.

It is absolutely scandalous that we are moving in this direction in housing. We hear talk about keeping up with what was stated in the Conservative manifesto, but the number of houses being built is paltry. My hon. Friend the Member for Attercliffe mentioned the deteriorating state of the homes of the two thirds of the population who own their own homes. Somewhere along the line, that will have to be paid for, and there will then be a bigger housing shortage. There has been much debate tonight about whether hon. Members listen to their constituents. I do not know what the position is among Government Members, but between 60 and 70 per cent. of the queries which I deal with in my constituency surgery, through correspondence and through telephone messages, involve problems of housing. Yet, according to the Government, we are building plenty of houses and there is no problem.

The problem has been exacerbated by the sale of council houses which have then not been replaced. That means that councils are struggling to deal with all the problems resulting from a reduced housing stock. The Housing Corporation and housing

associations--admirably though they try--are unable to stem the tide.

Mr. Day: Since hon. Members began holding surgeries, has not housing always been one of the majority of subjects on which there are requests to see a Member of Parliament? I do not quite follow the point that the hon. Gentleman is making. Housing has always made up a big percentage of the matters with which hon. Members deal.

Mr. Etherington: I can only refer to the two and a half years that I have been a Member and to what I was told by the previous hon. Member representing my constituency. I must disagree with the hon. Gentleman. It may be the case in his part of the world--it may be the case generally--but it is certainly not the case within my constituency.

The point I am trying to make is that it is a worsening situation, and it is worsening because of the shortage of housing. One of the commonest problems now is where a family splits up, and the wife and children perhaps go to live with her parents. When they then try to get rehoused in their own right, they find great difficulty. With so many marriages breaking down, one would assume that those in power would understand that if that is not curtailed, there must be additional housing. There is no other answer to the problem.

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I was disappointed that we did not have much more radical transport policy proposals from the Chancellor. We have all read in recent weeks about various ideas which are being considered, and perhaps the Budget has come a little bit too early to include those things. The problem is not being properly addressed. As long as we say that we will allow market forces to prevail--when those market forces are not in equilibrium--we will never make progress, and we will never do anything to improve the environment or the quality of people's lives.

The Budget follows all Budgets that I have heard since 1979, in that everything is based on trying to curtail public expenditure so that eventually there will be adequate money for proper and adequate investment. There has been, as was pointed out, tremendous curtailment of public expenditure just to allow the social security budget to function and to deal with the unemployed. In real terms, if one takes the social security budget out, there has been a disastrous reduction in public expenditure.

As was pointed out, public expenditure remains at about 44 per cent. of GDP, but what is the GDP? Perhaps it is not as good as we have been led to believe. Over the past 15 years, all of the privation that has been created --all of the people who have been put under the European threshold of decency--has not brought about a significant increase in investment. There is a reluctance to invest. I should have thought that after 15 years when the Government's measures have been seen to have failed, the Government might tackle the problem and perhaps consider other methods of achieving proper investment in industry.

Although I am not a conspiracy theorist, I sometimes have a lurking suspicion that, as the Government are an extension of the City and financial interests--that is how I, and most of the public, see them--it suits them to have a low-wage, low-investment economy. Until such time as I start to see real change in this country, I shall continue to believe that. I sometimes think that there can be no other reason. Why are people in Britain less willing to invest than our European competitors? They get a good return on their investment--better than in most other places--but it seems that what comes first is short-term expediency, maximum return on capital in the shortest time and minimum investment of capital, as we have seen in the public utilities since they were privatised.

The Chancellor was proud to mention that one in three children now go on to some form of university education whereas one in eight did so in 1979. That is excellent news, but when such figures are quoted, it would be interesting to know what money was put into the university system in real terms and whether it had increased in line with the increase in the number of people educated. I am told by various people whom I know within the university industry, if I might call it that, that nowhere do the resources match the additional requirements placed on those who work in the system. When that happens, it is only a matter of time before the additional burden catches up and a crisis begins. I hope that we do not reach that stage.

The hon. Member for High Peak (Mr. Hendry), who has left his place and who kindly gave way to me earlier, said that he was pleased about the £430 rise in the tax threshold for old-age pensioners. I am not, and I shall explain why. My views on the subject are almost exactly

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the opposite of those of the hon. Gentleman. There are some wealthy pensioners. Many pensioners are fairly well off, but the majority are not. There is a great divide among pensioners. If anyone doubts that, admirable information is available from the Commons Library on the subject. Although it might be dated now, it impressed me a great deal when I read it about a year ago.

Three million pensioners will be better off as a result of the raising of the threshold. That means that 6 million will be either no better off or worse off. I suggest that they will remain in the same position. I accept that my calculation is rough because we do not have the figures before us. I assume that a single pensioner paying 40p in the pound tax will gain about £3.25 a week and a married couple will gain £6.50, and that a single pensioner on the standard rate of tax will gain about £2 a week. If the Government were so keen to help pensioners, rather than doing it in that way, why did not they do what they always say that they want to do and target resources to the poorest?

The Government have targeted resources to the best-off pensioners, who do not need help. Those who pay tax are usually reasonably well off. The vast majority--6 million--pay no tax. If money is available, why do not the Government make it available to those pensioners rather than using a populist measure which looks good and might impress a certain number of Tory voters among pensioners? That question needs to be asked and I look forward to hearing the answer, if there is one, in the reply to the debate.

The Chancellor also said that he intended to close tax loopholes. I am sure that everyone welcomes that. If one tenth of the effort that is expended on prosecuting people on social security benefits were directed at dealing with various tax frauds in high society and business, a fair amount of cash would come in. The Chancellor says in the document distributed following his speech that a number of artificial schemes for avoiding tax will be stopped. I understand that "a number" can mean anything. It can mean all, none or part. If the Chancellor had stated that artificial schemes for avoiding tax would be stopped, I would have had more faith. The written word tells it all.

One thing that the Chancellor did not mention, although I have no doubt that it will be mentioned later in the debate, was that extra funds for science and overseas aid would be made available. I can well understand that the Chancellor might not want to mention that, because every citizen should be ashamed of our foreign aid record. It is deplorable, and I can well understand that, as it is so insignificant, the Chancellor did not even consider it to be worth mentioning.

I am disappointed in the Chancellor's speech. It seems as though all the problems from which we have not learnt will continue, and there will be an ever-increasing gap between the wealthy and the poor. We have no guarantee that the economic recovery will do anything about the disparities in society, and in many ways I regard the Chancellor's statement as being as big a damp squib as I have ever heard.

Mr. Day: On a point of order, Madam Deputy Speaker. I omitted to declare, at the beginning of my speech, the fact that I am a parliamentary consultant for Unison. I apologise to the House.

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9.5 pm

Mr. Sebastian Coe (Falmouth and Camborne): I agree with the hon. Member for Sunderland, East--

Mr. Etherington: Sunderland, North.

Mr. Coe: I beg the hon. Gentleman's pardon.

I agree with one important thing that the hon. Member for Sunderland, North (Mr. Etherington) said--it is always difficult to comment shortly after a Budget. He is right to say that we must avoid knee-jerk reactions and slogans--the tabloid trail. I have long been aware that Budgets that have tended to end with Order Papers, bells and whistles have often taken a 180 deg. about-turn in the next 24 hours. This afternoon's Budget was a Budget of substance, and I believe that it will be seen in that light.

I disagree with the hon. Member for Sunderland, North on the subject of smoking. I think that hon. Members in the Chamber share the widespread anxiety about the growing incidence of smoking despite our health promotion strategies. The continuing resistance of some young women to getting the message about reducing smoking should worry hon. Members on both sides of the House.

However, I disagree with the hon. Member for Sunderland, North about one aspect. As a board member of the Health Education Authority for much of the 1980s, I have to say that punitive levels of taxation on cigarettes do have an effect: price increases have dramatically reduced smoking. There is information and evidence to support that in this country, throughout Europe and in the United States of America. If I may digress for a moment, I should like to go a stage further. I should like changes with regard to generic packaging, and so on, and the hon. Member for Sunderland, North is right to mention the need for an educative programme. That is all part and parcel of it. Nevertheless, price increases have a significant effect and I know that the Health Education Authority, in its fight against smoking, will welcome the increase which was announced today.

I was interested in some of the comments of the hon. Member for Sheffield, Attercliffe (Mr. Betts), who is not in his place at the moment. He was a political inspiration to me in Sheffield. He and some of his colleagues who ran Sheffield city council during much of the 1970s and the greater part of the 1980s probably influenced me, more than any other single factor, to stand on the Conservative side of the Chamber. They used the city very much as a Stalinist experiment en route to greater things in this place, and I was interested to hear the new moderate tones, "all red-rosed and filofaxed". It was impressive. That is a terrific transformation. I feel vaguely brave this evening, in opening my remarks, in welcoming the announcements this afternoon by my right hon. Friend the Secretary of State for National Heritage of generous support and funding for the arts. I feel especially brave in saying that because my hon. Friend the Member for Hayes and Harlington (Mr. Dicks)

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is not here to intervene on me at every moment in the next few minutes--he being one of the country's great arts patrons.

Mr. Ken Purchase (Wolverhampton, North-East): The hon. Gentleman has seen his programmes on television.

Mr. Coe: I have, indeed, seen his programmes on television. Sensible support of the arts was announced this afternoon--an extra £7 million in each of the next two years, made up of an increase of £5.15 million per year for the next two financial years. Also very welcome in that package is the increase of £750,000 in the business sponsorship incentive scheme, which has been so successful in matching private sector sponsorship in the arts. That will mean support amounting to about £1.5 million over the next two years. I also welcome the maintenance of existing funding for the Sports Council over the next couple of years. That is allied to some structural changes at the Sports Council, such as upgrading the status of the regions where, frankly, they know best where to spend sporting money, whether it be on revenue funding or on capital programmes. There is to be an increase of 12 per cent. in the budget for the business sponsorship incentive scheme, from a planned £3.3 million to £3.7 million each year. That recognises how successful Sportsmatch has been in putting so much needed funding in place. I should be remiss if I did not comment on something that slipped through my right hon. and learned Friend's speech without great comment. I have fond memories of sport, so I welcome his support for the Foundation for Sport and the Arts. His predecessor, our right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), reduced the pools betting duty by 2.5 per cent. on the basis that, at that time, the pools industry supported unsponsored art and sport by that amount. There cannot be an hon. Member in this Chamber tonight whose constituency has not had sponsorship in one form or another for either sport or the arts. I say that with some pleasure because, of the funding that has come to Cornwall, some 40 per cent. has found its way into my constituency. Right hon. and hon. Members should be pleased when former experiences serve them well when they come to the House.

My right hon. and learned Friend the Chancellor was right to flag the real and permanent advances made under his economic stewardship. I unashamedly take this opportunity to repeat and affirm them. We know that inflation is at its lowest level for a generation. The hon. Member for Sunderland, North referred to the difficulties faced by the elderly on low incomes. I remind him that there is no greater hardship for anyone on a low income than being confronted by inflation, which for many years was out of control. It is the most debilitating and destabilising economic phenomenon to confront any community.

Mr. Peter Butler (Milton Keynes, North-East): Does my hon. Friend accept that in 1989 some 1 million pensioners were in receipt of supplementary assistance from the state wholly by virtue of the fact that the value

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of their savings, and therefore their subsequent income, had been wiped out by years of high inflation under the Labour Government at the end of the 1970s?

Mr. Coe: My hon. Friend is right and he makes a salient point. Contemporary history and some of the points of conflict throughout the century show us that a destabilised economy fuelled by inflation has led to many issues which, as a European nation, we never want to confront again.

I also welcome the serious reduction in the level of unemployment, particularly in the past year. I come from a constituency where unemployment is still too high and where there are deep pockets of resistance. The package of measures announced this afternoon by my right hon. and learned Friend meets the needs of many of my constituents. It probably would not excite some areas in the United Kingdom where the job market is relatively flexible, but where people are unfortunate enough to be unemployed, they manage to get back into employment remarkably quickly.

Unfortunately, there are still areas in my constituency where being unemployed for a year and a half or two years is not that uncommon. The moratorium on national insurance contributions for employers taking on the long-term unemployed must be welcomed, as must the general reduction in national insurance contributions for employers taking on extra labour.

My right hon. and learned Friend was also quite right to mention experiences that he has had in his surgeries and in discussions up and down the country. He knows, as do hon. Members on both sides of the House, that, on far too many occasions, we are confronted by constituents who look us straight in the eye and say, "It doesn't pay me to work. It is easier for me to be on benefits." Some of the transitional proposals about which we heard this afternoon, including the £10 family credit to encourage people to go into full-time jobs rather than into the part-time sector, are absolutely vital. It is not surprising that hon. Members look at those parts of the Budget that impact and impinge on their constituencies and their constituents in greatest measure.

The health and vibrancy of the Falmouth and Camborne constituency are based on the small business sector. In the whole of Cornwall, we have only one multinational company. The largest employer, aside from the docks in Falmouth, is Compair Holmans in the north of the constituency, which employs some 350 people. The overriding pattern of employment in my constituency is of small groupings. That is why I welcome--I know that the small business men to whom I speak regularly will welcome them--the package of measures that my right hon. and learned Friend put to the House this afternoon. If he has done little else, he has obviously listened to the needs and aspirations of the small business community, because I know that many of their wish lists--we all have wish lists before Budgets--were met, and in full. Let me mention some of the issues that will confront the House in the next year. We know from previous speeches this evening, and certainly from the bulk of my right hon. and learned Friend's speech this afternoon, that if I, or any hon. Member, had talked in the Chamber a year ago about a growth rate in the economy of 4 per cent. and said that inflation would be at its lowest level in a

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generation--for 13 consecutive months it has been under 3 per cent., matched, I believe, only before 1964--and said that interest rates would remain stable for so long, and if I had talked about the dramatic increase in exports and said that they would not be matched by a dramatic rise in the number of imports, which has been the be te noire of our manufacturing base for so many years, with reasonable rationale, Opposition Members would have intervened and questioned my sanity.

We have had a remarkable transformation in the fortunes of our economy in the past year, and that has been under the steady, enlightened stewardship of my right hon. and learned Friend the Chancellor. There was nothing dramatically exciting in his speech, but it had three important qualities: it was considered, thought through and of substance. In days to come, as hon. Members on both sides of the Chamber debate some of those measures, they will recognise that.

9.19 pm

Mr. Jimmy Wray (Glasgow, Provan): I have listened carefully to Conservative Members. From their speeches, it would be thought that the present Opposition had caused the problems, but let us not allow them to get away with having made a mess of the country for 16 years, creating instability and poverty. They talk of 4 per cent. growth--what a price to pay!

If hon. Members go down the road, they will see people living in cardboard boxes. That is the society that the Government have created. While Conservative Members sit in their consultancies receiving two or three wages as well as their parliamentary salaries, my constituency remains one of the poorest in Britain. I hoped that the Chancellor would do something for the poor and would alleviate the misery that the Government have created.

Let us consider what the Government have done to the national health service, to the homeless and to students who receive loans, not grants. Young people aged 16 or 17 are begging on the streets because the Government took away their benefits. No, we cannot allow the Government to get away with it: they must be put out, and the sooner that happens, the happier I shall be.

I regularly visit my "elderly forum" in my capacity as a constituency Member of Parliament. When I last did so, those elderly people asked me whether I thought that the Chancellor would show sympathy for the old and the poor and remove the VAT on fuel. Who suffers from that VAT? The poor, the unemployed and the disabled, who must stay at home a wee bit longer than the able-bodied.

We have watched Conservative Members weep crocodile tears, but we do not accept what they have said. We wanted constructive action that would clear up the mess, but we were given nothing of that kind today. I hoped that some of the children in the deprived part of Glasgow that I represent would be given an opportunity. I thought that education might be given a substantial lift, so that children in deprived areas could be given the verbal stimulus that would allow them to take their place in society. They have suffered, seeing only the closure of schools.

Plowden said--I heard an Education Minister repeat it one day in the Chamber--that we must give priority to children in deprived areas, because their fathers and mothers before them had suffered and were living in terrible housing conditions, with some 600 or 800 people

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to the acre. They suffered, and now their children are suffering in educational terms; they suffered through unemployment, and now their children are suffering.

I have never seen the like of the crime that is now being committed in the streets. It is like Dodge City in my constituency. People have guns, and every weekend people are killed; the number of drug addicts makes the morgue a commonplace. Is the Chancellor giving those people a chance? No-- he does not even know what is happening.

Yesterday, I heard the Chancellor talk of fraud in Europe. He blamed the media and Opposition Members for the bogus figure of £6 billion. I was a member of the European Legislation Committee. I went to Luxembourg and asked the Commissioner at the Court of Auditors how much fraud there was. I was told that £6 billion was a conservative figure. That is where the figure came from, not from Opposition Members. It was reported back to the House at that time by the Committee Chairman. We asked the Chancellor to do something about the fraud because of concerns about the payments being made. The Chancellor said that only seven inspectors were looking after the 12 member states.

When we visited Customs and Excise, we discovered that the people working there had no training in the subsidies going to other countries. One ship that was at sea had a cargo of what was supposedly prime beef with a subsidy of £2.5 million. When we asked the person in Customs and Excise about that, he said that there was a subsidy of £5,000 to £7,000. That is what the Government have allowed to happen. It must not continue. We must get the Government out. The Government tell us that the country is in the best state that it has been in for decades. They talk about 4 per cent. growth. Think about all the poor people. Many people were encouraged by every Tory local authority up and down the land to buy their own homes. They were told that it would give them security. When they bought their own homes, interest rates were 6, 7 or 8 per cent. but, two years later, they rose to 16 per cent. Those people are still paying and still suffering. They lost their homes and their cars. They lost everything. Do not tell Opposition Members about the 4 per cent. growth because it will never clear up the mess that the Government have left behind. That is the annoying thing. The biggest percentage of growth has been in the electrical industry and engineering, but the Government have destroyed the construction and manufacturing industries.

The Government have some training schemes. They train youngsters and then throw them back on the dole. The restart schemes simply involve asking stupid questions. Men of 40 have to spend an hour in a room with about 15 other people, many of whom are smoking. It is even unhealthy.

The Government think that privatisation is really working and that worries me. One of the Conservative Members talked about water privatisation. Surely, the Government should have learnt the lessons from the privatisation of water in England. The parasites took away public land and set up subsidiary companies. They sold off all the prime land and property and cut off the water from thousands of people. The profits they made from the high charges imposed on the poor were never invested in water or drains, but were invested in building, cars, insurance and many other things.

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We will not listen to this trash about private enterprise making everything in the garden rosy. We do not want any privatisation or any water being cut off in Scotland. The people of Scotland will let the boards know what to do. The pro-fluoridation crowd has been subsidised by the Government. We have had a referendum in Scotland which has said that we do not want the fluoridation of public water supplies because we are right and they are wrong. The Government have spent millions of pounds. They even introduced the Water (Fluoridation) Act 1985 to breach the civil liberties of the individual.

Under the Water Act 1945, directors of water companies and of public local authorities are employed to treat water and to make it wholesome for drinking. They are not employed to treat people who drink the water. It is said that there is nothing wrong with the substance that the capitalists and the drug companies want to put in water to make a profit of about £3 million or £4 million and to get rid of poisonous waste, which is expensive to dump. The Government should be looking at waste and other issues.

I am going a meeting tomorrow to combat the pro-fluoridation campaign of Dr. Beal. I have always said that, if fluoride is a medicinal product, why does not it go before the Committee on Safety of Medicines? Section 130 of the Medicines Act 1968 defines a medicinal product as a substance that is mixed with another substance and given to an animal or a human being, irrespective of the way in which it is given. I am concerned about that sort of issue. The Government are not worried about the waste of money and they continue to do the things that they do.

The state of the health service that the Government have created should be looked at. Fundholding practices are another mistake. Our people, the people most in need, are suffering. I am worried that the leprosy of fundholding practices in England, where semi-companies have been set up which sell medical instruments to themselves, will contaminate Scotland. We do not want fundholding practices. We want people to go to their practices and to be treated for their disease. We do not want the practitioner to think that he will not make a quick buck if he spends a lot of money and runs out of funds. Compulsory competitive tendering is another disaster--we have seen that time after time in local authorities up and down the country. It is easy for a rogue firm to put in a cheap tender when it pays cheap wages. We need the minimum wage to stop those parasites. Some Conservative Members are consultants for those companies, which pay wages as low as £1 an hour. We want that to be eradicated. I am concerned about the gas and electricity industries where someone can receive a wage of £470,000. I would not make such a person a member of a community council. That is the sort of issue that we are worried about. All those big bucks think that they are a wee bit better than the rest of us, but the people down below are suffering hard and fast. They are dying for lack of attention, lack of compassion and lack of care from an uncaring Government. The Prime Minister has lost his credibility. He should resign and take all his Cabinet along with him. I shall be happy when we get socialism back in this country, for the people, of the people and by the people.

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9.33 pm

Mr. George Mudie (Leeds, East): I fear that I shall sound rather downbeat after my hon. Friend the Member for Glasgow, Govan (Mr. Wray). Anyone who speaks five hours after the Chancellor has sat down deserves a medal--some would say for courage, but I think for foolhardiness.

The hon. Member for Falmouth and Camborne (Mr. Coe) rightly said that Budgets might be greeted with great applause on the day, but after a few days, when the newspapers have been read and the Red Books examined, they might turn out to be something different. Having qualified my remarks with that defence, I shall proceed to take up only a few moments of the House's time.

The hon. Member for Falmouth and Camborne said that it was a steady, no- surprise Budget, which fitted in with the comments of the hon. Member for Blackpool, South (Mr. Hawkins). He said that he broadly welcomed the Budget, which I regard as a qualified response--the Chancellor might appreciate the Budget being "warmly welcomed" but "broadly welcomed" has ominous undertones or overtones.

I do not have the time or the inclination to follow the train of thought of the hon. Member for Cheadle (Mr. Day), who refought the political battles of the past 15 years. It would be easy to fill in time refighting those battles--who was to blame for what and how good or how bad things were in the 1970s--but that is not the issue here. The fact is that the Budget is very disappointing. In fact, I would say that it is a bad Budget for many people. That can sometimes be necessary, but I am not sure that it was today.

The Red Book shows that the economic situation has improved dramatically in terms of Government receipts and expenditure. Here again, we could refight an old political battle. The Chancellor said that exports were very good but did not mention the disastrous retreat from the exchange rate mechanism. We could argue about whose party supported the ERM at the time, but there is no point in doing so.

Financially, things are good, or at least improving, but it still seems wrong to spend money on certain things. We see from the September increase in interest rates that the Governor of the Bank of England and the Chancellor are worried, even at this stage, about the economy overheating. One can sympathise with the Chancellor not being willing to spend but it is clear that he has money to spend, so, we have to ask, why is he not spending it sensibly on things that will not cause overheating or inflation?

The answer lies in the speeches made today by my right hon. Friend the Member for Sedgefield (Mr. Blair), and by my hon. Friend the shadow Chancellor during the debate on the Queen's Speech. They charged the Prime Minister and the Government with putting the Conservative party before the country. The serious issue is whether the Chancellor is being dull and steady this year because it is the right thing to do or because he wants to take no chances and save all that he possibly can so that he can have a marvellous tax-cutting Budget a few months before a general election in the hope--the vain hope--that the country will have forgotten his party's promises on tax at the previous election.

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I know that at least one other hon. Member wishes to speak so I shall quickly deal with three issues on which I believe the Chancellor could and should spend money, although to do so would not cost anything. We are about to balance the books more quickly than was foreseen last year. Last year, the judgment would have been that we would come in on a slightly longer plane. I guarantee that when we read the figures next year, we shall find that they have changed anyway. Against that background, the Chancellor will wish not to spend in some areas although he will be willing to spend in others. The first area with which I shall deal does not come under the heading of expenditure, but under the heading of receipts. What is unforgivable for people throughout the country is the increase in VAT. There is no financial reason, as the Red Book proves, for the second tranche of VAT being necessary. If I were a Conservative Member, I would contrast the cowardice of the present Chancellor of the Exchequer in dealing with the political albatross of VAT on fuel with the courage and political sure-footedness of the previous Chancellor and the present Prime Minister in dealing with the political albatross of the poll tax. The previous Chancellor and the Prime Minister moved quickly, whatever the cost, to remove the poll tax.

The Government have not moved to remove VAT on fuel despite the fact that they have the money. I think--and I am sure that you do, too, Mr. Deputy Speaker--of the harm that the Government are causing, especially to pensioners. If the Chancellor thinks for one second that the compensation that he has put on the table is enough, he obviously does not understand how pensioners in particular respond to quarterly fuel bills. The Chancellor cannot have been in pensioner households, as I have, for if he had he would know of the fear that the quarterly fuel bill causes in them.

I remember a pensioner constituent of mine whose gas was cut off because of some damage to his fire. I got him an electric fire and I went back the next day to make sure that everything was all right. I found him in bed, covered with blankets. I thought that the fire was not working. It was working, but the pensioner thought, "I am taking no chances. I cannot not afford to use the electric fire." He stayed in bed, covered in blankets. If the Chancellor does not understand how the VAT increase will affect the lives of elderly people on the estates who are petrified by fuel charges, he is totally out of touch.

There was no reason and no financial need for the increase. The Chancellor could have stopped the imposition of the second tranche. We shall watch the efforts of the Government, who have to cope with parties within their party, to find constitutional reasons to prevent us from tabling a motion next week that will enable us to vote on the VAT increase. We will table such a motion and we shall see whether a Conservative rebellion is like sunshine in winter.

Other areas about which a sensible, long-sighted and caring Chancellor should be concerned are training and employment. The Chancellor made great play of the training schemes and said that this was a Budget for jobs. From looking at the press release, it is clear that training for work has been not so much increased as focused more sharply. The Government focused invalidity benefit more sharply, which meant that the benefit was stopped for

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thousands of people. If unemployed people are being promised that training for work will be focused more sharply, they should look for cover.

The Chancellor referred to Community Action. Is there an increase? My right hon. Friend the Member for Sedgefield dealt with that point in his speech. There is no increase. The scheme is a continuation of a programme that the Government had intended to end this year, as is admitted in the press release from the Department of Employment. I am sure that the note for editors on work trials will have them filling their front pages with news about work trials. Do hon. Members know how long the work trials last? They last for three weeks. In three of the four wards in my constituency, there is unemployment of 28 per cent. to 30 per cent. The unemployed are hardly going to be chuffed about work trials that give them three weeks' work. The trials will cover 150,000 people and the small print of the press release states that they will be phased in over three years.

The key to this caring, considerate, long-sighted Chancellor is in the financial figures. In cash terms in the previous year, the Budget represented £3,461 million; next year, this Budget for work, this Budget for unemployed people will represent £3,483 million--an increase of £22 million.

That would be good news if it were true, but the press release states that those are real-terms figures. In other words, this year the Government will spend £3,286 million and next year, under this Budget for the unemployed, they will spend £3,227 million--about £60 million less. Why is the Chancellor not spending more money in the Department that is responsible for employment training?

The same sleight of hand is evident in education. I should like editors of the financial papers to look closely at the figures. Apparently, a 4 per cent. increase is proposed, but it is really a 1 per cent. increase in real terms. Apparently, £470 million is to be spent on education in cash terms, but in real terms the figure is £80 million. That £80 million is to be spent among all our universities, further education colleges and schools.

I suggest that Treasury Ministers should visit a school or further education college and meet those who have no skills but who we are trying desperately to train so that they can compete. The problem can be traced back to the classes of 30 pupils, to the lack of books, to the inadequate resources and to the state of school buildings. I shudder at the thought of sending children in my constituency to such buildings. That is the reality of education nowadays, yet the Government are spending £80 million on additional funding, spread across the country and including funding for their dogmatic schemes for colleges and so on, under which they take money from the state sector to give to their friends in other sectors. It is a disgrace. We face skills shortages and it is feared that we shall not be able to sustain a recovery because we shall run out of skilled people. The Government have money available, which they dare not give away in this Budget, and one would have thought that they would sensibly invest it in areas that would allow us to make that sustained recovery a thing of the future, but they have not done so. One has to ask why. Do they not care? I should have thought that the answer was self-evident from the past 15 years, if I may be allowed to enter this political-historical war.

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Yesterday, someone quoted the words of T. S. Eliot, who wrote: "it is the greatest treason to do the right thing for the wrong reason."

Are the Government saving money because it has to be saved? No, they are doing so because they want to try to hoodwink people at the next election, as they did at the previous one.

9.48 pm

Mrs. Jacqui Lait (Hastings and Rye): I begin by reassuring the hon. Member for Leeds, East (Mr. Mudie) that I, indeed, warmly welcome the Budget. I congratulate him, because, of the many hon. Members to whom I have listened, he seemed to be the only one who had the vaguest grasp of what the Chancellor had achieved and was planning to do. It was a shame that, thereafter, he proceeded to spoil all that knowledge by going back down the old-fashioned line of all the old socialists by suggesting increasing public

expenditure--not recognising that the key to this Budget is, in fact, our success in controlling public expenditure, which will mean that the economy will grow and be infinitely stronger than it has been. I will not go into the arguments of the past 15 years.

The other thing that amazed me while listening to the speeches of Labour Members was that they never appeared to move past last year's Budget. No Opposition Member grasped what we were saying today. No one had any feel for the achievements created by last year's Budget which have allowed us to build on that for the coming year. In that respect, I warmly congratulate the Chancellor on the help that he is giving to small businesses and people in long-term unemployment. Persuading people of the value of the sound money that we now have will be a lengthy process. I am reminded of "The Forsyte Saga" and Old Jolyon complaining about 5 per cent. on consuls. That was about the last time that we could rely on sound money for any great length of time. Sound money brings with it a completely different attitude to spending and saving. It provides a much stronger base on which to build an economy. As a result of the many generations in respect of which we built in an inflation psychology, we must still explain to people the virtues of sound money.

The supply-side measures, which will help small businesses enormously, are too numerous and have been welcomed by too many of my colleagues for me to repeat them. However, I particularly commend the moves towards improving conditions for venture trusts. Many of us have faced business people in our constituency surgeries who were desperate to find investment of between £50,000 and £500,000. That is the missing amount of equity. The venture trusts will fill that gap very well and I am pleased that the Chancellor has gone down that road, particularly by encouraging business angels.

It is also helpful that the Chancellor is moving the thinking in insolvency business from loan debt to equity as a way of stabilising businesses. The more we can encourage businesses to concentrate on equity as a means of investment, the more we will be able to get away from the debilitating reliance on overdrafts which has caused so many problems in recent years.

I very much welcome the simplification of the loan guarantee scheme, which has been a nightmare. It was very difficult for businesses to benefit from that scheme.

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Businesses will also be grateful for the changes in PAYE and national insurance payments from a monthly to a quarterly basis, for annual VAT returns and for the changes in the uniform business rate, quite apart from the pleasure--we hope--of getting the Inland Revenue, Customs and Excise and the Contributions Agency working together instead of, as so often happens, against each other.

An area of immense hope for the south-east in particular was the change in the emphasis on roads building. The hon. Member for Sunderland, North (Mr. Etherington) told us of the problems that he faces when he drives down from the north-east to London. He probably completes that journey marginally quicker than I travel down to Hastings. I do not want to repeat a very old argument, but we have a great need for better infrastructure and better roads. If the Department of Transport begins to move towards investment in smaller projects in respect of which accidents and congestion are the criteria, I would welcome that for my constituency.

The subject that I would like to talk about at great length is that of smuggling. Coming from the constituency of Hastings and Rye, which has been historically notorious for smuggling, I am conscious that the re-emergence of the problem is causing tremendous difficulty, not just in the south-east but throughout the country.

Although the actual evidence is difficult to find, I have anecdotal evidence--many of the representations from Customs and Excise to the Treasury and Civil Service Select Committee back this up--that the areas around ports, the big cities and, increasingly, the smaller towns are being affected by the ease with which one can buy smuggled alcohol and tobacco. A constituent told me of buying from a tobacco kiosk in central London a packet of cigarettes which came without polythene wrapping and without a health warning, indicating clearly that it was smuggled tobacco. It was not even sold by the back door; it was on sale to the public in the centre of London.

The proprietors of every pub, restaurant and cafe and every tobacconist in my constituency say that someone has knocked on their back door and offered them cheap alcohol and tobacco. Local tobacconists tell me-- this is borne out by figures from Rizla, which is the principal supplier of paper for hand-rolled tobacco-- that sales of tobacco paper have shot up, while sales of tobacco have disappeared. Rizla says that, while there has been an 11 per cent. decline in hand rolling tobacco sales, its sales have increased by 16 per cent. over the past five years. That is an indication of the scale of hand rolling tobacco imports.

Tesco has produced evidence to show that Kent, London, Anglia, south- western Wales, the midlands and Yorkshire-- the geography is interesting-- have been affected by a loss of beer sales. It is accepted that there has been a long-term decline in the sale of many alcohol and tobacco products, but the scale of that decline is quite dramatic.

I personally abhor tobacco. I am not a smoker and I would not do anything to encourage the industry. I have always believed that there should be a very high tax on tobacco. However, as I come from an area where

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smuggling was prevalent in the 17th, 18th and 19th centuries, I have done some research into how smuggling came to an end in that part of the world.

While prevention played a part, the history of the end of smuggling was tied entirely to a reduction in duty. In 1745, the duty on tea was four shillings per pound and the product was smuggled heavily. When Lord Pelham reduced the duty to one shilling per pound, the trade disappeared. I wish to quote from a very useful book entitled "The Smugglers", which says:

"When commodities in great demand with all classes were weighted with duties so heavy that few persons could afford to purchase those that had passed through His Majesty's custom-houses, two things might have been foreseen: that the regularised imports would, under the most favourable circumstances, inevitably decrease; and that the smuggling which had already been notoriously increasing by leaps and bounds for a century past would be still further encouraged to supply those articles at a cheap rate, which the Government's policy had rendered unattainable by the majority of people".

I would not for a moment say that we cannot afford to buy alcohol and tobacco, but when products are offered at a fraction of the price at which they appear on our shop shelves it is very tempting to buy them.

I turn to the cost of prevention. In the 18th century, the cost of prevention was considerably more than the cost of the articles that were recovered. The answer that I received to my parliamentary question on the subject said that approximately 240 staff-- most of them excise verification officers-- are employed in the area of prevention. Their annual employment costs are about £30,000, which makes a total of £7.2 million. The revenue value of seized goods in the 20 months to August 1994 was approximately £4 million. It seems to me that, yet again, prevention is not working and we need to consider very closely how we will deal with the excise case. I accept, of course, that we cannot and would not wish to reduce excise duty in the Budget; that would be most inappropriate. However, we cannot rely on our European Community partners raising their duties to our level. We need to make the practice unprofitable. I hope that, in the long run, the Treasury will deal not with the harmonisation but with the closeness of excise duties so that the problems of smuggling can be brought to an end.

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

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