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Mr. MacShane: If we are out of the recession, why does page 17 of the Red Book forecast lower growth and higher inflation for next year? Every other Finance Ministry in Europe is forecasting increased growth for 1995-1996, yet the Red Book says that our growth will decrease.
Column 1369rates. Interestingly, the hon. Member for Colchester, North (Mr. Jenkin) did not know about the increase in unemployment in his own constituency.
With the benefit of the Conservative party deputy chairman's insight, how have the Government responded? The Chancellor of the Exchequer introduced what he describes as a "Budget for jobs". Unemployment is no longer to be "a price worth paying". How can anyone believe in the Government's determination to lead a crusade against unemployment when it is to be led by the Secretary of State for Employment? He does not believe in Government action to get unemployed people back to work, because he believes that everything should be left to the market. He made that quite clear when he said that any action by Government undermines personal responsibility. The right hon. Gentleman, more than anyone else, is the heir to the Thatcherite legacy. The Chancellor wants to bury Thatcherism, but the Employment Secretary continues to praise it. That is why this so-called Budget for jobs is a sham. How can it achieve its aim when the Employment Secretary does not even believe in the principle that the Government have a responsibility for the unemployed?
The Budget has been billed as the Budget for jobs, but it will cut the budget of the Department of Employment by 14 per cent. over the next three years. It has been boasted that the Budget will help unemployed people, but it will cut help with mortgage payments for people who become unemployed. The Budget purports to recognise the particular difficulties faced by those who have been unemployed for a long time, but, at the same time, the training budget for the unemployed will be cut.
If the Government were serious about tackling unemployment, they could take immediate action, because we have 350,000 unemployed building workers, 128,000 homeless families and many council houses in need of improvement. The £5 billion held in capital receipts lies idle, however, in local authority accounts. A Labour Budget would have phased in the release of those capital receipts so that local authorities could put building workers back to work to build houses for the homeless. Everyone recognises that that would be common sense--everyone except the Government.
Mr. Phil Gallie (Ayr): If the Opposition pursued such a policy, Labour councils would have to increase their council tax rates. Surely that is typical of the Opposition, who are always talking about raising taxes.
Ms Harman: I am glad of that intervention, because I hope that the hon. Gentleman, at least, will stand by his constituents when we vote against the extension of VAT to fuel bills. I believe, however, that he missed the point about capital receipts, which are being held by councils as a result of the sale of council housing. That money could be used to put building workers back into work, but Tory dogma of the 1980s dictated that it was not the role of local or central Government to invest in housing.
Have the Government buried Thatcherism in their Budget for jobs? Far from it, because, instead of releasing capital receipts, they have cut 25 per cent. from the funds for investment in social housing and have imposed harsher rules for those on housing benefit.
Column 1370The so-called Budget for jobs has two defining characteristics of the old Thatcherite dogma--the refusal to take action to put people back into work and benefit cuts, which make life even harder for the victims of the Government's failure.
Mr. Portillo: Is the hon. Lady aware that, if a council is debt- free, it is free to spend its receipts? Does she not realise that the reason why councils are not free to spend their receipts when they have debts is that the money is set aside and stands alongside their current debts? Such councils do not choose to pay off those debts directly because they get a higher rate of interest on the money in the bank, the original debts having been taken out years ago at a lower rate of interest. The hon. Lady must realise that, if councils are debt-free, they may spend the capital receipts, but, if not, what she proposes represents an increase in borrowing. That is why the Government think that she and her party are irresponsible.
Ms Harman: The problem for the Employment Secretary is that the Government recognised that it could be acceptable to allow councils to spend their capital receipts and they allowed councils to have an 18-month holiday to spend. If they accepted that principle, albeit for a short time, why were they not prepared to phase in the release of all capital receipts? The right hon. Gentleman's argument simply does not hold water in the light of the Government's previous decision, which they deemed acceptable, to allow councils to spend their receipts.
Although the Government's rhetoric on the long-term unemployed has changed, it is not matched by action. The Chancellor admitted that the Government had to intervene in order--I quote him approvingly--to "encourage employers to look more favourably on people who have been out of work for some time"- -[ Official Report , 29 November 1994; Vol.250, c.1090.]
The right hon. and learned Gentleman is right: long-term unemployment is a tragedy and a waste. It breaks up families, tears communities apart and holds our economy back.
Many employers are reluctant to take on people who have been out of work for years, and the Government's new proposals are inadequate. Although the Conservatives say that they have recognised the problem of the long-term unemployed, the presence of the Secretary of State for Employment prevents them from tackling it.
What a contrast there is between the Government's central proposal to help those who have been unemployed for two years and the Labour party's plans. A Labour Budget would provide a £75 a week tax rebate for employers, which is designed to end long-term unemployment. The Chancellor's central proposal is based on a national insurance rebate that, according to the Government's figures, which were repeated today, would offer an employer just £6 a week to take on someone who has been out of work for two years or more. British business has already said that the Government's proposals are not enough and will not work; the Institute of Personnel Management and the Institute of Directors have already made that clear.
Our scheme is ambitious. It would put the 300,000 people who become long- term unemployed each year back to work. We have costed our scheme, and our figures have been examined by the Institute of Fiscal Studies. I accept that it would cost money in the first year--about
Column 1371£100 million net--but by the second year public money would be saved because we would not have to pay to keep people unemployed. We would also save money by not having to pay income support and housing benefit. The Government have never understood that lesson. They are prepared to see the unemployment bill to the public purse go up and remain high.
I challenge the Employment Secretary to tell us why the Government do not accept our proposal. I suggest that the reason is the same as the one that will prevent any effective Government action on unemployment while that right hon. Gentleman stays in office--that he does not believe that it is the job of the Government to help. He has said in his speeches that action by Government confiscates personal responsibility.
The Chancellor has proposed a complex array of other measures. In truth, a snowstorm of small proposals may blind people on Budget day, but they are not enough to make a difference.
Mr. Clarke: If the hon. Gentleman would like to see me with a prop, I am happy to move to the Dispatch Box. I have been in the House for a long time and I can assure the hon. Gentleman that I can speak without that prop, but I am not proposing to do so for a very long time in the future.
As the hon. Lady is the first Opposition spokesman to cost any Labour proposal, does she accept that when she talks about a net cost she is presumably making great assumptions about the savings and benefits that will reduce the gross cost to that net cost? We have costed our policy honestly, without anticipating behavioural consequences. I do not know the gross cost of her proposal, but it must be far bigger than the cost she quoted to the House. Perhaps she will give its true cost.
My proposal is meant to reduce the cost on employers for the first year when they take on an unemployed person. Her proposal sounds like an expensive competitor to mine, but how is it logical to combine her proposal with a minimum wage, which would increase the cost of moving people from benefit into employment? Why cannot the Opposition get rid of that inherent and ridiculous contradiction in their policies to reduce unemployment?
Ms Harman: It is interesting to note that, when I criticised the proposal to put the long-term unemployed back to work, the person who jumped to his feet to defend it was not the Employment Secretary, who clearly has mixed feelings about it, but the Chancellor. We have done our costings and they have been examined by the Institute of Fiscal Studies. We say that there would be a net cost, taking into account the expenditure on the £75 tax break and the savings in income support and housing benefit.
The point about the scheme is not that it is complicated, not that it is not straightforward and obvious and not that it is not affordable; the point about the scheme is that a Labour Government would implement it, whereas the Tories, racked by division, are not prepared to take serious action on unemployment.
Column 1372The Chancellor made several small proposals. With much fanfare, he announced that he will pilot workstart, but that has been piloted before. First, it was piloted in the March 1993 Budget. It was piloted again in the March 1994 Budget. Now it is to be piloted yet again. The scheme has three pilots, and still no take-off. The Government have also proposed a pilot of jobmatch, a scheme that offers a job subsidy for part-time workers. That, too, has already been piloted. If it was successful, why has it not been tried on a larger scale? The answer is that pilot projects are used by the Conservatives as an excuse for inaction.
Real action to combat unemployment needs an Employment Secretary who believes that Government must act to help the unemployed; it needs an Employment Secretary who is prepared to argue with the Treasury for programmes that make good economic sense; and it needs an Employment Secretary who believes in the Department of Employment. In short, it needs a different Employment Secretary.
The Government are tentative about measures to help the unemployed, but they do not bother with pilots of measures that hit the unemployed. Help with mortgage interest payments is to be cut--no pilots there. For some people, that will mean that the loss of their job means the loss of their home. Unemployment benefit is to be cut. Two hundred and fifty thousand unemployed people will be worse off because of the new jobseekers allowance.
We see the old Thatcherite Conservative party, unable to shake off the habit of punishing the unemployed for the Government's economic mistakes. The Chancellor says that he wants to attack unemployment, but the Employment Secretary is obviously much happier when he is attacking unemployed people.
The Employment Secretary does not believe that his Department has a role in training, either. Many unemployed people, especially long-term unemployed people, lack the skills they need to obtain a job. The Government's own figures show that unemployment continues to rise among the unskilled. The unskilled and the unemployed need training.
The Confederation of British Industry emphasised that businesses, too, want the Government to take a strong lead on training. The Government's own survey shows that a growing number of companies are complaining that skills shortages prevent them from expanding. This year, the Government are already spending 40 per cent. less on training every unemployed person than Labour did in 1979, when there was nothing like the demand for technological skills that there is today.
Against that background, only a madman or a demagogue would cut the training budget--and that is where the Employment Secretary comes in. He will cut training for work, the major adult training programme, by one quarter in the next two years. The number of places on the scheme is to be cut by 40,000. He thinks--he said it again clearly in the debate, and he said it this morning--that if businesses want trained people, they will train them, and if businesses are not prepared to train people, it is because businesses do not want them, so why should the Government do it?
The Employment Secretary believes that training is not the job of Government. He seeks to justify cuts on the grounds that the scheme needs to be better targeted--he said that again today. Of course help must be targeted
Column 1373effectively and money must be well spent. [Hon. Members:-- "Oh."] I ask the Employment Secretary two questions. First, if training for work is as inefficient as the Employment Secretary says, whose fault is it? It must be the fault of the Government, which introduced the scheme as recently as last year.
Secondly, if he is worried about efficiency, why was the money not diverted instead to other training schemes? We know that it was not because the overall employment budget was also cut, which means that other training programmes will face cuts in their budgets too. The Employment Secretary's claims about efficiency are a cover for his dogmatic determination to slash the training budget.
Everyone who recognises the central importance of training for unemployed people, for people in work who want to upgrade their skills, for companies, and for our economy, will be dismayed that the Employment Secretary does not believe in his own Department's role in training. If he will not stand up for training in Government, who will?
As recently as a few weeks ago, the Employment Secretary professed his belief in a high-wage, high-skill economy. [Hon. Members:-- "Hear, hear."] Yet he has cut his own training budget. The truth is that he is not committed to a high-skill economy and we have had countless briefings-- presumably, and helpfully, from his own Department--in advance of the cut.
David Wastell in the Sunday Telegraph explains the reasons behind the Employment Secretary's decision to cut the training budget. It was partly based on being impressed
"by research in the United States, which found unemployed people who were given extensive training became less willing to take low skilled jobs."
The Employment Secretary protests his new-found belief in high skills and high wages, but he remains wedded to his vision of low skills and low wages. He believes that the only future for whole swathes of British people is in low-skill, low-wage jobs, and that is why he opposes a minimum wage. His claim to be worried about the job effects of a minimum wage is bogus.
The very essence, the hallmark, of the Government is indifference to mass unemployment. Most of the recent research on the effects of the minimum wage, as my hon. Friends have said, suggests that it does not cost jobs-- quite the opposite. The Ministry of Agriculture, Fisheries and Food admitted, in its analysis of the effects of the wages council in agriculture, that it did not have adverse effects on employment.
The Employment Secretary opposes the minimum wage because of dogma, not economic analysis. It is the same dogma that said in 1975, "You cannot have an Equal Pay Act; you cannot pay women the same rate as men. If you do, you would harm women's prospects in the Labour party"-- [Laughter.] "It would harm women's opportunities in the labour market, and at one stroke they would all be driven home." The Equal Pay Act 1970 did not have that effect, and more women are now in the labour market than before.
The Employment Secretary does not offer a high-skill, high-investment, high productivity vision for Britain. He offers people the choice: no job or low pay, but topped up increasingly by the public purse.
Column 1374The Employment Secretary does not believe either in Government ensuring that there is training for people in work. That is important. Today's unskilled and low-skilled people in work will be tomorrow's unemployed people. That is not simply the result of the decline of old industries. The demand for people with low or no skills declines relentlessly. Those workers feel insecure because they know that they are vulnerable.
Even when employers do invest in training--the Secretary of State quoted the figures--they concentrate on their white collar workers and neglect low -skilled workers. The CBI highlighted that issue in its Budget submission.
The Government should have recognised that the voluntary approach to employer training has failed. Labour would have used the Budget to ensure that employers make a fair contribution to the training of their own work force.
The Government's failure to act on training is obviously more of the Employment Secretary's handiwork. We should not be surprised that there is no effort to help people in work obtain the skills that they need, for the Employment Secretary is actually refusing £60 million that the European Commission offered to help retrain workers in declining industries. The reason is--I quote from the Financial Times --that he believes it to be
"part of a French-inspired"--
need I continue?--
"Commission effort to build up an industrial policy by subterfuge."
There we have it. When the right hon. Gentleman is offered the chance to help those who are threatened by unemployment, he falls back on the dogma that adequate training for those who are in work is not the business of the Government and the dogma of anti-Europeanism. His posturing on Europe damages employers, employees and the economy. Proposals that would help Britain are rejected because they come from Europe. His stance on Europe is not about winning for Britain in Europe but about political positioning in the faction-riven Tory party.
Mr. Portillo: The hon. Lady alludes to objective 3 and objective 4 funding. The United Kingdom has not lost any money because of our stance of arranging to take objective 3 and not objective 4 funding. I do not want to dent the hon. Lady's argument, but I must tell her that all the decisions in that matter were taken before I became Secretary of State.
Ms Harman: The Commission seemed to take a different view, and it still says that £60 million could be available under objective 4. That is not being taken up because of the right hon. Gentleman's dogma.
British business will wait in vain for the Secretary of State to establish a European agenda that helps business because that will not happen. His European arguments are not about business or jobs but solely about the divisions at the heart of the Tory party. The Secretary of State has proved himself to be the enemy of any real Budget for jobs. He is the enemy of training, of measures to put people back to work, of the unemployed and of his own Department. He is the enemy within.
In the past few weeks, there have been momentous events in the Tory political calendar. There was the Queen's Speech, the European Communities (Finance) Bill and the Budget, and they all led to the most important event in the Tory calendar--the right hon. Gentleman's
Column 1375celebration of 10 years as a Member of Parliament. It is to be held at Alexandra palace tomorrow night. At last he is to have what he always wanted--his very own party.
But some of the guests have refused to join in the fun. The right hon. Gentleman must be asking himself, "Where are the glitterati of the Tory right wing?" Will Lord Tebbit be there? No, he will not. He had the date in his diary but he now discovers that he has a more pressing engagement. Lord Parkinson, too, has suddenly found another pressing engagement. Most hurtful of all, Lady Thatcher will not be there, because she too regrets that she has a prior engagement with a group of American business men. We in the Opposition are asking ourselves whether she could be declining the company of one favourite son to pursue the interests of the other.
The Secretary of State's party will, in every sense, reflect his style and substance, because it will be an occasion for balloons and fireworks. There will be a film about the life and times of Michael Portillo, and it will be set to music. Those who are present will be able once again to relive those glorious golden moments in his glittering career of service to the British people. It will feature his term as a social services Minister when he withdrew benefits from 16 and 17-year-olds and introduced the social fund.
It will feature the right hon. Gentleman's time in the Department of the Environment, which was memorably marked by his assertion that the poll tax was a vote-winner for the Tory party. It will also detail his tenure as Chief Secretary to the Treasury where, since the election, he spoke about his instinct for tax cuts while the Government introduced the biggest tax rises in history. In his current office he is cutting training and reducing help for the unemployed.
The Budget fails to tackle unemployment, it does not address insecurity at work, it fails to stop falling living standards and presses ahead with VAT on fuel--the unfairest tax of all. On Tuesday, the House will have the chance to reopen the issue of VAT on fuel, and in the vote Conservative Members will have a choice between honouring their election promises to constituents or siding with the Government. They all know the anger that their constituents feel about VAT on fuel. They should stand up for those constituents and vote with Labour.
In case they somehow feel moved by the Chancellor's claim that he is providing extra compensation, I must tell them that that is yet another fraud. The compensation scheme is a sham and Conservative Members cannot use it as an excuse for abandoning their constituents' interests. At the conclusion of the Budget debate they must join Labour in voting against the second stage of VAT on fuel. As I have said, the Budget is a fraud. It is not a Budget for jobs, for economic prosperity or for fairness. It is the Budget of an exhausted regime, which is ideologically bankrupt and politically divided. That is why we shall vote against it on Tuesday.
Sir Mark Lennox-Boyd (Morecambe and Lunesdale): I congratulate my right hon. Friend the Secretary of State for Employment on his powerful speech, which was one of the best expositions of its kind that I have ever heard. It is not easy to create a climate in which employers can provide more jobs, and perhaps the most difficult task for policy makers is to engage in the hard and clear thinking
Column 1376that is needed. My right hon. Friend did think clearly and firmly, and that is in stark contrast to the thinking of the hon. Member for Peckham (Ms Harman), much of whose thinking has been around for a long time.
In about 1985, local authorities raised the issue of capital receipts being released, and it was clearly explained to me at that time that one must consider local authority borrowing. I beg the hon. Lady or someone in her team to find out the figures for local authority borrowing. The arguments have been well addressed and what the hon. Lady advocates is on other occasions claimed not to be Labour party policy. She advocates an increase in public borrowing because that would be the result of releasing local government capital receipts.
I have not been able to speak as a Back Bencher for about 10 years, although I am glad to say that this is not a maiden speech. An ex- Minister's first speech from the Back Benches is perhaps best described as akin to a bridegroom's speech at his second marriage after a first marriage which has been immensely happy but which, sadly, came to an end because of bereavement. I shall deliver an unashamed constituency speech, because that is what my constituents deserve after 10 long years.
Morecambe needs help. It has difficulties, but we are successfully fighting them and I hope that we shall win the battle for Morecambe's economic regeneration. Indirectly, I wish to speak about the creation of jobs in Morecambe, but I shall also cover some aspects of regional and industrial policy that are raised by concerned constituents after any Budget.
Morecambe receives Government assistance in various areas, but it does not receive any of the large sums that go to other areas in the north-west. My constituency is not in an assisted area, and is ineligible for assistance from any European Union structural fund. Earlier this year we fought hard to get objective 2 status under Interreg 2 funds, but we failed. Areas in the north-west that have industries in direct competition with my constituency often receive very substantial amounts of state and European aid under those headings.
I fear that I must speak about the Mersey Docks and Harbour Company, which is in direct competition with Heysham port in my constituency. In February this year, my hon. Friend the Member for Ribble Valley (Mr. Evans) asked the Secretary of State for Transport what help the Mersey Docks and Harbour Company had received from the European Community and the Government over the past four years. He was told that, between 1990 and 1994, European regional development fund sums that the Mersey Docks and Harbour Company was entitled to claim amounted to more than £6 million.
Such facts and figures are distressing and unfair. Heysham, a small harbour trading across the Irish sea, is just a short distance away from and in direct competition with the Mersey Docks and Harbour Company. To rub salt in Heysham's wounds, we failed to get objective 2 status, but Merseyside achieved objective 1 status in July and will receive some £630 million over the next five years--some of which, it is anticipated, will go to the Mersey Docks and Harbour Company. Heysham has received and will receive nothing under any of those headings.
Column 1377There is clearly no level playing field, but despite those disadvantages Heysham is very successful.
Ms Eagle: Surely the hon. Gentleman agrees that the deplorable, high and persistent levels of unemployment in the Merseyside area meet objective 1 criteria. Surely he is not suggesting that the real deprivation in that area should be dismissed because of a competition problem between two port authorities.
Sir Mark Lennox-Boyd: The hon. Lady should listen carefully to what I am saying. Indeed, if she reads my speech tomorrow, she will realise that I am not advocating anything that will disappoint her. I am simply pointing out the manifest unfairness in the nature of the funding when two commercial enterprises are in direct competition. Heysham port was acquired by Sea Containers in 1984, when the company purchased the Sealink interests of British Rail. It is a thriving small port, and over the past 10 years, more than £8 million has been invested in its infrastructure. In the mid-1980s, it benefited from the fact that it was not registered under the dock labour scheme.
The division of Sea Containers that handles the ferries and ports operation is the world's leading fast ferry operator and the United Kingdom's third major ferry company. It handles more than 8 million passengers and 1.6 million vehicles a year. It pioneered the introduction of high-speed ferries in 1990 and has revolutionised ferry travel with fast and top- quality customer service. Over the past six years, Heysham's tonnage throughput has doubled. I mentioned earlier that Heysham was never a registered port under the dock labour scheme.
Sir Mark Lennox-Boyd: I will not cross swords with the hon. Lady on that point, because I am developing a wholly different point. The port of Liverpool suffered considerably from the fact that it was burdened by the absurd provisions of the dock labour scheme--something created out of the lunacies imposed upon the nation by Labour Governments before 1979. Perhaps the hon. Lady would like to think about that. It is all history, but I mention in passing that employers at the port of Liverpool received more than £7.5 million from the Department of Transport to assist with dock labour severance payments.
I do not object to the fact that Liverpool is now unshackled; I am most pleased that it is so. However, I hope that the Government will reconsider their industrial policies during this Session to determine whether the manifest unfairnesses that I have described can be eliminated or relieved. It cannot be right that one industry in one area of the north-west has such a tremendous advantage over another industry located nearby, which is a direct competitor.
The port of Liverpool certainly does not need all that assistance to generate jobs in Liverpool. It is expanding its interests rapidly, and earlier this year it acquired the Medway port and shipping interests. Such takeover bids for
Column 1378interests miles outside the assisted area and at the other end of the country are being facilitated by receipts of large sums of European and national Government grant.
We all know that at the end of the day the Treasury is the Government. I hope that my hon. Friend the Minister will listen to my comments and, in his discussions with his colleagues at the Department of Trade and Industry, will bear in mind the inequities that result from our method of dispensing national and European assistance.
Mr. John Garrett (Norwich, South): The Chancellor of the Exchequer said the other day that this was the Budget of the great prize of sustainable growth, and he referred to the wise use of the recovery from recession. Last year, he referred to the recovery under way. In 1993, his predecessor commended to us his Budget for sustained recovery; in 1992, he referred to an unparalleled growth in the living standards of the British people; and in 1991 he promised recovery from recession. We have had all those promises of recovery, yet the Red Book shows that next year's economic growth will be lower than this year's.
For the city that I represent, the Chancellor's words are cruel and hollow. During the past few months, the formerly relatively prosperous city of Norwich has been struck by economic catastrophe. Far from recovery, it has fallen into a trough of recession, the like of which we have never seen before. Our major employers have been struck by economic conditions that have led them to terminate the employment of literally thousands of workers. Norwich Union, our great insurance company, has, after years of growth, declared 1,200 redundancies over the next few years--an unprecedented experience for that company.
Nestle -Rowntree proposes to close its factory in Norwich, which has been there for more than 100 years, over the next two years, with the loss of 900 irreplaceable jobs. Those are deadly blows to the city's economy. For Nestle -Rowntree, it involves the closure of a very successful and profitable company. Norwich people who have worked there over generations heard the news with disbelief. Anglia Television has made scores of people redundant. Colman's, a name synonymous with Norwich industry, is now up for sale, and nobody knows the future for that major employer. British Gas has announced the closure of its headquarters in Norwich, with the loss of 200 jobs. British Telecom has declared 130 redundancies with the closure of its telephone operators' office in the city.
During the past few weeks, we must have heard the announcement of more than 2,500 job losses in a city which, according to the House of Commons Library statistics section, in October 1994 had an unemployment rate of 12.5 per cent., with no less than a 17.9 per cent. male unemployment rate--a 70 per cent. increase since 1989. It is as if, having suffered not only the recession of the early 1980s and the late 1980s, Norwich has a new and exceptionally deep recession of its own.
What struck me most about the Chancellor's Budget speech was the throwaway line at the very end announcing £24 billion off public expenditure during the next three years. That will lead to enormous public service redundancies. The best estimate is that 250,000 public service jobs will be lost, 100,000 of which will be in the civil service.
Column 1379There will be heavy public service redundancies in Norwich--we can see them coming already--in the city council, in the county council and in Government Departments located there, including large local offices and national offices, such as Her Majesty's Stationery Office and the Central Computer and Telecommunications Agency. I fear that hundreds more will be added to the dole queue. The loss of the spending power of 2,000 or 3,000 new unemployed will lead to the loss of perhaps another 1,000 jobs in the economy.
Then we have the macro-economic effect of last year's Budget added to this year's Budget--a tax increase of £7 billion, which will again reduce economic growth and further dent the Chancellor's recovery. I should like to know what development assistance can be given to areas such as Norwich, which are suddenly plunged into recession in that way. We cannot wait for the boom that is to be engineered for the next election. Too many of my constituents will be tossed on to the scrap heap long before then.
I gather that housing is likely to be particularly hard hit be cuts in public expenditure and that homelessness will increase. The city that I represent was once exceptionally well housed, with a massive council house building programme now long since gone. If the Chancellor had wanted to promote recovery, he could have allowed the city council to use some of the receipts from the 6,000 council houses that have already been sold, in order to build new ones in a city that now has substantial and thoroughly miserable housing stress.
Nothing was done in the Budget to redress the problem noted by the previous Financial Secretary to the Treasury, now the Secretary of State for National Heritage, described as socialist by Lord Hanson, that the tax system holds back industrial investment by encouraging companies to pay out excessive dividends. The Budget will not encourage or induce companies in my constituency to invest in training or in new plant and equipment.
As to the social consequences of the Budget, the personal tax measures will make 84 per cent. of households worse off from April by an average of £2.40 a week, taking together the announcements for 1995 made in this Budget and the previous one. Immediately, the poorest will be the worst hit, particularly by the increase in VAT on domestic fuel from 8 per cent. to 17.5 per cent.
The increase in assistance for pensioners is nothing like compensation for the increase in the cost of fuel. As a result of that and other measures, such as cuts in public services on which the retired depend disproportionately, their living standards will fall. At the same time, they see the salaries of directors and top executives, particularly those in privatised utilities, rocketing upwards. Fairness in taxation and economic matters means a great deal to the British people, and what the Government are doing is palpably unfair.
The Budget for jobs' measures are too small to have any great effect on unemployment, yet there is work to be done everywhere in Britain. Our schools need to be repaired and refitted, and we need better railways and urban transit systems, new hospitals and thousands of new houses.
What should have been done? Surely the way to reinforce a recovery is through public investment, particularly in infrastructure--in the hospital that Norwich needs and has needed for the past 20 years--and in public transport. Instead, we get a 12 per cent. reduction in
Column 1380public capital spending during the next three years, the equivalent of £3.6 billion in cuts, with the best calculation being the loss of 160,000 jobs across the economy.
The Budget is an irrelevance, and nowhere is it more irrelevant than in my constituency.
Mr. Nicholas Winterton (Macclesfield): My contribution, I hope, will be fairly brief, it will be pertinent and, in parts, it will be critical of the Government. I did not get much encouragement from the Budget until the last paragraph of my right hon. and learned Friend the Chancellor's speech, just before the conclusion, where he says: "Taking into account the tax and public spending measures, I now expect to be able to reduce borrowing from £30 billion to £21 billion in 1995-96, from the previously forecast £21 billion to £13 billion in 1996-97, and from £12 billion to £5 billion the year after that."--[ Official Report , 29 November 1994; Vol. 250, c. 1103.] My right hon. and learned Friend is to be congratulated on that because it clearly holds out immense hope and potential for the future. But at the same time, my right hon. and learned Friend has a duty to the country and the electorate at large, particularly, because we are talking about unemployment today, to the 2.5 million people who find themselves out of work.
Of course, I warmly welcome the measures, modest though they are in real terms, to assist the long-term unemployed, and the various schemes that my right hon. and learned Friend put forward to help them get back to work and, as it were, to cover the transition between unemployment and a return to work which, often for those on low incomes and the unskilled, is difficult because they lose more benefit than they receive in wages. Therefore, the transitional arrangements announced by my right hon. and learned Friend are welcome.
So too--we must put the measures in context and in perspective--is the modest assistance to employers to take on the long-term unemployed as employees. I welcome those measures, but we do not want to over-emphasise them or overstate the benefit that they will have. We have already heard from the hon. Member for Peckham (Ms Harman) that the employers do not count them for a great deal and do not believe that they will be particularly effective. I only express the hope from the Conservative Benches that they will be more effective than perhaps employers believe at this time, particularly the Institute of Directors and the Confederation of British Industry. But I must confess to my colleagues on the Treasury Bench that there was little to celebrate in the Budget delivered by the Chancellor. My right hon. and learned Friend missed a golden opportunity to improve the perception of the Government in the minds of the electorate, although I accept that he hopes to have much greater room for manoeuvre by the next Budget, which will be nearer to the date of the next general election.
However, I must put down a marker to my right hon. and hon. Friends. I fear that the British electorate are now a little more sophisticated and cynical than many politicians appreciate. They will see through the antics of any tax-cutting Chancellor who gives away money for short-term electoral advantage close to a general election.
My right hon. and learned Friend had the chance, which he took, not to act imprudently or to buy favours, but rather to present the Government as having learnt from the lessons of the past. But has he listened to the British