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Mr. Michael Fabricant (Mid-Staffordshire): We are coming to the end of five days of debate on the Budget. The hon. Member for St. Helens, North (Mr. Evans) made an interesting speech, although he raised a couple of points which begged a few questions. First, he spoke of what he called the litany of Tory tax rises; yet he did not refer to his party's position at the last general election, when it pledged additional spending of £13 billion. He did not say what tax rises there would have been had a Labour Government been in power trying to make that additional expenditure.

The hon. Gentleman also referred to the "feelgood factor". The reason why there might not be one is the negative equity suffered by so many home owners. Of course, one reason for there being negative equity is that we have not fallen into the trap of encouraging inflation. In fact, currently the United Kingdom is enjoying growth and low inflation--a position which, as many hon. Members have pointed out over the past five days, is virtually unique.

In rising to take part in this debate on the Budget, I broadly welcome the initiative taken by my right hon. and learned Friend the Chancellor, although I deeply regret the fact that he has inherited one particular tax measure from an earlier Budget. However, I shall say more about that later. Over the past few days, my hon. Friends have highlighted the fact that it is a balanced Budget. It not only serves to build on a firm fiscal base by reducing spending and offering new tax initiatives, but it takes steps to improve employment prospects for the long-term

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unemployed. That is something that even the Leader of the Opposition was forced to welcome in his response to my right hon. and learned Friend-- [Interruption.] although only because Conservative Members shouted at him, "Do you welcome it?" and he had to admit that he did.

I would not want to adopt the policy of my hon. Friend the Member for Chingford (Mr. Duncan Smith), who said that he would reiterate all the excellent points in the Budget. Instead, I shall concentrate on just two measures which have not attracted the headlines and have not been mentioned much over the past few days, but which deserve recognition. I also intend to deal with the question of VAT on fuel, about which I have the deepest misgivings.

Before becoming a Member of Parliament, I built up a business with clients in some 52 countries. Some were developed nations and others were developing nations. In the business that I was in, the multi-million-pound contracts tended to be in the developing world where high premiums were paid for western--nay, British--expertise. That gives the lie to Labour Members who constantly denigrate the level of expertise in this country.

The Opposition also denigrate the service industry. My hon. Friend the Member for Chingford referred to the financial services industry. I remind the House that Britain is also one of the world leaders in computer software. That is another important service industry. I and other British exporters often faced overwhelming competition from France, Germany, Japan and the United States, as a result of a price differential arising from the support that our competitors received from their Governments. HERMES, the German equivalent of our Office of Economic Co-operation and Development, offered particularly aggressive facilities and rates to domestic manufacturers--aiming to encourage exports to markets which have less than an A1 credit rating, but which are among the most lucrative markets for UK exporters. While I sweated in hot and humid climates, I saw Siemens and Bosch winning while we lost out.

Building on the initiatives of the past couple of years, my right hon. and learned Friend the Chancellor has wisely directed his attention to manufacturing and to the Export Credits Guarantee Department in particular. By reducing premiums by 20 per cent. for exporters to Argentina, Brazil, the Philippines, Egypt and to what in my view is "the economy most likely to succeed"--Vietnam--costs have been reduced substantially, enabling the UK to compete advantageously with our competitors.

In addition, a further £300 million of cover was announced last week for the so-called amber zone markets--China, South Africa and Indonesia--to which my right hon. Friend the President of the Board of Trade referred. They are all areas where I have traded in the past and which offer Britain huge export potential.

With a stronger ECGD and one of the lowest rates of corporation tax in Europe, with rates lower than in Japan or the United States, low inflation and lower national insurance premiums for employers, British manufacturers have the springboard to take a deeper plunge into world markets.

Not every company can survive. Many can fail despite a full and profitable order book. Overtrading can induce cash flow difficulties, and banks and the Inland Revenue may be unsympathetic. I therefore welcome the second

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initiative that I wish to highlight--the 28- day moratorium for insolvent companies. Bankers and tax collectors are often different animals from the entrepreneurs working in small and medium- sized businesses. Too often, they foreclose without exploring opportunities. I look forward to the Green Paper, heralded in the Budget, which my right hon. Friend the President of the Board of Trade plans to issue.

Chapter 11 has worked reasonably well in the United States. There are companies trading today which would have been bankrupt without chapter 11, which protects the creditor while allowing many companies to trade out of difficulty and to keep many people employed. I hope that the DTI initiative will include many of the best features of that legislation.

I was bitterly opposed to the imposition of value added tax on domestic fuel, and I am disappointed that the improvement in the economy has not allowed my right hon. and learned Friend the Chancellor to maintain it at 8 per cent.--an international treaty makes it difficult for us to lower it. I oppose that measure on three grounds--compensation levels, the effect on my party, and the very principle behind the tax.

The elderly spend three times as much on fuel as ordinary households. They feel the cold more. They are often at home during the day, particularly when it is cold outside, when others are at work and have their heating switched off. The elderly also often live in badly insulated houses, so I welcome the Government's initiative on home insulation in the Budget.

Other hon. Members have spoken at length about the shortfalls in the Government's compensation package. I refer the House to the excellent speech by my hon. Friend the Member for Brighton, Kemptown (Sir A. Bowden). Despite the £2.5 billion for compensation announced in the Budget, which should not be underestimated, pensioners with little spare cash will be slightly worse off--and many hard-up people will receive no help at all.

My right hon. and learned Friend the Chancellor is wrong if he thinks that the hostility to VAT on fuel--a tax measure which he inherited--will blow over. It will not. I almost wonder whether this issue could be the final straw, as other hon. Members and the media have suggested. As I told the hon. Member for St. Helens, North, elderly people die of hypothermia every year. They have always done so and they always will. Often such deaths have nothing to do with the cost of fuel or with taxation, but for every foreseeable winter from now on the Opposition will be cynically blaming the Conservative Government for the deaths that will occur this winter and the next and the next--and the press will take up their cry. Neither we nor the electorate will be allowed to forget. The staggered introduction of VAT on domestic fuel has made things still worse for my party.

Mr. Jack Thompson (Wansbeck): Does the hon. Gentleman agree that over the year the average temperature in the north of England is more severe than in the south? Elderly parents in my constituency are a cause of concern for their children who, for economic

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reasons, have moved to the south. In such instances, two families are affected by the imposition of VAT on domestic fuel.

Mr. Fabricant: The hon. Gentleman makes a valid point. The Government are giving extra assistance in the form of cold weather payments, but they will not help in every case.

My most important objection is to the principle behind the introduction of VAT on domestic fuel, which is fundamentally wrong. In the 1980s, we shifted from direct to indirect taxation, to extend choice and encourage a savings culture that had been enjoyed by Germany for many years. That country has had historically low interest rates, resulting partly from low inflation and a high savings ratio--something that we have not enjoyed. But how much choice is there in purchasing fuel for the home? Such choice as there is certainly does not extend to 17.5 per cent. of the cost, even taking into account the compensation available to some sectors of the community.

Privatisation has brought a significant lowering in the cost of fuel, as was admirably pointed out by my right hon. Friend the President of the Board of Trade earlier today. Why can we not keep VAT on fuel at 8 per cent? I intend to demonstrate that we could do so and remain within our public sector borrowing requirement target. The solution might even have satisfied the carbon tax lobby on the Opposition Benches.

Other countries have multiple VAT rates. France, our nearest neighbour, has four: zero, 2.1 per cent., 5.5 per cent. and 18.6 per cent. If we maintained VAT on fuel at 8 per cent.--an amount over which everyone can exercise some choice--we could broaden the tax base to include other commodities in that band which are currently zero-rated all in one step and without prolonging our political misery. That might be politically difficult, but not so politically difficult as putting VAT on fuel at 17.5 per cent.

The Government's thrust has rightly been to wean people off state benefits. Yet at a stroke we have succeeded in alienating more of our natural supporters while trawling still more into state dependency. This House is sometimes referred to as the palace of enchantments. At times, it is also the palace of empty gestures and rhetoric. If the Opposition amendment before us today would keep VAT on fuel at 8 per cent., I would vote for it. But it does not. And abstention is deplorable. Because the Opposition amendment would not result in keeping VAT on fuel at 8 per cent. and would, I believe, simply serve to destabilise the economy-- [Interruption.] I invite Opposition Members to intervene and correct my argument if I have it wrong. Mr. Bennett rose --

Mr. Andrew Smith (Oxford, East) rose --

Mr. Fabricant: The hon. Member for Denton and Reddish (Mr. Bennett) stood up first.

Mr. Bennett: Does the hon. Gentleman accept that it is normal practice in the House to have to have paving amendments and then the follow -up amendments, and that if the paving amendment is not passed it is very difficult to vote for the follow-up amendment? I invite the hon. Gentleman to vote for the paving amendment today and

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then, as soon as we get the opportunity on the Finance Bill, to vote to ensure that VAT on fuel does not go up to 17.5 per cent.

Mr. Fabricant: The hon. Gentleman raises an interesting point. I could refer to some paving motions in the past that I would have liked to avoid altogether, because they were not always necessary. However, I digress.

This amendment is a paving motion to disaster, because the hon. Gentleman knows as well as I do that the international markets would say that a fundamental element of Government legislation-- [Interruption.] The hon. Member for Walsall, North (Mr. Winnick) interrupts from a sedentary position, but makes no sensible points. I shall finish the point raised by the hon. Member for Denton and Reddish. I shall then be happy to allow the hon. Member for Walsall, North to intervene.

If the paving motion fails, the international markets will say, quite correctly, that a fundamental pillar of Government legislation has failed. I believe that there will be pressure on the pound and that that will put interest rates up, which will be detrimental not only to householders, but to pensioners and the unemployed, because the growth in our economy will stagger to a halt and slowly slip backwards. There can be no doubt about that. So when I vote tonight, I shall be voting with a heavy heart, but I shall be voting for the better of two evils.

Mr. David Winnick (Walsall, North): Why does the hon. Gentleman not simply say that although he is totally opposed to what the Government intend to do he has not got the bottle to follow his conscience and vote, as he should, with the Opposition? He is betraying his constituents. All the weasel excuses that he is making cannot alter the fact that he has surrendered to the Whips instead of listening to his constituents.

Mr. Fabricant: The hon. Gentleman does not know me. He thinks that he does, but he does not. If he knew me as well as the Whips do, he would know damned well that I would not surrender to them or to anyone else. He can sit there in Opposition and come up with weasel words and points that he thinks will score, but I tell him this: if the Government fail tonight, my constituents--and his--will suffer more than the 17.5 per cent. on fuel, which I still believe is iniquitous.

I am a Conservative because I wish to see no ceiling on anyone's aspirations or opportunities, but our safety net must be of a fine mesh to minimise the number of those who might slip through. I believe that it is time that we took a long, hard look into what we stand for as a party and reassess our programme for the future. It is not just about privatising the Post Office, which I would have supported vigorously, subject to the safeguards of which my right hon. Friend the President of the Board of Trade has already spoken. It is about supporting libraries, parks, the monarchy, care in the community, the police and a variety of other institutions--a whole social environment of which we can all be proud, including those who might not normally be this Government's natural supporters. We need a sound economy. The Government have already won us that. But we need to remember that the boundaries of the state can be rolled back only so far. Too little, as Opposition Members would like, and initiative would be stifled, leading to economic and social ruin. Too much, and the Prime Minister's promise of "a nation at

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ease with itself" would become ever more hollow. We need to regain the trust of the people, of those decent, ordinary people who are our natural supporters. We need to revisit the values which respect firm governance and respect for our institutions, tempered with security for the weak and assistance for the vulnerable. Those values are not at variance with a sound economy: they should be the very aims of a sound economy--an economy based on respect for the law, low taxation, free trade and a balanced budget.

7.54 pm

Mr. Thomas Graham (Renfrew, West and Inverclyde): I have found some of the speeches tonight so pathetic, so unbelievably wrong. I heard the hon. Member for Mid-Staffordshire (Mr. Fabricant) showing his anger about VAT, yet he is not prepared to support the elderly, the disabled, the unemployed and the low-paid. He is not prepared to walk through the Lobby and put a stop to the increase in VAT on fuel increase. We will stop it tonight only if Tory Members are prepared to do that.

I heard the President of the Board of Tears--sorry, Trade--start the debate tonight. I have never heard him so weak. I have never heard him deliver such a pathetic speech--a speech that lacked any guts. He is normally at the Dispatch Box jumping, shouting and knocking his speech into us. Tonight, his speech was knocking into the elderly, the disabled and the unemployed. His Government created a situation in which the 17.5 per cent. VAT was a result of their total mismanagement of local councils. Lo and behold we had the poll tax, which was a disaster, then the increase in VAT to 17.5 per cent. The poor are paying for the absolute mismanagement of the Government. They are paying through their fuel--badly needed fuel which allows them to live in their homes.

We hear the members of the Government painting a rosy picture. Are they deaf? Do they not read the newspapers? Have they not travelled around the country? Can they not see what the opinion polls say? Are they not listening to the ordinary men and women who have said, "enough is enough"? The other day, when there was a possibility of a general election if the Government had been brought down, millions of people in the country were praying for just that. Millions would have turfed Tory Members into the place where they belong--the Opposition Benches.

I heard the President of the Board of Trade tonight. I felt as though I was in Disneyland and hearing "The Jungle Book", a kid's film. But that is not the world that I live in. It is no Disneyland where Tommy Graham comes from. I live in a community where the people have to pay the price of the Government's failures, and that price costs lives. Undoubtedly, people will die because of the Government's VAT policies. I will go further. I have heard rumours that the Chancellor, if he does not win the vote tonight, will savagely reduce public expenditure. Public expenditure has already been reduced, for 15 years.

I heard the hon. Member for Mid-Staffordshire talk about public expenditure. Where has he been? The number of home helps has been slashed. Bus services have been deregulated. Communities have been isolated. Bus services have been ruined. Train services look as though they will go the same way. We have seen the wholesale slaughter of private and nationalised industries. We have seen companies go bankrupt and go out of business. Millions of people are unemployed. I remember

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1979. I had a job. My neighbours had jobs. The people of Linwood had jobs. Do they have jobs now? No, after 15 years, millions of people are unemployed and the Government have the audacity to tell us that they have the policies to make Britain good again. It is not on.

It is obscene that tonight the Chancellor was smiling away when my right hon. Friend the Member for Copeland (Dr. Cunningham) told him that he had made champagne cheaper. He gave us a lovely bubbly smile. Yes, the rich too are bubbling with cheer; but the ordinary men and women--the poor, the unemployed--are bubbling with tears because of the measures that the Government will force through tonight.

I spoke to a number of constituents before I came here tonight. One, Rose Templeton, has worked as a sister in NHS hospitals all over Britain. Last week, she told me that the imposition of VAT on fuel would cause shivering in the homes of the elderly. Let us make no bones about it: the hospitals will be full of elderly people suffering from the effects of trying to keep their homes warm. Other aspects of their lives will suffer, such as their dietary habits, and they will end up queuing for the doctor or even a hospital bed. The country will pay dearly for that.

Sir Teddy Taylor: Was the hon. Gentleman able to assure Rose that a possible future Labour Government would bring fuel costs down again?

Mr. Graham: If I were leader of the next Labour Government, I would give an assurance that I would look after the people of Britain far better than the present Government. I would ensure that the elderly could live and die comfortably, and that the young folk had a decent and healthy future. I would create a single system for us all, not a separate system for the rich. We would give the poor a chance to live and breathe. From small seeds grow great trees, but only if the Government are prepared to provide the seeds, and the present Government have no hope of doing that.

In a letter to me, the chairman of Renfrew district council wrote:

"I sincerely urge you to take up the issues against an increase to fuel costs . . . There is clear evidence that the fabric on housing stock is damaged and rot sets in if houses are not well insulated but especially if they are not properly heated." Local authority public expenditure will then be needed to make the houses habitable. The council chairman pleaded with the Government not to increase VAT on fuel.

I also received a letter from Age Concern, which represents many elderly people. One says:

"I dread this tax as I must have heat; I will need to forfeit other things including bathing and washing clothes."

This is what VAT on fuel means to elderly men and women:

"It means making flasks of tea for hot drinks rather than making a fresh brew each time. It would be nice to be allowed to live in comfort and dignity in our old age . . . I pray we have a mild winter . . . I am proud to say I have always paid whatever I have been asked for but God knows what the future holds."

After 15 years of the Tory Government, taxes on basic necessities are taxes on life. It is scandalous. The pensioners say:

"Like the comedy on TV, I'll be Waiting for God . . . I'll hibernate for the winter . . . I'll have to sit in the shopping centre . . . This takes us back to the war years when sacrifices were made to help everyone. This is not required now--hardship should be a thing of the past."

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I could go on, but I feel that I am speaking to a heartless bunch, and also that I am speaking to a number of Conservative Members who will not be here at the next general election.

Let me tell the hon. Member for Mid-Staffordshire about a wee note sent to me by Dr. Brenda Boardman, of Oxford university's environmental change unit. She has estimated that VAT at 8 per cent. will cause 5,000 extra winter deaths, and that VAT at 17.5 per cent. will double the number.

Mr. Fabricant rose --

Mrs. Ewing: Will the hon. Gentleman deny that?

Mr. Fabricant: I am grateful to the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) for giving way to me. I have no doubt that the 17.5 per cent. rate of VAT on fuel may produce some detrimental effects; as for the 8 per cent. rate, prices have fallen over the past two years. The net effect of that is that the charge for most fuel is now the same as it was two years ago. Are not Dr. Boardman's figures flawed?

Mr. Graham: I think that every hon. Member has been inundated with letters, data and other information about the bad effects of VAT on fuel. I do not know of a single hon. Member who has received a letter supporting it --not even a Conservative Member. I am, however, more prepared to believe that woman than to believe any Conservative Member. That is what has happened in the country: we do not believe Conservative Members. We have lost our faith and trust in their ability to govern the country well. There is no possibility that I would believe the hon. Member for Mid- Staffordshire in this context. There is no doubt that VAT is the Tories' favourite tax. How many times have the present Government conned the public? They have made such statements as:

"We have no plans to increase value added tax . . . There will be no VAT increase."--[ Official Report , 28 January 1992; Vol. 202, c. 808.]

In March 1992, in a Westminster press conference, the Prime Minister said:

"I have made it clear that we have no plan and no need to extend the scope of VAT."

Less than a year later, his Government announced the imposition of VAT on fuel.

Since 1979, the Government have extended the scope of VAT 14 times. The Chancellor is clearly out of touch with the public in whole-heartedly supporting VAT, which he describes as "a perfectly fair tax". He has said:

"I think it was a very sensible decision to impose VAT on fuel." I plead with the House to listen, and to stop the imposition of VAT on fuel. I plead with hon. Members to allow 10,000 people to live, and to allow 10 million people to take part in the democratic process and vote the Government out. It is time for a change of direction, to ensure that everyone in the country can live comfortably and heat his or her house, eat in that house and enjoy living in Britain. I hope that the Minister will change his mind and support our amendment.

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8.7 pm

Mr. David Porter (Waveney): It is always a pleasure to follow the hon. Member for Renfrew, West and Inverclyde (Mr. Graham): to do so shows that he has finished speaking.

Mrs. Ewing: He spoke sincerely.

Mr. Porter: He did; he often speaks with great sincerity. I hope that the hon. Lady will accept that I will speak with equal sincerity in representing my part of the country.

Last week I felt that the Budget represented a small sticking plaster for the wounds inflicted on the party last Monday night. It was welcome in that regard. A Budget that is criticised for being a Budget without fireworks and praised for being a "no headlines" Budget must be quite good, especially at this point in the economic and political cycle. A Budget for business--especially small business--for jobs, for the unemployed and the low-paid, which cuts borrowing yet increases targeted public expenditure is just what we need.

The fact that the Budget is a part of a coherent economic policy, a strategy for long-term stability and growth, seems to have escaped many Opposition Members. The fact that it is possible to have this strategy of low inflation, sound finance, deregulation and supply-side reform is due in large measure to our departure from the ghastly exchange rate mechanism. That fact has not escaped my hon. Friends even if they do not talk about it in those terms. We all know that the holy grail of growth that is steady and sustained cannot be put at risk for short-term popularity.

Just before the Budget, the Confederation of British Industry, eastern region sent a letter to East Anglian Members of Parliament presenting a picture of a fragile recovery, a modest improvement in most sectors, cautious investment plans and some reluctance to take on extra employees. I should have thought that the Budget addressed all those concerns directly.

My right hon. and learned Friend the Chancellor referred to the strategy of letting the flow of new jobs come. That will always be required to replace the old jobs eroded by technology and competition. That point is at the heart of many of the problems in my constituency.

In Waveney, serious problems with declining industries seem to get worse as the recession visibly ends in other parts of East Anglia. We are not helped by a perception of remoteness of the area, by poor transport infrastructure or by Great Yarmouth, which is next door, being given assisted area status. The Government did not listen to the argument that giving assisted area status to one location may compound the problems of another just 10 miles away.

Not all businesses like being in assisted areas or having objective 5b status. They would rather pay less tax so that such artificial subsidies were unnecessary. They will welcome the tax changes and the small business measures. Some businesses do not find it helpful to hear an area being criticised or run down in the way that Waveney district council often does. It is controlled by an unmodernised Labour party which attempts to blame the Government for everything that moves. None the less, parts of Waveney now have approval for objective 5b funding.

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In one of the copious press releases in our Budget information files there is one from the Ministry of Agriculture, Fisheries and Food which confirms that in a reduced public borrowing environment parts of Waveney will benefit from extra spending. In so doing we can test the claims of two different arguments. The first is that extra funding of that sort can stimulate jobs and the second is that partnerships between public and private funding are the best way forward. The experiment in public funding will test both those absolutely.

Another press release tucked in the pile is from the Overseas Development Administration telling us that Britain's aid programme is to be increased. Few will argue with that, particularly where the ODA guarantee of tying aid to sound economic policies and good government is invoked. However, I must tell my right hon. and hon. Friends on the Front Bench that I have had a small number of letters from constituents, particularly elderly people, who feel that we give too much overseas aid and that more should be spent at home. They find it particularly galling that, for example, money goes to the former communist bloc. It is a view and it should be recognised as such, particularly in a tight financial settlement.

The big resentment comes over the overseas aid we pour into Europe. The press release says:

"British contributions to multilateral agencies, especially to the European Community, are planned to increase sharply." I know that we are talking about money for genuine aid in third-world countries and countries in transition, but to most people in Britain, our net contribution to the European Union's budget is a glorified way of giving British taxpayers' money in overseas aid to Spain, Portugal, Greece and Italy, to allow many of those countries to put our people out of work. I did not hear my right hon. and learned Friend justify such a big payment out of the nation's account for that.

Mr. Jimmy Wray (Glasgow, Provan): Will the hon. Gentleman consider reimbursing the people who have lost their homes and thousands of pounds and are still paying the debt that the Government created for them? Will he consider giving them something back?

Mr. Porter: Given that I am not a member of the Government and that I am criticising them in a small way, that is a hypothetical question.

I know that we are not addressing the European Communities (Finance) Bill now, but it is hard to separate that from the tax and spend debate. One aspect of policy which, mercifully, is still free from European diktat is education. The 1 per cent. increase in real terms in education spending is very good news. It will allow for student numbers in further and higher education to grow still further, it will allow the curriculum reforms to bed down and it will allow some capital works spending. I presume that it will also allow for spending on the first steps towards the nursery and pre -school education that has been announced. Perhaps we shall have to wait for next year's Budget to hear the details.

I have already mentioned the roads in my area. In transport, a partnership between public and private sectors is obviously the best provision. As the Chancellor said, privatisation and private finance for capital investment are increasingly the chosen method for raising the quality of public service. That system works with the Department of Transport's policy of supporting a wide variety of smaller

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schemes. I remind the Government that the A12 Ipswich to Lowestoft dualling plans are already in five manageable bites, each one different. They range from rural dualling and village bypasses to a new bridge at Lowestoft. I commend all five parts to the Government as being economically essential and environmentally helpful to the quality of life.

The Department of the Environment has announced that standard spending assessment methodology is to be changed. It currently calculates the SSA by looking at social, demographic and other factors which affect an authority's need to spend and it applies those to the individual circumstances of each authority. I should like to see each authority that is left after the local government review raise what it likes in local taxes and then answer for it each year at the ballot box. That would be real local government accountability. Until then, we have SSAs and all that paraphernalia. I hope that the Department will review the rural deprivation element in the SSA and the extent to which local economic bases can diversify and adapt to increasing competition and technology.

The package of transitional support on business rates, the investment encouragement in growing firms and the reduction in costs for taking on new staff are not only welcome but essential and they should make big inroads into unemployment numbers. When those are coupled with the measures to help individuals back to work they should assist in keeping the United Kingdom at the forefront of Europe in achieving a sound and balanced economy.

For all the sweeping statements and visions of national changes benefiting individuals, the VAT issue remains a principal concern. I shall not rehearse all the arguments yet again because I do not believe that we shall change any minds in the Chamber. I suspect that the changing of minds is going on in Rooms outside this place. I wish that the media and some politicians would give equal space and hot air to the fact that 15 million people are receiving above-inflation help with VAT and that there is extra help from April 1995 and April 1996, which is in permanent addition to the benefit rates and will be uprated in the normal way. My right hon. Friend the Secretary of State for Social Security told the House last week that information on all that would be included in all benefit books and I welcome that.

Twenty years ago no one would have predicted that tourism would have been the biggest job creator in Britain in the 1980s and 1990s. We cannot predict everything that lies ahead. The challenges of the next century are enormous and unpredictable. We know that the technological revolution has only just begun and what is coming will make what has happened so far seem like a teddy bears' picnic. The advances in medicine, life style, communications and entertainment will be mind boggling for us. We know that the threats from drug abuse, organised crime and disaffected people are terrifying and real. We know that pollution and the environmental tasks ahead will stretch our brains, our ingenuity and our pockets to the limit. We know that demands to live longer with more material possessions and in better health will be relentless. That future is inevitable. We owe it to those who will follow us to take on that challenge, to give them a stable financial bedrock and we have to do it now. That is why I support the thrust of the Budget.

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8.17 pm

Mrs. Audrey Wise (Preston): The Labour amendment talks about the Budget leaving increasing numbers of fellow citizens in poverty. It will do that and many of those fellow citizens will be children. It should be seen as a national scandal that one third of our children are now growing up in poverty. Many of those fellow citizens will be pregnant women. I notice that statutory maternity pay has been frozen at £52.50. Not many people remark on that. Somehow, pregnant women do not grab the headlines. The freezing of statutory maternity pay is a disgrace. Statutory sick pay and statutory maternity pay were linked for technical reasons, and now statutory maternity pay is suffering because of that link. It shows the Chancellor's lack of concern for pregnant women, but there is worse.

In 1992, the Select Committee on Health report on maternity services suggested that family credit should be extended to families during pregnancy so that preparation could be made for a healthy birth and a healthy child. Still, family credit does not extend to pregnancy.

We recommended that pregnancy age discrimination should be abandoned, but there is no mention in the Budget of the hardship suffered by our youngest mothers and mothers-to-be. Under-16s do not receive any financial support and 16 and 17-year-olds receive no income support for the first 29 weeks of pregnancy unless they can show severe hardship.

Ministers say complacently that pregnancy is not a qualification for income support. They are asking 16 and 17-year-old pregnant girls, therefore, to suffer severe hardship before they receive the sort of help that is available to older women. Income support, if they receive it, is at the rate available to 18 to 24-year-olds--still substantially lower than that available to 25-year-olds.

The Government have given no convincing explanation as to why pregnant women aged under 25 need less money than pregnant women aged 25 and over. The reason why they receive a lower rate is that the Government consider that they have fewer household responsibilities. Pregnancy should at least be a cure for that assumption. It would cost peanuts to institute such a change in the Budget. Even though a majority of the members of the Select Committee are from the Conservative party, the Government still ignore its recommendations. As the Department of Health and Social Security noted as long ago as 1977:

"An inadequate diet before and during pregnancy may impair growth of the baby and put at risk the health of both mother and child". The Select Committee said:

"We do not believe that all the difficulties faced by mothers in feeding themselves during pregnancy result from lack of knowledge about good food, rather we believe that major difficulties arise from poor material circumstances and low income."

The Select Committee, which has a majority of Tory Members, went on to say:

"Our view is broadly no different to that expressed by one of the earliest commentators. In his report on poverty in York in 1899, Rowntree observed that if York was typical,`then the impediment to the rearing of healthy children is not the ignorance of the mothers so much or nearly so much as that the conditions of modern life do not enable them to supply their children with sufficient sustenance.'"

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That applies not only in 1899 but, unfortunately and disgracefully, in 1994. We seem to have spent 100 years coming full circle. The Budget does nothing to remedy the problem. The Government, therefore, have left young poor women on income support in a position where, as is widely acknowledged, they cannot receive adequate nourishment because they cannot pay for it.

The babies of those women are likely to be smaller. In later life, smaller babies are more likely to suffer heart trouble, diabetes and other problems. They will then call on the national health service, if it still exists, which is not certain with the machinations of the Conservative party. This matter affects not only women during pregnancy, but the entire life of the babies to whom they give birth.

The poorest mothers might apply for a maternity grant from the social fund. It has been frozen again at £100. The poorest mothers can receive only £100 to help them to pay for all their babies' necessities. Women on supplementary benefit in April 1987, when the Government were in power, could receive a grant of £187. In December 1991, it would have been worth £249. The maternity grant level for the poorest mothers would, I think, now be about £270 if it were based in the same way as the 1987 grant. Instead, they receive a measly £100 and it is frozen. No wonder Opposition Members talk about leaving our fellow citizens in poverty.

Government policy affects not only the food of the poorest mothers. Children born into poor families are likely to live in inadequate housing. Those families will suffer greatly from VAT on fuel. I agree with everything that has been said about the plight of the elderly, but it is not the whole story. Poor families with children also suffer from VAT on fuel. Children in poor, inadequately heated homes are contributing to the positive epidemic of respiratory illness among children.

The Government's response is not to improve those families' housing. They do not take any constructive steps in that regard. They make threats to reduce housing benefit. Hon. Members can read the gobbledegook of the Secretary of State for Social Security in Hansard . In one paragraph, he says:

"Rent officers determine whether rents are within reasonable market levels and help"--

that is help from housing benefit--

"is not usually available above that."

He said that people could receive help above the market rent in their region and went on to say:

"But in many areas, the market level is largely determined by those on housing benefit."

In the next paragraph, the Secretary of State says:

"New claimants and those moving home will be entitled to housing benefit for the full rent up to the average rent for similar properties in the area."--[ Official Report , 30 November 1994; Vol. 250, c. 1206.]

In the previous paragraph, however, he said that that was the existing position. All I can conclude from that is that the Government are waving threats about while they consider how to carry them out.

Many Opposition Members have regular experience of the fact that people on housing benefit in the private rented sector frequently have the utmost difficulty in receiving the full rent. They are told that it is too expensive. I always challenge the housing benefit office to find accommodation at a lower rent than that being charged to the person whose case I am dealing with.

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