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Mr. Peter Bottomley: I do not wish to anticipate the hon. Member's speech, but is it not perverse that the increase in the duty on spirits led to an income for the Treasury that was £53 million lower than it excepted? The Government were not just defeated on the rate of VAT on fuel, but also by the increase in duty--and consequent reduction in Treasury income--on whisky and other spirits.
Mr. Chisholm: I have to agree with the hon. Gentleman. I also agree, unusually, with Adam Smith on that point. He said that one often reaches a point at which revenues go down. If taxes are too high, they encourage smuggling, people buy less and we end up with less revenue. I think that revenues from spirits were £62 million lower in the first five months of this year. Perhaps that was the main fact that influenced the Chancellor.
I do not mind what influenced him. He certainly moved duty in the right direction. I should have liked to see more done in terms of alcoholic content. Whisky is taxed at twice the rate of wine. The excise duty on whisky should continue to be reduced. I should like to see it reduced by, say, 4 per cent. a year until it was equal with duty on wine. However, so far as it goes, I welcome the reduction.
The whisky industry is a massive industry in the Scottish economy. It is the biggest net exporter, and a massive employer. Some 15,000 to 20,000 people are employed directly by the industry, but there are another 40,000 related jobs. The materials for the whisky industry are from Scotland or the United Kingdom in general rather than imported. It is an important industry. I am glad to be able to welcome something, even though I would have liked the Chancellor to go further.
Many of the other tax changes give with one hand and take away with the other. A good example of that is the emphasis on the private finance initiative, which in many ways we support. We should like to make it work better. Howeber, the Government are using it as a cover for reductions in vital capital expenditure. The Chancellor openly admitted that the Government were reducing capital expenditure programmes.
For example, the health capital programme for England will be reduced by 17 per cent. They are trying to fill the gap with the PFI. It is by no means certain that the gap will be filled, because the Government's promises so far about the PFI have not come to a great deal.
The Financial Secretary to the Treasury (Mr. Michael Jack):
Does the hon. Gentleman believe that the announcement today of a £35 million project for a new hospital for the South Buckinghamshire and Amersham health authority is illusory, or a real illustration of just how well the PFI can work?
Mr. Chisholm:
Obviously, some money has come from the private finance initiative. It is not illusory. I am aware of the PFI in health. In Edinburgh, a project for a hospital costing £100 million is out to tender. We also have an extension to the Western General hospital for
£60 million. I have serious concerns about the PFI in health. The Health Secretary said last week that it would not affect clinical services, yet in Stonehaven in Scotland, a whole hospital, including clinical services and everything else, is being put out to the private sector. In general, I support the PFI, but I do not support its use in the health service, except under strict conditions.
Dr. Lynne Jones (Birmingham, Selly Oak):
Earlier today, I had a meeting with the chair and chief executive of one of our local hospital trusts. They expressed great relief that their capital investment was more or less through the pipeline, and they would not be caught up by the bureaucratic mess that is the private finance initiative. We have to consider the long-term cost. Private business which puts up the capital will expect a return on its investment. That will create greater debt servicing costs than straightforward public sector borrowing.
Mr. Chisholm:
I thank my hon. Friend for that point. The on-going costs are fundamental to the PFI in the health service. Over time, it will be more expensive to pay for the lease of a building, and that will have effects on patient care because it will affect the revenue budgets. I have serious anxieties about the PFI in the health service. The Chancellor talked about delays in traditional capital expenditure programmes, yet the long-drawn-out tender process of the PFI creates the most enormous delays. There are many problems connected with it.
Another example of giving with one hand and taking away with the other is in local government expenditure. It is widely believed that the council tax will rise way beyond the rate of inflation to cover some of the cuts that have been made today. Promises were made about two specific areas of expenditure that affect local authorities-- the police and the education service.
We do not yet have the Scottish details. The situation in Scotland is different from that in England. In Scotland, it will be difficult for local authorities to put more money into schools or policing if their general
allocations from central Government are cut. Certainly, in Scotland, local authorities receive a general block of money for such services, and it is up to the council to do the best it can.
I feel that the promises will turn out to be deceptive in Scotland, and that may well be the case in England, too. I am told that a promise of 1,000 extra police in England was made three years ago, and we now have 1,000 fewer police than in 1992. We shall wait and see, with some scepticism.
There were slight tax reductions in the Budget today which will be welcome to people, but they do not compensate for the tax rises that they have put up with during the past three years. Although there are some slight improvements in the tax situation, there are no improvements in the general economic situation. That is our fundamental concern as we look forward.
Ms Diane Abbott (Hackney, North and Stoke Newington):
We are approaching the Christmas pantomime season. I hope to take my son James to see Cinderella at Hackney Empire. As the Chancellor reached the climax of his speech and his announcement of 1p off income tax, we felt like shouting, "Look behind you", as if we were a pantomime audience. His colleagues massed on the Benches behind him looked gutted. A desperate Tory party had been looking to the Chancellor to bribe the electorate with ludicrous cuts in the basic rate into voting Tory at the next general election. We could see from their faces that they did not believe that 1p off the basic rate was enough.
Nothing would be enough to drive the British people to vote for this discredited Administration one more time. People have only to look around them to see what has happened to manufacturing industry, to see the rise in unemployment, to see job insecurity, to see hospital closures and to see what has happened in education. Nothing will be enough. Yes, Tory Members looked gutted.
I intend to draw attention to some of the more cruel and inhumane aspects of the Budget. First, it is astonishing to hear the Chancellor and Tory politicians talk of cutting housing benefit for the under-25s, as though people of that age leave home on a whim, or as a casual act.
Hundreds of thousands of young people leave home, often because they face terrible overcrowding. In my constituency, it is not unusual for families of five, six or seven to be crowded into two-bedroom council flats. Grown boys and girls in their 20s might share a bedroom. Many young people under 25 are forced to leave because of severe overcrowding in the family home, particularly in inner cities.
It is well known to those who deal with the single homeless that many young people leave because they are being physically or sexually assaulted, the family has split up or there are tensions and stress. It is irresponsible for the Chancellor to fashion his policy on housing benefit as
though the under-25s are leaving their family homes on a whim and only slight tinkering with financial incentives is necessary to change the pattern.
As a direct consequence of cutting housing benefit for the under-25s, many more people in that age group will find their way on to the streets and into a floating life in hostels. Those who read the accounts of the Rosemary West trial will realise how easy it was for young, homeless, hopeless people to be drawn into the life there and to disappear. No one knew where they had gone or cared what had happened to them. This cut in housing benefit for the under-25s can only feed that stratum of society. Young people with no jobs, hopes or strong family connections will be left to drift without the means to build a life for themselves. It is a particularly cruel and unfair cut in social security.
On the cuts for lone parents, the Government say that the right approach to lone parents is to give neither preferential nor adverse treatment. That is all well and good, but the measures in the Budget amount to adverse treatment. Of course it is more expensive for a single parent to bring up a child than it is for two people. There are all sorts of extra costs, be they fuel or child care.
My hon. Friends have welcomed the increase in the child care allowance, but the allowance is taken up by only 23,000 families and it is not available in respect of children over 11. What on earth is a mother to do with children of 12, 13, 14 or 15? Leave them at home without child care, I suppose, and then get done by The Sun for leaving them "home alone". The child care allowance is a little step forward, but whittling away one-parent benefits and the lone parent premium are acts of pure political vindictiveness and spite.
The Chancellor announced with pride the cut in allowances for refugees and asylum seekers. What that means is that, come 8 January, literally thousands of people in London--families with children--will be without means of support. I had to step out of this debate for a short time to take part in a meeting in which refugee organisations were planning to set up soup kitchens and other means of supplying the basic needs of people who will be without means of support on 8 January--all to enable the Government to amass money for tax cuts.
We heard much about the private finance initiative in the run-up to the Budget and today. The P in PFI stands in my view for pure wishful thinking. How can the Chancellor talk of an illustrative list of 1,000 projects worth more than £25 billion in his Budget speech? What is such a list if not pure wishful thinking?
It is a fantasy to imagine that the private finance initiative is some magic way to provide, at no cost, more money for capital programmes. The initiative is perhaps appropriate for certain types of public investment in which there is a natural revenue stream, such as transport. As a colleague said, however, private finance means that the private sector will want some sort of revenue stream in return. I cannot see how, if the private sector has to borrow the money more expensively and is looking for a revenue stream in time, the initiative can turn out to be cheaper than public sector funding.
The Financial Secretary to the Treasury, the hon. Member for Fylde (Mr. Jack), seems to be nodding. He is very attached to the private finance initiative. We will wait
for the big Jack launch tomorrow, but, like all the Government's private finance initiatives, it will consist of the Government's announcing the same scheme--as they do year after year. It will not prove as simple as the Chancellor imagines to push many of them through the pipeline. The initiative is not appropriate to large areas of public expenditure and will not produce concrete schemes.
On that elusive factor that the Chancellor's Budget was supposed to generate--the feel-good factor--I note that the Financial Secretary to the Treasury has a constituency in the north of England. He might not be aware that what has happened to the housing market is the biggest single element underpinning the lack of such a factor in London and the south-east.
It is interesting that, in successive Red Books, the Government have tried--whistling in the dark--to claim that an upturn in the housing market is just around the corner. In last year's Red Book, we were told:
"On balance the housing market indicators point to renewed recovery."
In this year's Red Book, we learn:
"House prices are 2 per cent. lower . . . while turnover is over 13 per cent. lower."
When the Government predict the same modest housing market recovery this year, we know what weight to give it.
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