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Mr. Deputy Speaker (Mr. Michael Morris): Order. I remind hon. Members that Madam Speaker has ruled that, from now on, Back-Bench speeches are restricted to 10 minutes.
7.12 pm
Mr. Jim Cunningham (Coventry, South-East): I was interested to listen to the debate yesterday and today.
As some of my hon. Friends pointed out, council tax payers will bear the brunt of the so-called "1p reduction" in income tax. I am sure that many people will be alarmed at that proposal because they will fear for the services provided by local authorities. It has been suggested that extra money will be provided for education, although it has not been made clear whether that will be ring-fenced, so people in local authorities will be extremely worried about the Budget's impact on their jobs. It will threaten jobs, from teachers to cleaners. Even before the Budget, local authorities in some parts of the country, especially Coventry, had already started looking at jobs, pay and conditions. That did not bode well for lower-paid
employees, or the education service and other services. So I imagine that many people in Coventry will be alarmed about this Budget.
The Budget did not do much for the unemployed, and I saw no reference to investment in young people. Rather, it contained punitive measures against young people as benefits will again be cut. Once again, young people are the whipping boy. One-parent families and old-age pensioners will also carry the brunt of this Budget.
Over a period of years, the Government encouraged many people, particularly young people, to take out mortgages. Unemployment now threatens their ability to pay those mortgages. Worse, the Government, who say that they support a property-owning democracy, have cut mortgage relief over the past two or three years. If one goes further down that road one notices a little thing called negative equity. The Government have hung a millstone round the necks of many young people who want to own their own homes, yet they call themselves the Government of hope.
Much has been made of the new initiative, which is actually an old initiative--it has certainly been around for a number of years--called "city challenge". I had always thought that the scheme was designed for the inner cities. The problem is that it is a lottery, so it will not tackle some of the major problems of the inner cities as the Government claim. On the contrary, leaders of city councils may have to wait 10 years before they see results using that method of pouring money back into our inner cities.
The Government have also made great play of the fact that, over the next two or three years, they will employ 5,000 extra policemen. When that figure is broken down, one sees that cities like Coventry will be lucky to have between 10 and 15 extra policemen. We need more than that to tackle some of the crimes committed in parts of the inner city that I could mention. Ministers have come to Coventry and insulted parts of that city and its population.
The Government propose to cut some £2 billion from the social security budget. Given that £3.5 billion has been cut over the past two or three years--the past two or three Budgets must be taken together--it means that £5 billion or £6 billion will have been taken from the social security budget.
The Conservatives claim to want to help the poor and say that they are the compassionate party, but over the past two or three years they have cut housing benefit, which does not help one-parent families, the poor or the homeless. One has only to talk to people who work for charities in any major city to find that, rather than assist organisations like Shelter, or the Cyrenians in Coventry, the Government have cut resources for staff which those organisations badly need. Those organisations not only house the homeless but deal with people with drugs problems. The Home Secretary said that he intends to set up a special task force to deal with drug abuse. If we leave out MI5, that task force must be funded, but there is no reference to it in the Budget.
The Budget does nothing for industry or to expand our industrial base. Conservative Members often talk about wealth creation, but when it comes to putting their money where their mouths are, they do nothing to help industry, which is crying out for help. It is no good simply tinkering
with small measures like corporation tax. The Government must come to grips with the needs of industry, which include money for research and development, and for training. Where will future generations go to learn their skills? The Government have no proposals on that.
Mr. John MacGregor (South Norfolk):
For the record, I have declared in the Register my outside interests, although I do not think that anything I shall say will have a direct impact on them. I congratulate my right hon. and learned Friend the Chancellor on his wise, shrewd and balanced Budget. He is right not to take any risks with inflation or interest rates. The tax reductions have been shrewdly chosen and have many good targets, and I support the priorities of education, health and the police.
There is much that I should like to say, but in view of the time limit I shall confine myself to a few comments. I particularly draw attention to the measures for retirement incomes and the provision for long-term care. We all know the issues--demographic patterns and the fact that people living longer creates health problems in later life-- and we all know about the high cost of community care. That may become one of the most potent political issues over the next 20 years.
The Chancellor has started to tackle the short-term problem of the feelings of many people who have saved throughout their lives only to see their savings eroded to meet the cost of community care in residential homes. The cost of that may also include the family home. Therefore, I warmly welcome the increase in the capital thresholds from £8,000 to £16,000 and from £3,000 to £10,000. That will bring relief to many people with modest savings. Many such people spoke to me while I was making speeches on that issue in various parts of the country.
The perception that the family home may have to be sold worries people. That does not always happen, but frequently it does and in due course I should like to see the family home exempted from the needs calculation for meeting the cost of retirement care. At least the Budget has introduced a good measure.
In the context of short-term issues, I welcome the reduction on savings incomes to 20 per cent. for basic rate taxpayers. It will affect mainly retired people because they are the people with building society deposits and a small amount of equities. The significance of that measure is
shown by the actual cost in tax relief, which is £800 million. It is a significant measure that will help many retired people, but the long-term problem is much more formidable. It is essential to start to tackle the issue by encouraging many more families who can afford it to start saving through personal pensions and long-term insurance schemes--not just through TESSAs and PEPs--to meet the cost of retirement care.
At the moment, only 10,000 to 15,000 insurance schemes are being taken up but I have no doubt that in the next 20 years there will be a much greater need for such schemes. That means introducing tax relief measures to encourage people to save more. I am delighted that consultation documents are to be produced and that a couple of measures have already been suggested. A range of options is possible and I hope that over the year ahead we shall introduce them. An important actuarial point is that the earlier people start to save, the less they need to pay and the more benefits they will receive at the end of the day. Every year lost in encouraging people to take out policies for retirement care is a year lost for many families. Through tax measures and constant education, it is necessary to change the culture among the younger generation towards this issue, because it will have an impact on them. I am glad that the Budget took a step in that direction.
The second issue also relates to savings and I shall couple it with the Chancellor's remarks about the need for tax simplification. That does not just mean explaining tax measures to make them simpler for professional advisers and the public at large. We need to simplify the underlying structure of the system. In that respect, I should like to highlight capital gains tax. I welcome what has been done about inheritance tax and I hope that capital gains tax can be tackled next.
The right step on capital gains tax is not to abolish it altogether because there is a real issue in terms of the early years. The right approach is to taper capital gains so that the assets and the capital gains move quite swiftly, say within seven years, out of the tax system altogether. That is a much simpler way to deal with the issue than the current one and I hope that the problem can be tackled.
The third issue relates to the expenditure plans and it is the source of some disappointment. As a former Chief Secretary, I am fully aware of the difficulties that face any Government every year. I have been in several spending Departments and on the other side of the table, and I understand all the issues. I congratulate the Chief Secretary on his reductions in the overall expenditure plans this year, although part of the contribution is from the contingency reserve. I am sure that he will be very tough on that reserve in the year ahead.
I support the plans for education, health and the police and it would be churlish of me to single out the area in which I am critical of what has been done. Nevertheless I shall do so to highlight it for the years ahead; it relates to the roads programme. I strongly support the private finance initiative on roads and the concept of design, build, finance and operate. I started them and thought that they would be important in the years ahead. I hope that in due course motorway tolling can be linked to them to produce resources that will enable us to ensure a significant future roads programme. However, I do not think that the PFI and DBFO will be enough over the next three or four years.
A substantial number of road projects have been cut as a result of reductions in the programme. That worries me, partly because all over the country there is a need for more bypasses for environmental and other reasons, to relieve towns and villages that are hard pressed by traffic, but also because if we do not maintain a decent roads programme, congestion costs on businesses and the economy will start to grow again. Of course, a cut in the programme also has an impact on the construction industry.
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