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8.17 pm
Mr. Harry Barnes (North-East Derbyshire): The speech of the hon. Member for South-East Cornwall (Mr. Hicks) was very different from that of the hon. Member for Bridlington (Mr. Townend). It was not just that the hon. Member for South-East Cornwall made a constituency speech, but that he referred to equitable distribution and how that related to the income tax provisions. Those points were entirely absent from the speech of the hon. Member for Bridlington, and I found myself at the opposite end of the political spectrum from every point made by the hon. Gentleman in his speech.
I wish that there was greater honesty from the Government in our Budget debates in the House. I realise that, in politics, that may be a wild wish, but we seem to have moved into a dangerous era of news management. We have had a Budget statement and debate in which some of the priorities have not been referred to at length. We have spent a lot of time debating the extra 50 per cent. on strong cider that will raise £5 million, and we have almost passed over what is happening with regard to VAT. Only one brief reference was made to that matter, although there are some proposals in the Budget which are aimed to raise £600 million by altering the accountancy schemes that operate in the collection of VAT. That is quite important. Will the scheme function? We are talking about a large amount of money.
News management does not merely take place when the Chancellor is addressing the television cameras in here. When we get to look at documents relevant to the Budget in the Vote Office, we find that some are press releases that are intended as news management. The Treasury argues that the average family will be about
£450 a year better off and certain newspapers will pick up on that, but when one reads the qualifying remarks, one finds that it is talking about hoped-for economic growth, improvements in wages and other provisions and that that is what it is all about. Really, when one talks about the financial consequences of the Budget for an average family, if there is such a thing, one should consider the amount of money that will result from the Budget itself.
What was to be the Chancellor's final word on tax cuts?
That was what everyone was concentrating on. We discover from the Red Book that, all told, income tax cuts account for about £3.7 billion. More than half that amount comes from the avenues that the hon. Member for South-East Cornwall mentioned and from alterations in the bands and allowances. That is interesting because, if
we had had none of that, we could have had a tax cut of 2p in the pound instead, which was the headline that many people were looking for.
At least the cut in the Budget shows that the Chancellor is giving some consideration to other factors that need to be taken into account, although the Budget is generally entirely inadequate and inappropriate for our needs and does not do anything for investment and growth, as the Opposition Front-Bench team has said.
Where does that £3.7 billion come from? As I said in an earlier intervention, £3.2 billion is from the reserves. I do not want to over-egg the argument because there are some technical reasons why it is as much as that. Higher figures are given for reserves for the year ahead and the year ahead of that. As one moves into the fresh year, one always takes a certain amount of money out of the reserve, but it is a fact that, at the time of the autumn statement in November 1992, the contingency reserves stood at £4 billion and they are now down to £2.5 billion. Those reserves are gradually being raided and we may be in a precarious position if some of the other items contained within the Red Book do not function properly.
That is a serious consideration and it seems to have been recognised in a number of contributions tonight. People realise that that is where the money is coming from. If all of it has not come from raiding the reserves, at least a part of it--the tax cuts--has, and I do not think that that is a healthy position for us to be in, especially as some of the rest is expected to come from tackling social security fraud. Hon. Members have already expressed doubts as to whether it will be tackled to the extent indicated. So there seems to be something economically dodgy about balancing the amounts.
On the equity considerations, the arguments expressed by the hon. Member for Gordon (Mr. Bruce), the Liberal Democrat spokesman, are important. We have been told that local authority expenditure on education will increase by something like 4.5 per cent., which is an increase in monetary terms. When we take into account inflation rates, it becomes an increase of about 1.25 per cent. The problem is that the latter figure is then tied in with the local government figure. We are told that local government expenditure will increase by 3.3 per cent.-- just a little ahead of the inflation rate--so there will be no increased money for local government, although education has been granted that increase in expenditure. Cuts will therefore have to be made in other areas.
In one area--the fire brigade--equity runs in favour of Cornwall and not Derbyshire. The length of coastline is taken into account in the formula. Cornwall has a considerably longer coastline than Derbyshire, which is in the middle of the country and so has no coast at all. On grounds of equity, it seems that that arrangement should be altered.
It is little wonder that some money is being found for education, given the organisation, petitioning, lobbying and demonstrations with which parents, children and teachers have been involved. They have got some response. As always with this Government, however, when one gets a response in one area because of pressure, there have to be cuts in other areas--often areas of considerable need.
In Derbyshire, we have considerable problems in other areas, such as social service provision. I believe that tomorrow we will hear an important statement from the
Secretary of State for the Environment, which concerns district councils and will be of vast importance to Derbyshire. The problem is not only the size of the total bill and whether it is being raided in areas other than education, but the massive problem of the avenues of distribution, which is of considerable importance in Derbyshire.
North-east Derbyshire has one of the worst-funded district councils in England per head of population. It is unbelievable when one considers the nature of the area. I know how it works because I know something of the nature of the formula that operates. It is a fiddled formula and happens to hit us from all directions.
Sir Andrew Bowden (Brighton, Kemptown):
There is no question but that the Chancellor presented a highly responsible Budget yesterday in the face of a propaganda campaign conducted by the official Opposition in which they claimed that everything that the Government have done and said in the past six months was designed purely to provide massive sums of money for huge--and irresponsible--tax cuts. Yet again, they have been shown to be totally wrong. I hope, however, that the Chancellor will be able to follow it up in the very near future with a significant cut in the interest rate.
On education, we must be careful to recall that we are talking about expenditure in the next financial year. There is every prospect that, in that financial year--beginning April 1996--the inflation rate will not be in excess of 2.5 per cent. That means that the increase in expenditure on and money made available for education will be nearly double the rate of inflation. Local authorities will certainly be able to maintain services in their areas and, in many cases, they will be able to improve them.
In East Sussex, which covers my area of Brighton, the settlement exposes the hypocrisy of the campaign organised by the controlling political parties on East Sussex county council, which have been going around Brighton and the county saying that, within the next three financial years, there will have to be massive cuts in expenditure on education. They were talking about
£24 million pounds. Such a cut was never going to happen and the new announcement of the money that is to be available has shot the campaign to pieces.
Unfortunately, many parents were seriously worried and upset by what I can only describe as a scandalous campaign. We now need a community campaign in East Sussex and Brighton conducted by parents, school governors and teachers to ensure that that additional money is spent in the county's education budget. Without one, I suspect that the county will find excuses for not doing so.
I want now to deal with pensioner issues. I warmly welcome the proposals on long-term care. They will give many families more financial security and greater peace of mind. The director general of Age Concern England, Sally Greengross, stated:
The Government have said that they are preparing a consultative document on some of the problems of long-term care. I hope that that document will contain a range of proposals and possibilities so that there can be widespread consideration of the options. I hope that the document will include the possibility of people being able to buy equity in residential homes and/or to purchase a room in a residential home. That would help many people to preserve part, if not all, of the capital derived from the property that they owned and, when they died, the proceeds of selling their equity or room in the residential home could be passed down in the family.
There are two groups of pensioners that concern me deeply. There are those who do not claim income support when they could and those who have a few pounds a week above the income support level. Many of them will be worse off than people in receipt of income support. We have not yet found a way of giving the help and support that we should to those sections of retired people.
I am upset with one thing in the Budget--the Government's decision to cut the home energy efficiency scheme. Until the Budget, it was open to pensioners as a whole. Now, as I understand it, it will be limited to those on income support. That will create hardship and difficulties for those who do not claim income support when they could and for those who have only a few pounds a week above the level of income support. I submit to the Government Front Bench, with great respect, that that should be carefully reviewed. I hope that the decision will be reversed.
"Older people who are worried about paying for care will be delighted to hear the proposals in regard to the capital limits for residential and nursing home care."
That is indeed a major step forward, but it is just the first step.
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