| Previous Section | Index | Home Page |
7.15 pm
Mr. Nick Harvey (North Devon): If I said that the Budget was a missed opportunity, I would mean something very different from the many Conservative Members who might share those sentiments, judging by the picture of their faces as the Chancellor sat down at the end of his speech. I noted with interest that two Conservative Members declared surprise at the reactions in the newspapers the next morning, but if they had had the advantage of viewing the body language, faces and expressions of hon. Members on the Government Benches as the Chancellor sat down, and had been able to contrast those with the expressions on the faces of hon. Members on the Opposition Benches, they
would have understood only too clearly why the editors the following morning also saw it as a missed opportunity for the Conservative party.
But my meaning is rather different. The right hon. Member for Derby, South (Mrs. Beckett), who spoke for the Opposition, rightly and with great precision outlined the vast sums that have been blown by the Government in recent years. In particular, she catalogued the proceeds of the privatisations and added them to the North sea oil revenues, quoting both at current day prices and pointing out that they had not been used in a prudent way or to invest in the longer term. I find it remarkable that the Conservative party, which has often lectured us about the merits of good housekeeping, has found it fit to squander that money, not on capital expenditure, not on investment for the future, but on an orgy of current expenditure, most notably in the consumer boom of the late 1980s and also to fund tax cuts, which time and again have been reversed afterwards by one means or another.
When one looks at the overall state of the nation's finances, as quoted in the back-up figures to the Budget, one can see that public sector borrowing is vastly higher for the current year and for the next than the level that was quoted just a year ago in the Budget. The Government are borrowing more heavily, not to invest in the future, in capital expenditure, but to pay for the tax cut that they have used as a gimmick, which they had hoped would be of some political benefit and a salvation to them.
Another disappointment of the Budget is that some of the areas of expenditure that have been cut--which, perhaps, have not yet been highlighted to the extent that they deserve, but which will emerge over the coming weeks and months--will in some cases prove very damaging. I should like for a few moments to highlight new house building. It can be seen from the Budget that new house building will be cut in the coming year. The Government originally promised that there would be £1.5 billion for new homes next year. That has now been cut to less than £1.1 billion. So the number of new homes that will be started will drop by more than half--from 76,000 to 41,000. When one looks at what the Government's own figures suggest will be the need for new housing during the coming year, one can see that the total number of lettings that housing associations will be able to undertake--both the new build and the other forms of housing that they are able to make available--will be around only half of what the Government acknowledge could be needed in the coming year.
Of course, as well as the impact on housing provision, it is well known to all hon. Members that the number of people out of work in the construction industry remains alarmingly high. It is down somewhat from the high of 500,000, but is still unacceptably high. All those people have to be paid benefits and are not contributing anything back in the way of tax revenue to the Government. That is costing the nation a great deal at a time when there is a need for new housing.
In my region, the south-west, the number of houses that housing associations can start next year will fall from nearly 7,000, as the Government first promised, to
about half that figure--3,500. Not only will unemployed construction workers in mine and the neighbouring constituencies not be given the opportunity to get back to work and do something useful, but many of my constituents who are in need of housing will not have that need met. That is not unique to my area or to north Devon. A survey of Members of Parliament showed that housing was singled out as the biggest issue in Members' postbags. Two thirds of Conservative Members and all Labour Members agreed that there was a shortage of available rented accommodation in their constituencies.
A heaven-sent opportunity to deal with that serious problem is being wasted so that money is available for a tax cut in the Budget. That is very nice for those who are in a position to enjoy it, but it is not of much benefit to those on low incomes who do not even pay tax and are without homes. The Budget could have done something concrete to promote house building and tackle that problem.
Much has been said about the private finance initiative. House building is one of the areas in which it has been deemed to be a success. It has been possible for housing associations to attract private funding to match pound for pound the public moneys that they have been putting into new house building. In addition to the £450 million of public funding that will be lost, a further £450 million of private funding, which could have been attracted through the PFI, will also be lost. That is nothing short of a scandal and it is one of the several stories that will emerge after time and after people have had the opportunity to look at the finer print of the Budget and see some of the real damage that is going to be done in many parts of the economy to pay for the 1p tax cut.
This afternoon, there have been discussions about measures to help businesses and small businesses. There have been some in the Budget and it would be churlish not to acknowledge them. None the less it remains a fact that all those referred to are too modest. It is welcome that employers' national insurance is down from 10.2 per cent. to 10 per cent., but this hardly seems to be the occasion to raise the flags and celebrate. It needs to go a good deal further than that.
Further relief against the increases in business rates for small businesses is welcome, but even after that many small businesses in the south-west and elsewhere will find the rate that they are expected to pay cripplingly high and a major problem as they try to steer their way out of the recession. There can be few regions of the country that have suffered quite as badly on the business rate as the south-west.
The fact that small firms will also face a lower corporation tax bill in the coming year is also welcome. While the small increase in the value added tax threshold is welcome, however, many small businesses are desperate for fundamental reform of the VAT system. I do not pretend for one moment that a magic wand can be waved to put that right automatically, but some acknowledgement by the Government that much further reform of the system is necessary would be welcome.
The right hon. Member for Worthing (Sir T. Higgins) chose to refer to the moneys which, during his speech on Tuesday, the Chancellor led everyone to believe
would be available for education in the coming year. Education should be a top priority for investment because it is unquestionably investment in the future. If we are to tackle the long-term spiral of decline, there can be no better way of setting about that task than bringing about real improvements in our education system and in the facilities in which those working and learning in the system find themselves trying to cope every day.
On hearing the Chancellor's remarks, I like many others genuinely thought that he was making £878 million of new money available to education, of which £770 million would be channelled through the local authorities. Like everyone else, on studying the finer detail of the Budget, I was surprised to find that the central Government settlement to local authorities for the coming year is to increase by a mere 3.3 per cent., which is broadly in line with inflation, and that the money that was supposedly being earmarked for education does not exist.
Local authorities are invited to spend that additional money on education, but are not given the means to do so. They have to make a choice. They either cut other services that they are responsible for providing, which means that they will have to cut road repairs, libraries and personal social services, which are already strained to the limit as they struggle with the task of implementing the community care programme; or, if they cannot find any way of cutting other services, they will have to raise the council tax to pay for the education package.
It is interesting to find in the Red Book that the Government anticipate as part of this Budget that councils will have to increase council tax by three times the rate of inflation. When councils set their budgets next April and May and find themselves driven to do so, one can confidently anticipate the cries from Conservative Members who receive letters from constituents complaining about the rise. They will say,
"Look at this. Liberal Democrat and Labour councils are increasing the council tax." They will not be able to point to any Conservative councils doing it because there is none left.
People must understand that that is what the Conservatives have been anticipating from the word go. The whole thing is an elaborate deception. They have given the impression that the money is there, but it is not.
Mr. Stern:
The hon. Gentleman claims, with what justification I am not sure--my hon. Friend the Minister will make that clear in her reply--that it is assumed that the council tax will rise by a rate three times higher than inflation. As a citizen of Bristol, I can tell him that if the council tax were to rise by a mere three times the rate of inflation, it would be a blessed relief to the citizens of that city.
| Next Section
| Index | Home Page |