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9.40 pm
The Economic Secretary to the Treasury (Mrs. Angela Knight): First, I congratulate all those hon. Members who are still here late on Thursday night when Parliament is not sitting tomorrow. We certainly had some
interesting contributions in the debate, some considerably more factual than others. I thank my hon. Friends for their factual contributions.
The Government's overall economic objective is to promote sustained economic growth and higher living standards. This Budget concentrates on securing Britain's healthy, lasting recovery. It reduces unemployment, continues to reduce borrowing, lets people keep more of the money that they earn and spends money on the things that are important to them. It looks particularly to the education of the young, the job prospects of the working population and security and safety in old age. It continues to offer the best prospect that British people have faced for decades, which is to enjoy the benefits of growth. It is a Budget of substance.
My right hon. Friends the Members for Worthing (Sir T. Higgins) and for Northavon (Sir J. Cope) and my hon. Friend the Member for Gravesham (Mr. Arnold) expressed concern about some of the headlines in the newspapers the day after the Budget. They should not worry about that. Headline writers will always have a field day. They have had one with this Budget, but a headline in the newspaper is like a soundbite from the Leader of the Opposition; it lasts 10 seconds, but for content we have to look elsewhere.
The debate was opened by the right hon. Member for Derby, South (Mrs. Beckett), with what I felt was a snippy little speech. She went through her normal arguments against privatisation. She argued against the £90 electricity rebate that customers will get. She forgot to tell people that when those industries were nationalised, they cost the taxpayers £50 million a week; now, they contribute £55 million a week into the public purse. She forgot to say that when British Steel was nationalised, it was one of the biggest loss makers of all time; now, in private hands, it is profitable and a world leader. She even gave us a harangue against North sea oil. She did not mention the fact that Rolls-Royce in Derby has won a contract for over £1 billion for engines.
The speech of the right hon. Member for Derby, South, I submit, in no way represented the views of industry. Let us look at some of the views of industry. Mr. Archie Norman of Asda said:
We heard criticism in the Chamber tonight of the private finance initiative. However, Labour seems to have little knowledge of the PFI and does not know what to think about it. The hon. Member for Edinburgh, Central (Mr. Darling) said:
Labour is one party with two faces and two voices, and it is facing in different directions at the same time. Before Labour Members say one word more about the private finance initiative, I suggest that they go and look it up, find out what it is and see the projects that have been signed up.
The hon. Member for Swansea, East (Mr. Anderson) made a thoughtful speech. One of his concerns was that council taxes would go up. There was something extraordinary about his argument, because he seemed to forget that he and so many members of his party are in favour of no capping at all on local government. His party's proposal would simply result in people paying far more than they do now for local services.
I enjoyed the speech of my right hon. Friend the Member for Northavon. He is an experienced accountant and we all found very interesting the convolutions that he highlighted. I look forward to his contributions to the report on tax simplification, which I am sure will serve the Government and other accountants well.
The hon. Member for North Devon (Mr. Harvey) made a number of points, and I should like to pick up on two of them. He expressed concern about social housing. I assure him, however, that housing continues to benefit from substantial public capital investment. We are planning to spend more than £1 billion a year through the Housing Corporation and on housing association properties and, indeed, through the private finance initiative, which will bring new opportunities to housing and the construction industry as a whole. The Government have a target of a further 1.5 million home owners in the next 10 years. I hope that he is satisfied by those comments.
The hon. Gentleman's second point related to education. Education is the cornerstone of much of the Budget, and spending on schools is a top priority. The additional cash will be channelled through local authorities. My colleagues and I expect the local authorities to pass the money into the schools.
Having spent some years in local government, I am well aware of the complexity of the formulae that many local authorities use and of how they use that complexity to frighten parents. Many parents have been greatly worried about their schools' budgets. Many local authorities talk about cuts, but to give an example, it works like this: the reality is that it is a cut in a wish list. Thus, Madam Deputy Speaker, if you, for example, wanted a salary increase of £500 and received only £250, you would have a pay increase of £250. A local authority, however, would say that it had a £250 cut. That is the fallacy of the local authorities' argument. That is why their language is so wrong and why parents get so upset. It is why every hon. Member must get all the parents to ask their local authorities how they propose to spend the extra money for schools on their children.
I know that the hon. Member for North Devon at least has a policy. His party has a policy for a 1p increase in taxation for education. However, we have looked at his
shadow Budget, which contains about £6 billion of extra expenditure. That is apparently going to be paid for by tax changes--they are not called tax increases--of £1.1 billion. Another item is tax reform to the tune of £900 million. In his shadow Budget, the hon. Gentleman has £6 billion of extra spending, which is to be financed by £2 billion from extra taxes, all brought about by a 1p increase in the basic rate. It is as confusing a mess as I have described it. We therefore have to take what he had to say with a great pinch of salt.
My hon. Friend the Member for Bristol, North-West (Mr. Stern) spoke about the PSBR and made a number of detailed and complex points. Would he care to come and talk them over with me at a later date rather than in the Chamber tonight? I understand only too well his concerns about the need to reduce the borrowing requirement, and I agree that we should pull it back as fast as possible. He should not compare us too harshly with many of our European competitors, as we are the only country that has dealt with the pension problem properly. The finances of Germany and France show that if they do nothing about their pension schemes, their national debts will be about doubled. He should not have too many fears, as we are taking the right and prudent steps.
I apologise to the hon. Member for Sherwood (Mr. Tipping)--I nearly called him my hon. Friend, as more often than our respective Front-Bench teams would like, we agree with each other on our local radio station-- for not being present when he made his speech. I understand that he talked at some length about green issues. The Budget contains a 15 per cent. reduction on duty on road fuel gases. I hope that that will at least go some way to meeting his concerns about green issues.
The hon. Member for Barnsley, West and Penistone (Mr. Clapham) spoke about unemployment. I looked at the figures for his constituency, where unemployment has fallen by 11 per cent. compared with this time last year and by more than 20 per cent. compared with the end of 1992. I am sure that he, too, welcomes the general fall in unemployment in this country and the fact that the number of people in employment is now higher than it was in 1979.
In an enthusiastic speech, my hon. Friend the Member for Beverley (Mr. Cran) touched on many important points, of which the housing market was one. I am grateful for his comments. Average mortgage repayments are now about £180 a month. I do not think that many people would be able to rent a similar property at that price. My hon. Friend also mentioned the considerable need to look at long-term care issues. I hope that he feels that the changes that we have introduced in the Budget relating to the increase in disregards, the assistance for elderly people in general and, specifically, the tax relief on care insurance will go a long way to meeting not just his concerns, but those of prudent, elderly savers.
I understand that my hon. Friend the Member for Bury St. Edmunds (Mr. Spring) is the owner of a vintage car, a betting man and no doubt likes a glass of whisky. I am therefore not too surprised that he had so much praise for the Budget. He rightly said that we are in a global economy, and he strongly supported Britain's aim to be the enterprise centre of Europe--a point also raised by my hon. Friend the Member for Croydon, North-East (Mr. Congdon). He also mentioned lower interest rates-- his views will probably have been heard by my right hon. and learned Friend the Chancellor. But if my right hon.
and learned Friend missed them, I shall pass them on to him later--I am sure that they will also be passed on to the Governor of the Bank of England.
Low inflation and sound public finances are not an optional extra; they are necessary for a successful, expanding economy. Low inflation is essential because when inflation was high, it was the saver's enemy, the silent thief who stole the value of the pension. High inflation closed factories and took away jobs. That is why we have the 2.5 per cent. target. Underlying inflation has not been so low for so long since I was 11 years old. Compare that with 20 years ago, when inflation was running at 26 per cent. and it wiped out my grandfather's pension. That is why it is essential that inflation is low, and that is why it is one of our overriding aims.
"We are delighted. It is a bullseye."
One of the major construction companies said:
"The Chancellor is on the right track and the measures he has put in place provide the best prospects for the UK building industry."
An assistant in a clothing and footwear shop said:
"The Chancellor has listened to the small people . . . it's brilliant news."
The chairman of ICI said:
"I welcome the direction of the Chancellor's policy in reducing public spending and cutting taxes in a fiscally responsible way."
That is what industry said of this Budget. It has given the Budget a very big thumbs-up.
"Labour believes that the initiative has to be given fresh impetus",
but the hon. Member for Peckham (Ms Harman) said that the PFI is
"a raft for a sort of ramp for privatising".
The Leader of the Opposition says:
"We would get public and private finance working together in transport, in housing, in health and education",
but the right hon. Member for Derby, South says:
"Market testing represents creeping privatisation. As does the Private Finance Initiative."
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