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9.19 pm
Mr. Peter L. Pike (Burnley): Five minutes are available to me so I shall have to be brief. The hon. Member for Carshalton and Wallington (Mr. Forman) spoke about the possibility of a windfall tax and gave his reasons for opposing it. There is a strong argument for such a tax and I shall certainly support the Labour Government when they introduce it in a year or 18 months from now.
Almost all the privatised utilities are monopoly suppliers with protected rights to make profits because of the way in which the legislation was carried when they were privatised. For example, the profits of the water companies are assured by the formula and despite recent interventions by the regulator they cannot fail to make substantial profits. National Power and PowerGen work within the pool system and the great fluctuations in prices in the pool result in grossly inflated profits.
My hon. Friend the Member for Pendle (Mr. Prentice) asked who gets the £9 a week about which the Government, the Chancellor and the chairman of the Conservative party talk. We saw the chairman of the Conservative party on "On the Record" speaking about that yesterday. Few of my constituents will get anywhere near that amount from the Budget. Because of the single allowable maximum at the lower rate, the most that a single person who pays only the 20p tax rate can earn is £7,665. That is equivalent to about £147 a week, and in a constituency such as mine that is high pay. The majority of people in Burnley and Pendle and north-east Lancashire get well below that amount. However, the person earning that amount will be £83 a year better off as a result of the tax cut. That is equal to just over £1.50p a week.
Hon. Members have spoken about the national health service and the private finance initiative. My hon. Friend the Member for Carlisle (Mr. Martlew) intervened during the speech of the Secretary of State for Health and twice asked whether the Government would guarantee the programme if the PFI did not deliver what it was expected to deliver. The Secretary of State failed to answer. We have nothing against the principle of the private finance initiative, but we think that the programme for health service provision is so crucial that we want it to be guaranteed. Much of what the Government say is ludicrous.
A fourth phase of development was planned for Burnley general hospital in my constituency and the planners were asked to see whether the private finance initiative would be appropriate. In the end it was deemed inappropriate and the programme was considerably delayed. The PFI will not deliver what is expected.
Most people think that the Government have failed to recognise not only the major need for housing investment but the fact that housing development is one of the quickest ways to get the economy going. What have the Government done to housing associations? In 1979
housing associations were the favourite sons of the incoming Tory Government. The National Federation of Housing Associations briefing states:
Another issue is the £1 billion privatisation of the Housing Corporation's loan book. I have no particular objection to that, but if we have to move in that direction why not invest some or most of that money in housing stock? If the Government were prepared to use the £1 billion of capital receipts, they could start to tackle some of the problems in housing. They could get people back to work and get the economy moving in the right direction.
The cut in funding for the home improvement energy efficiency scheme is nonsense, and is a step in the wrong direction. Reducing the funding from £100 million to £69 million--a cut of 30 per cent.--will mean that 200,000 fewer homes are insulated.
Ms Dawn Primarolo (Bristol, South):
This has been a very long and interesting debate which--for most of the time--has concentrated on the issue of fairness and on the divided Britain. My hon. Friend the Member for Motherwell, South (Dr. Bray) concentrated his comments on the structural changes in employment, a subject to which I want to return later in my speech. He talked about the need to create jobs and the need for sustainable growth, and--in a thoughtful speech--talked about the deep-seated problems of the economy.
My hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) made a precise speech on the NHS, and reinforced the points made by my hon. Friend the Member for Peckham (Ms Harman) in her opening remarks. In particular, my hon. Friend concentrated on the jargon and the way in which words are used in the NHS to disguise the denial of care to those who need it. My hon. Friend the Member for Newport, East (Mr. Hughes) characteristically defended his countrymen, and women, against the onslaught of Tory tax rises.
My hon. Friend the Member for Sunderland, South (Mr. Mullin) graphically described the lack of hope bordering on despair and the alienation of young men in particular, and referred to the Government's broken promises year in, year out. My hon. Friends the Members for Wallasey (Ms Eagle) and for Doncaster, North (Mr. Hughes) spoke eloquently about the NHS, and also referred to the need to reduce unemployment, to increase security in work and to provide investment in our economy.
My hon. Friend the Member for Nottingham, South (Mr. Simpson) highlighted the inequalities in health and in wealth, and put the case for a fair tax system. He made
the point that, if the Government were interested in reducing taxes, the fairest tax cut that they could have made would to reduce VAT to 5 per cent. My hon. Friends the Members for Sheffield, Hillsborough (Mrs. Jackson), for Pendle (Mr. Prentice) and for Burnley (Mr. Pike) talked about the unfairness of our divided Britain, and referred to the hunt for the £9 that was allegedly on offer to all of our constituents. When we return to our constituencies, the burning question from our constituents will be: "Where is that £9?" Like all Tory promises, it is an illusion. It is only there for the wealthy, and is not available for the poorest and most vulnerable members of society.
The Government have failed in the Budget to tackle the real weaknesses in the British economy. They have failed to encourage new and sustained investment, and they have failed to close the investment gap with our competitors. They have failed to move people out of welfare and into work, and they have failed to bring down the crippling levels of unemployment. It is because they do not understand the relationship of the welfare state to the changing nature of work and the restructuring of work in society that they still cannot address the question which blights the lives of so many of our citizens.
Public borrowing will now be £7 billion higher next year and £10 billion higher the year after. Public finances are in such a poor state under the Government's stewardship that there will be a 17 per cent. cut in public investment and a 27 per cent. cut in the hospital building programme. Having put taxes up by the equivalent of 7p in the pound, the Government propose in this Budget to reduce them by just 1p. That is giving with one hand and taking back with the other.
As Britain slips further into despair, moving down the world prosperity league from 13th to 18th place, the Government have failed to deal with the continued economic failure and the rising social distress that accompanies that economic failure.
Even the tax cuts are distributed unfairly. The simulations by the Institute of Fiscal Studies, the figures produced by Coopers and Lybrand for The Guardian and those produced for The Times show that the better-off get more and the poorly-paid get less. The Chancellor has completely missed the fact that people now demand tax fairness, not simply tax reductions.
The Chancellor repeated in his Budget that the Conservatives wanted to abolish tax on inheritance and capital gains. Half the benefit from those tax cuts will go to the richest 5,000 people in our country. Instead of abolishing those taxes, he should use the money to introduce the new lower starting tax rate of 10p that we have proposed.
The tax giveaways announced by the Chancellor will do little to reverse his previous two packages. High indirect taxes--VAT and excise duties--have made a serious dent in families' pockets, particularly low-paid families. Unless we strengthen our economy for the long term, tax cuts will not last and public services will continue to deteriorate.
We must deal with unemployment. Changing patterns of employment mean that we have to have a strategy not only for keeping people in work but for getting them back to work. During the Government's reign we have seen a growth in insecurity in the labour market. The new jobs that are being created are insecure and poorly paid. That
is why we proposed using the windfall tax of £1 billion on the public utilities to guarantee to every young man and woman under 25 a proper job with proper pay, a job that provided qualifications, or a full-time education place.
"The Chancellor announced that . . . housing associations will receive less than £1.1 billion to provide affordable homes for those most in need. That is a cut of £450 million from the £1.5 billion first promised by the Government".
That means that next year the housing associations will be able to provide only 41,000 new homes, compared with the 76,000 that could have been built. That reduction makes no sense when there is such a desperate need for housing investment.
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