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6.55 pm
Mr. Gerry Sutcliffe (Bradford, South): I, too, welcome the Budget, but not because of its content. I welcome it because it will, I hope, be the last that a Tory Government will inflict on Britain's people. Tory loyalists defend the Government, but it is complacent of them to say that there have always been tax loopholes. Two years ago, and even last year, the Chancellor did not accept that there were tax loopholes. Labour Members have been saying for long enough that people should pay tax, and that clever accountants were robbing the Revenue because it was not collecting taxes that people should pay. It is interesting that, finally, the Chancellor has recognised that fact.
I am saddened by the Budget, because we are here to represent our constituents, and nothing in it will do anything for my constituents in Bradford, particularly the long-term unemployed. The Budget should have contained a strategy for the future, but what we have is the usual thing. After 17 years, this Government think about the next few months. They think not about the economy's long-term prosperity, but about a Budget for
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In the past 17 years, we have had failure. The Tories have increased tax 22 times. It is untrue for the hon. Member for Croydon, North-East (Mr. Congdon) to say that they have not raised taxes 22 times, because they have. The main point is that the Tory party emphasises that it is the party of tax cutters, but it is not.
We have the highest tax regime ever, despite all the opportunities that the Tories have had--North Sea oil, for example. There is a great imbalance in wealth. The earnings of the top 10 per cent. have increased, and those of the bottom 10 per cent. have decreased by 17 per cent. That is a disgrace. As we have said, this is a Government for the few, not for the many.
The economic failures are legion. Investment is growing more slowly in this recovery than in any this century. When we talk about investment, we mean internal investment--not inward investment from abroad, but British investment within Britain. Britain lacks the education and skills needed. We are 42nd in the world skills league. As has been said, one in five families are without work--more than in Germany, France and the United States of America.
Since 1979, Britain has fallen from 13th to 18th place in the world prosperity league. Since 1992, we have seen a fall in living standards--a clear breach of Tory election promises. That proves that we could not trust the Tories then, we cannot trust them now, and the electorate should not trust them in future.
The boom-and-bust recovery is built on sand. For years, the Government have neglected investment in industry, in education and in skills. Unless we invest in the future, the recovery will prove unsustainable, as happened in the 1980s. Again, the people who were hit were ordinary families.
The Budget should have tackled the British economy's fundamental problems. Instead, it chooses to paint a rosy picture than no one outside recognises. We are judged on how the electorate view us--that is the simple test. That is why Labour has won the past nine by-elections. That is proof that people do not trust the Tories.
As I said, under the Tories, we have fallen from 13th to 18th place in the world prosperity league, and, at 9th out of 15 countries, we are in the bottom half of the European prosperity league. In 1979, Britain was above the European average for living standards, but, by 1995, we were below the average. Far from being the enterprise centre of Europe, Britain has suffered economic decline with the Tories. We have had the slowest average growth rate of any major industrialised nation.
Our manufacturing base has collapsed under the Tories. In 1979, manufacturing accounted for 30 per cent. of GDP, and employed more than 7 million people. By 1995, manufacturing accounted for only 20 per cent. of GDP, and employed only 4 million people. Industrial production has grown at a slower rate than in 11 other European countries, and matters have not improved much since the recession. In August 1996, manufacturing output was barely above the level before the recession. The collapse in manufacturing has undermined our ability to trade with the rest of the world.
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In 1983, the UK's balance of trade in manufactured goods became a deficit for the first time since the industrial revolution, and the situation has remained unchanged ever since. That fact is truly an indictment of the Government. Our share of world trade has slumped to the lowest level this century, and it is less than the share held by Italy, Germany, Japan and the United States.
The Economic Secretary to the Treasury (Mrs. Angela Knight):
That is wrong.
Mr. Sutcliffe:
Wait; we will no doubt soon hear what the Minister has to say.
The two worst recessions since the war have been brought to us by the Tories. The most recent hit home owners, workers and taxpayers alike. Home owners were hit as interest rates doubled to 15 per cent. and house prices plunged. Negative equity has affected nearly 2 million home owners, and the taxpayer was left to pick up the bill for the Conservative's failure. There have been 22 tax rises, which, since 1992, have meant an additional £2,000 in tax for the typical family.
When the Tories let inflation get out of control on the most recent occasion, they had to raise interest rates to 15 per cent. in fewer than 18 months to get it back under control. The same pattern could be repeated if the Chancellor does not tackle the economy's fundamental weakness. Today's inflation rates are poor by European standards. Britain is 11th in the European inflation league, and, of the other major industrial nations, only Italy has higher inflation.
Investment is the key to our economic success and to future growth and economic well-being. The recovery is lacking investment. In 1995, investment was still 11 per cent. below the 1989 level and, over that six-year period, investment has accounted for an even smaller proportion of national income--down from 23 to 17 per cent. Private sector investment is only 9 per cent. higher than it was in the depths of the recession. At the same point in the most recent recovery, such investment was about 30 per cent. higher. That is a slower rate of recovery in investment than in any recession this century, including the 1930s, and the manufacturing investment rate is still lower than it was in 1979.
Under the Tories, we have invested less as a proportion of our nation's income than any other European country. We have been watching what has been going on. Investment per worker is 18 per cent. higher in Germany, 51 per cent. in France and 68 per cent. in the United States.
A modern, dynamic economy requires a highly trained and highly skilled work force. However, under the Government, Britain has fallen to 42nd place out of 48 countries in the world education league. We have fewer 17 and 18 year-olds in full-time education than any other country except Turkey, and the percentage has decreased over the past two years. Only 67 per cent. of the work force are qualified to NVQ level 2 or above, compared to over three quarters of the work forces of Germany, France and our other major competitors. At the age of 18, twice as many Germans are in full-time education as young British students.
The central task of economic modernisation for Britain in the 21st century will be to overcome the long-standing problem of under-investment in people, industry and our
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Any sensible Government would have used this Budget to ensure that we had a platform for economic stability, which is essential for sustained growth. Labour would have created regional development agencies to work with venture capital to encourage the provision of more long-term finance for small businesses, considered other ways in which we could enable the tax system to encourage long-term investment, and shown interest in the Confederation of British Industry's proposals for a two-tier capital gains tax, to encourage assets to be held over the longer term.
We should be bringing the public and private sectors together to invest in major infrastructure projects of national interest. Labour would radically improve the private finance initiative by prioritising projects and streamlining the decision-making process. In rebuilding our infrastructure, the way ahead is not to resort to the Tories' methods--relying solely on privatisation--and it is not to rely on the public sector to do everything. We should instead consider constructive and lasting partnerships between the public and private sectors. Britain badly needs capital investment across the range of our infrastructure, and especially in our physical infrastructure.
Transport is vital to the future of our economy and to the everyday life of each of our citizens. We value it because it provides us with access to our jobs, to leisure, to services, to family and to friends, and it is crucial to the quality of life. The effects of transport policies reach far beyond the transport sector itself. They effect nearly every aspect of the nation's life, yet Britain is currently investing only 0.7 per cent. of GDP in transport infrastructure, which is about half the rate of our closest European neighbours.
Transport congestion costs British business £19 billion a year, according to the CBI's figures, which is equivalent to £800 for every household in Britain. But the Tories persist in refusing to set a national transport strategy, and continue to be driven by dogmatic faith in free market solutions--rail privatisation, bus deregulation and, now, privatisation of the road network.
I wonder whether people noticed today's cuts in the roads programme, which were mentioned by my hon. Friend the Member for Newport, East (Mr. Hughes). Those cuts will mean that we will not have many necessary roads which were called for by local authorities and communities. Our road, motorway and trunk road networks will suffer chronic congestion by 2005, and, based on current trends, all but one of the major roads into London will be gridlocked. According to the Automobile Association, one of every seven miles in our motorway network and over 4,000 miles of our primary roads urgently require repair.
Parts of the London underground system are now 120 years old, and the King's Cross inquiry was told only a few years ago that the disaster revealed
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Rail privatisation has squandered more than £450 million in fees for consultants, lawyers and accountants, although service and standards have become worse. Rail privatisation has fragmented a nationally integrated British Rail into more than 100 different companies. They were sold off at knockdown prices, with separate companies owning the trains and the track and running the services. Those companies have now called for large public subsidies before they can do anything to increase the amount of freight currently carried by road to rail.
The situation has come about because of the Government's actions of the past 17 years. They have been driven by a dogmatic belief in free market solutions, irrespective of the transport consequences. A road-building programme that was meant to cater for an ever-growing demand for car use has suddenly been chopped back, with no alternative plans in place. Meanwhile, the Government-driven privatisation of the rail network and deregulation of the bus industry has led to further decline in public transport provision. Nationally, since deregulation, there has been a 35 per cent. reduction in the number of bus passengers. That failure of the people is absolutely outstanding.
We have fallen behind our European competitors in vital transport investment. France already has a high-speed rail link to the channel tunnel, but the building of Britain's has not even begun.
Conservative policies have denied real choice in transport. People with cars are forced to suffer traffic jams and fumes, whereas those who wish to use public transport suffer declining services, and those who wish to walk or cycle cannot find safe and unpolluted streets.
The Government's role is to set the framework and then to enable much of the provision to be privately funded. There must be a genuine public-private partnership, in which stated public policy aims have central place. The role of the private sector would then be to participate in those projects, to which it can bring its expertise and investment. Investment is lacking in our transport infrastructure, and that is the Government's legacy after 17 years.
We have heard from the Chancellor today that the 1p to be cut off income tax will be lost to local government, whose funding will again be attacked by the Government. Local government is at the sharp end of dealing with the day-to-day realities of the problems in our communities--the lack of investment in our schools, in community care and in other essential local services. Local government needs £2.3 billion just to stand still and avoid service cuts.
Local authorities will need to spend £19.2 billion on education next year. We always say this, because it is true and has been true when local authorities of all political persuasions have gone to Ministers to argue against the central Government funding formula.
More than 1 million primary school children are educated in classes of more than 30 pupils. That figure has risen by 500,000 since 1992. Large classes can damage young children's chances, but class sizes have
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Britain has the lowest level of publicly funded services for young children in Europe and the wider industrial world. As Secretary of State for Education, Baroness Thatcher pledged to provide nursery education free of charge to all three and four-year-olds whose parents wanted it. Despite her pledge, the Government have undermined nursery expansion through repeated cuts in local authority budgets, forcing a squeeze on discretionary services. In a skills-based economy, local authorities cannot provide the standards necessary to meet the needs of future generations.
The cost of providing an acceptable level of personal social services will rise by nearly 8 per cent. next year, due to factors beyond the control of local authorities. Personal social services are already severely underfunded, particularly community care. Many people who need services and would have received them in the past now receive none because of the implementation of charges or the inability of the local authority to provide the services. The transfer of responsibility for community care from the Department of Health to local authorities requires additional funding of £127 million next year.
Increased investment in public services such as personal social services can save money for central Government programmes. It has recently been shown that increased investment in preventative programmes in community care could lead to lower NHS expenditure on long-term hospitalisation.
Many local services have already been cut or underfunded to protect services such as schools and community care. That will continue. The Government say that they will make more money available to schools, but the reality is that they take it from the other side of the pot. That is the true situation. People will find out that they are paying more for less.
The Government have ensured that local government has suffered. Those who look to the local authority to provide the services they so badly need have been let down time and again by central Government, because not enough money has been allotted to local government. Some 85 per cent. of local authority spending is controlled by central Government. That does not meet local needs or give local authorities the opportunity to develop programmes to do so.
"an endemic and long-standing under-investment in technology at a risk to safety."
Consider what happened to the underground system last Wednesday, when the entire system was shut down because of the total failure of a 91-year-old power station.
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