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Sir Irvine Patnick (Sheffield, Hallam): That was not a good analogy.

Mr. Foster: I recommend that the hon. Gentleman looks at yesterday's press release from the Department of the Environment--do not worry about the Red Book, tables or anything else; there is only one table that he needs to consider--because it will tell him the whole story.

Let us consider education. The Secretary of State for Education and Employment issued a press release stating that there will be £633 million more for schools. She also stated that, in subsequent years, she will cut money for education--but we will leave that point aside for now. After the announcement of £633 million more for schools, the hon. Member for Hallam looked excited, because that money will be shared between my constituency and every other hon. Member's constituency.

Where will the money come from? The Department of the Environment's table, under the heading, "Table 2--Aggregate External Finance" shows that, in real terms, which is the amount of money that central Government will make available to local government, the estimated outturn for 1996-97--the current financial year--is £35.23 billion. How much will the figure be next year? Will it be more, to make up for that £633 million increase for education and for some of the other increases that we have been promised? No, it will not; it falls to £35.07 billion--a real-terms cut in the amount of money that will be made available by central Government to local government.

Therefore, how can there be £633 million extra for education? The fact is that there is no additional money. The hon. Member for Hallam should therefore rethink whether my analogy was correct. It was absolutely apposite. The only thing that I did not do in my analogy was to say that the parents were increasing the amount of pocket money but reducing the amount of money that they were giving to the child. There is no additional money for education--[Interruption.] I shall happily give way to the hon. Member for Hallam. However, he is clearly not prepared to engage in the debate on this issue.

Sir Irvine Patnick: The hon. Gentleman admits that his analogy was incorrect. The analogy was the cause of my laughter.

Mr. Foster: If the hon. Gentleman is saying that my analogy did not go far enough and that I did not paint the picture as black as I should have done to show the truth of what the Chancellor said, I accept that I was in error. I am grateful to the hon. Gentleman for pointing out that error.

The point--I hope that it will be clear to the House--is that the Chancellor and the Secretary of State for Education and Employment cannot tell the House that

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more money will be available for education and spending on our schools. More money can be spent on our schools only if local councils reduce expenditure on the other hard-pressed services on which people depend, further raid money from already depleted reserves or impose a massive hike in levels of council tax. That is the hidden tax that the Chancellor was not prepared to mention. Not even the Chief Secretary was prepared to use the words, instead using that emotive language of "fiscal tightening"--which, as I said, means tax rises.

Mr. David Nicholson: I am puzzled as to how tightly capped local education authorities will be able to pass on to council tax payers the education spending increase that the hon. Gentleman speaks about.

The hon. Gentleman speaks about the frailty of the economic recovery; he is worried about the borrowing requirement. He argues for higher spending on areas outside the industrial sector. He wants certain taxes to be reduced--national insurance or whatever--yet the Liberal Democrats will vote against the main tax reduction in the Budget. How does he square all that?

Mr. Foster: It is relatively simple. I was taking advice from the right hon. Member for Wells, who has great experience in such matters, and who a few minutes ago told the House that he was worried about the Chancellor's inflation predictions. I was arguing that, if his inflation figure is wrong, the Chancellor will have considerable difficulty in delivering the economic package that he promised us in his Budget.

The hon. Member for Taunton (Mr. Nicholson) knows me well enough and knows that I shall say to him, "We have said openly and honestly that, if necessary, we shall increase income tax to deliver those improvements, especially in education and training, that we believe are vital for the economic future of this country." We shall vote against the tax-raising package in the Budget as it will not give us a sustainable economic future because it does not invest in education and training and does not introduce some of the measures that I mentioned. I hope that that is a fairly clear and straight answer.

The hon. Member for Taunton still does not believe that he is being conned by the Chancellor of the Exchequer. One can see it in his face. He still believes that the Government are magicking more money for his local education authority to give to its schools. If he believes that, he is wrong.

Many organisations have expressed to us misgivings about the Budget. Perhaps my favourite example came from the British Chambers of Commerce. I spoke to one of its groups just before the Budget announcement. In its submission stating what it hoped would be in the Budget, it said:

"The Government should not consider tax cuts while the PSBR remains so high . . . we cannot see any scope for tax cuts in the Budget. The higher priority should be to reduce current levels of borrowing. Any money which can be found . . . we would like to see channelled into spending on education (and transport).


The British Chambers of Commerce urges the Chancellor to make education spending priority."

I entirely agree.

Sadly, we did not get that from the Chancellor. As a result, the Chancellor's Budget statement reminded me of George Orwell's comment 50 years ago:

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"political language is designed to make lies sound truthful and murder respectable and to give the appearance of solidity to pure wind".

7.12 pm

Sir Peter Fry (Wellingborough): The hon. Member for Bath (Mr. Foster) seemed to say that it was impossible for resources to be moved from one form of county council spending to another. He appeared to assume that every last economy had been made. If one allows for alterations due to the nursery voucher scheme, Northamptonshire's standard spending assessment shows an increase of 3.6 per cent. this year. I would agree with the hon. Gentleman if I felt that every penny spent by the Labour-controlled Northamptonshire county council, abetted by the Liberal Democrats on that council, had been wisely spent, but let me list a few things that it has done in the past year.

First, the council produced a leaflet on sexuality for all teachers, to protect any homosexual or lesbian person who came out. Secondly, it introduced a new policy on tackling poverty in Northamptonshire. There may be something in it for some people in Northamptonshire who are not as well off as others, but it is a waste of public money; it will not relieve absolute poverty.

Thirdly, the council has spent enormous amounts as a result of allowing early retirement, which it need not have done. That is a heavy charge against the council tax payer. Fourthly, it has allowed an enormous increase in mileage allowances, especially in the social services department, which has meant that many members of that department spend more time at conferences than they do sorting out the affairs of elderly people who require long-term accommodation. I could go on.

The argument that there are no savings to be made in local government, especially by councils controlled by the Labour party and the Liberal Democrats, is obviously nonsense. I suspect that all my colleagues could find similar examples to those that I have cited.

I have not always been known as the most ardent admirer of the tax proposals of my right hon. and learned Friend the Chancellor of the Exchequer, but I admit that I believe that, in this year's Budget, he has achieved a balance between ensuring the country's continued prosperity and competitiveness and continuing the policy of gradually introducing the tax reductions on which my party was proud to fight the previous general election, and will be proud to fight the next.

One must be realistic. As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said, if too much had been given away in tax cuts, inflation might have reared its ugly head. That would have caused a sharp increase in interest rates, which would not have been welcomed by the many millions of mortgage payers. It would have been ludicrous to give away much more today and find, in a couple of months, that the increases in mortgage payments would be greater than the tax reductions, which would not be received until April 1997.

I applaud the way in which my right hon. and learned Friend the Chancellor presented his Budget, which shows not only a cautious control in directing an improving and expanding economy, but a deal of political wisdom. There are many good ideas in the Budget; some were mentioned earlier. Every hon. Member in whose constituency there

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are small businesses will welcome the freezing of the uniform business rate. It was important to take another large chunk of lower earners out of the taxation system, and the widening of the 20 per cent. tax band now means that 25 per cent. of all taxpayers pay income tax only at 20 per cent. That is a big step towards the day when all modest earners pay no income tax.

Nearly every right hon. and hon. Member will welcome the extra money being made available for health, education and law and order. I am very pleased with the extra money that has been provided for the Northamptonshire police authority. But--there is always a but--no world is ideal and I have one or two reservations. It will not be news to the Government that I am disappointed by the decision to delay any change in the area cost adjustment. The Secretary of State for the Environment well knows that the hon. Members representing Northamptonshire have argued strongly for a reassessment of the ACA. We believe that we partly convinced the Government of the need to set up an inquiry, which they eventually did, under Professor Elliott. His report may not have been perfect in everyone's eyes, but the implementation of its recommendations would have removed some of the inequalities that are visible to all.

It is ludicrous that the county of Bedfordshire can have more than £100 per pupil extra because of the way in which the area cost adjustment works, when the neighbouring counties of Cambridgeshire and Northamptonshire have to make do on much less. It has been particularly disheartening to learn that one of the major reasons for the failure to make that reform was the strong opposition of the Labour-controlled local authority organisations. It is distressing that no progress has been made on moving towards a better allocation of local authority funds. I understand why a total change to the Elliott ideas was difficult, but I believe that we should make a gradual move towards a better system. I want to make it clear to all the people of my county that the opposition of the Labour councillors in the various local authorities was one of the major reasons for us not getting a better deal.

In welcoming the Chancellor's increase in funds for education, I also echo the comments about local authorities refusing to pass on all the money that has been made available for school governors. Last year, despite having screamed and complained about how school budgets were being cut back, my county council withheld almost £2 million that it could have passed on to school managers. It would be disgraceful if the Labour county council tried to do that again in the next financial year. We know perfectly well that it will say that money is short and will blame the Government for it.

It was rather disappointing to see that Wellingborough borough council's SSA has been reduced by 3.2 per cent. It is one of the few councils in the country not controlled by the Opposition. It is almost unique--it is certainly unique outside London--in making no charge for its services. In fact, it supplements the county's precept. I hope that the policy pursued by my right hon. and learned Friend the Chancellor will not be continued in a way that could be seen to penalise authorities that have done very well, and end up as a penalty on thrift.

One aspect of the Budget that has caused me concern--I do not think that it has been mentioned so far--is the increase in diesel duty and the effect that that will have

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on road haulage. I entirely accept that road vehicles should pollute less and should be encouraged to be more fuel-efficient, but I am perturbed by the aspect of the Budget that puts another considerable increase on the costs of that industry.

The facts are reasonably clear. The United Kingdom has the highest rate of duty in the European Union and the highest rate of vehicle excise duty. Even before yesterday's increase, UK duty was much greater than those of our continental partners. The duty here is 25 per cent. higher than that in France, 33.3 per cent. higher than that in Germany, 100 per cent. higher than that in Greece and 30 per cent. higher than the European average. That difference in fuel duties means that many continental hauliers can come to this country with full tanks and compete with our industry, perhaps buying no fuel--or very little--at the rates that our hauliers have to pay.

I accept that my right hon. and learned Friend has brought forward some welcome measures to encourage the use of cleaner fuel, but that will not help in the immediate future. Any new investment requires healthy profits, but studies of growth in the industry over the past few years have shown pre-tax profits running at only 3 per cent. I therefore urge the Government to adopt a more helpful approach to the haulage industry's difficulties.

Some will ask whether that matters, supposing that the situation will merely encourage a greater transfer of freight to rail, resulting in fewer lorries, less traffic and, probably, a little less pollution. I should like to respond quickly to anyone who holds that view.

The road haulage industry is carrying almost 90 per cent. of internal freight in this country. It is a highly competitive industry that has had to keep its costs down. If it has to put its charges up, the prices of many products in the shops and in industry will be affected and that will have an eventual effect on the retail prices' index.

It is a fallacy to believe that it would be easy to transfer from road to rail. The Government have already carried out much excellent work in encouraging new freight terminals and giving grants to help transfers. Last week, I heard a Railtrack spokesman admit that the economic distance for the transfer of goods from road to rail had gone up to 450 miles. That covers virtually every internal journey in this country.

That fact illustrates the importance of the industry. Continual tax hikes on the industry, together with its low levels of profitability, can result in poor prospects for many small companies that are struggling. The problems of the industry deserve more sympathetic attention in future Budgets. I am certain that there will be a new leader of the road haulage industry before the next Budget. I suspect that he will be vocal on the subject.

After more than 20 years as joint chairman of the parliamentary road study group, I have a special interest in the roads programme. I congratulate my right hon. Friend the Secretary of State for Transport on having been able to retain a £6 billion programme for next year. I am sorry that many long-term schemes have had to be removed. It is time to think about the longer-term implications. I would like more design, build and maintain schemes, although I appreciate that very few of those announced last year have made much progress. I am still waiting eagerly for an announcement that the A6 bypass at Rushden will come into operation before too long.

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We must realise that we are talking against a background of increasing road traffic. That traffic will inevitably increase further as national prosperity rises. We still have to improve public transport to a level at which it becomes more attractive and available to the motorists whom we are trying to persuade out of their cars.

Any major transport infrastructure that we decided on would probably need 15 years or more before it came into being. Even if we started today, it would be well into the next century at the earliest before we could meet some of the increased demand. The problems will continue. Instead of calmly cutting investment in transport infrastructure, a move that is always tempting when there is competition for spending from education, health and law and order, we must ask what the situation will be when roads such as the M25 become car parks for two or three hours of the day.

We cannot turn the country into a swathe of concrete or tarmac, but many useful improvements could be made to deal with the worst pinch points in our transport network. Road widening schemes and local bypasses can make a great difference. That should be the direction of our road building policy in the next few years. We should not sit back and do nothing because of the environmental opposition. Many people wish to travel, and until we provide an adequate public transport alternative--particularly in congested areas--they will not stop using their cars. The alternative must come first; otherwise, people will continue to drive.

As I listened to the speech of the right hon. Member for Dunfermline, East (Mr. Brown) I became increasingly concerned, not about the confidence trick that my right hon. and learned Friend the Chancellor was playing on the country, but about the bigger confidence trick by the Opposition in the House and wherever they go. Although they cannot oppose the tax cuts, they appear to oppose some of the tax changes. They seem to want to spend more money in various ways, but they are terrified of saying how they would pay for any increase in expenditure, because they know in their hearts that they will have to increase taxation.

The right hon. Gentleman spent months travelling around the country making spending pledges, deploring Government spending cuts and giving the impression that the election of a Labour Government would mean Christmas for 365 days a year. Now that some of those pledges have been costed, the Opposition have started to run away and say that they were not promises at all. So we have a modern riddle: when is a promise not a promise? The answer is: when it is a Labour party pledge.

As the weeks go by, the nation will see increasingly that the Opposition have given us only a number of gloomy prognostications. In my view, the biggest danger to the growth of the feel-good factor in Britain is seeing the gloomy face of the right hon. Member for Dunfermline, East on television night after night. It is enough to make one want to go to the cinema or read a good book. A party that seeks to obtain power by inciting everyone to be miserable about the future will not be attractive to the electorate.

Labour's long-term dance of the 22 veils is rapidly coming to an end. It will have to reveal each of those veils. Whatever else public opinion polls reveal, it is becoming increasingly clear that British people do not trust the Labour party not to increase taxation. When they

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come to cast their votes, they will remember not the knockabout comedy of the Budget debate, but the fact that the Government have gone through a difficult recession and presented not a general election giveaway Budget, but a responsible Budget that provided encouragement by a further march forward in reducing the standard rate of income tax.

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