House of Commons Hansard Debates for 27 Nov 1996 (pt 46)

9.10 pm

Mr. Michael J. Martin (Glasgow, Springburn): I shall try to be brief, because other hon. Members want to speak.

Two municipal by-elections will be held tomorrow in London. If Conservative Members are so confident that this is a good Budget, they should watch the results of those by-elections, because they will provide an important opinion poll. I think that the Conservative party will be rejected.

The Budget is not good news for people who are lucky enough to be in a job but have to drive a car. The Conservatives have hammered transport and local authorities. People nowadays need a car on the road if they have any distance to go for their jobs. The rise in car tax and petrol tax is not good news, and Conservatives Members are kidding themselves if they think it is.

My hon. Friend the Member for Rotherham (Mr. MacShane) mentioned airport tax. British Midland Airways and Air UK provide the city of Glasgow with an excellent shuttle service to and from London, which I use. One of the biggest complaints from the business community is about the extra tax, and now we have another one. Ten pounds on a ticket for one of the most expensive domestic flights in Europe--perhaps in the world--is not good news for the business community.

Every time a trade union leader says anything, Conservative Members say that they want to hear from the membership. They have said that employers' associations welcome the Budget, so let us hear from their memberships. I shall be hearing from the membership in my constituency and in my native city.

I no longer need to defend tobacco, because there are no tobacco jobs left in the city of Glasgow, which was famous for its tobacco industry. In a sense I am glad of that, because, although that industry was a good employer, I hate the idea of a product that causes emphysema, lung cancer and bronchitis.

It is silly and demeaning that tobacco products are smuggled in from the continent. Our excellent Customs officers must stand by and watch, because the Government have not given them the resources to stop that smuggling. If tobacco is smuggled across the channel, it must be easy to obtain the heroin and other drugs that we are all worried about.

Concern has been expressed about small shopkeepers. Newsagents that sell tobacco legally--so that the proper rate of tax goes to the Exchequer--are appalled that, within walking distance of their shops, smugglers are selling ill-gotten goods openly in railway viaducts. The privatised railway company ScotRail gives premises to people who smuggle goods. That is ridiculous. Those small shopkeepers are obeying the law--all of us are worried about small businesses that are trying to keep their heads above water--while, just down the road, smugglers are able to sell their goods in broad daylight.

As my constituency contains Tennents brewery and United Distillers, I welcome both the fact that no further tax has been applied to beer and the cut in tax on whisky. The whisky industry brings not only direct but indirect employment to my constituents. Advertisers, the printing industry and those who make containers benefit from it. In the old days, the Scotch whisky industry could take the sale of its product very much for granted, but now there is heavy competition. People are buying other products, including those from Japan and other parts of the world.

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I am disappointed that prescription charges have risen again. It is sad that people should pay more than £5 for one prescription, when we know that, when a doctor calls, he will not necessarily hand out just one prescription. That hits the weakest members of the community.

I plead with the Minister to look at the provisions relating to local government. In areas of high unemployment such as mine, local government is a good employer of labour. Every time we hit local government, we damage employment prospects for men and women. There is no point in saying that we shall spend more on law and order, while telling local authorities that they must close their community centres. The police will tell us that the best places for youngsters are community centres--and, indeed, at night, schools can be used as community facilities. There is no point in closing such facilities as a result of local government cuts, and saying that more will be given to the police: that just does not make sense. We must ensure that all the services are there. I welcome spending on the police, but, as I have said, we must ensure that every service is there.

9.17 pm

Mr. Hartley Booth (Finchley): The fact that, along with others, I am speaking during the last few minutes of the debate gives new meaning to the phrase "time-sharing agreement", but I welcome the chance to add my few thoughts.

We heard a farrago of distortion from the hon. Member for Rotherham (Mr. MacShane), who, I felt, somewhat lowered the high standards of our debate with his personal remarks about my hon. Friend the Minister's shoes.

Mr. MacShane: He told me to say that.

Mr. Booth: I do not know what we are supposed to make of that sedentary intervention, but the point was made. The hon. Gentleman went on to demonstrate that he was still keen to ensure that the Labour party introduced control--Labour is always the party of control--over the economy.

From the hon. Member for Nottingham, South (Mr. Simpson) we heard the litany of small points to which we are accustomed. We are used to hearing privatisation berated. It is never said that, now that privatisation has happened, it is producing £50 million-worth of taxation for us all to spend on good things every week. The hon. Gentleman also referred to homelessness, waving his arms, but he did not say that for every homeless person there are five empty homes; nor did he say fairly, as he should have, that we are now lowering unemployment. The hon. Member for Glasgow, Springburn (Mr. Martin) should know that, even in his region in Scotland, unemployment is falling.

I was interested when the right hon. Member for Dunfermline, East (Mr. Brown) said that our unemployment was far worse than the rate in France. He has been presented as a man of probity and one who gets his facts right, but nothing could be further from the truth. We are miles ahead of France. Our unemployment rate is down to 8.1 per cent., whereas the European average is 11 per cent., and the situation in France is even worse. So much for his probity and accuracy.

I was surprised that the right hon. Member for Dunfermline, East did not say that, every time Labour comes to power, people do well--in France, Germany,

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Italy and in all our competitor countries. Our tax rates are pushed up and spending goes through the roof in this country every time Labour comes to power, and we are made uncompetitive abroad.

I should like very quickly to make a couple of points, because I know that time is running out. This debate has shown that the Chancellor is not going for the short-term fix; he is there for the long term. There is no cynicism in his Budget. The tax receipts from his many tax changes--such as taxes on profit-related pay, capital allowances on long-life assets, corporation tax on drilling and capital allowances on fixtures--will come in and benefit us in 1998, 1999 and 2000, not this year. So much for claims of a short-term, cynical fix for short-term benefits. The Budget has demonstrated the fact, once again--as my hon. Friend the Member for Brentford and Isleworth (Mr. Deva) said--that the Conservative party and the Chancellor major in honesty.

The two other points that I should like to make both concern the colours of the lateral thinking that we should hear expressed in the debate. This summer, I had lengthy correspondence with the Chancellor and his office--I was probably being a nuisance to him--about the black economy, which he agrees probably now stands at £50 billion. He has tackled part of that problem by telling us that the compliance that he will achieve through provision of 2,000 extra customs officers will bring in £6 billion, doubling the compliance improvements that have already been achieved by officials at the Inland Revenue. That demonstrated his lateral thinking, common sense and prudence.

In 1987, when I was an official in the Treasury, the white economy--the income that comes from all those good charities, foundations, companies and people who give from their own back pockets for good causes--stood at £12 billion, and it is probably now about £18 billion. That economy has been boosted on 32 occasions in the Government's 18 Budgets.

This morning, I heard a noble prelate speaking at an event on the other side of Parliament square--the hon. Member for Newham, North-East (Mr. Timms) might also refer to that speech, because he was there--and that prompted me to speak in this debate. He said--many people will not understand it unless I put it into context--that we have forgotten entirely about Overseas Development Administration funding and that we have not properly dealt with it. That funding is rising. We can be proud if we consider that funding, with the huge help that we have given to the white economy and military aid for humanitarian causes around the world.

I support this sensible Budget, in all its colourful aspects--dealing with the red account, tackling the black economy, widening the white economy and boosting the blue economy. The blue economy will continue to govern after the next election.

9.23 pm

Mr. Stephen Timms (Newham, North-East): I appreciated the colourful contribution by the hon. Member for Finchley (Mr. Booth). I am grateful to him and to my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) for leaving me time to contribute to the debate.

As I listened to the Chancellor yesterday, I wished that I could introduce him to my constituent, a young man who visited the House of Commons for a meeting two

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weeks ago; he asked to see me and we went for a cup of tea. He was a bright and engaging character in his mid-20s, and I asked him what he did. With some embarrassment, he told me that he has been unemployed. He had left school in 1987 and had not had a single job since. That is a disgrace. There was nothing wrong with him--no reason why he could not contribute to our economy. We are throwing away the talents and energies of a generation. We cannot afford to carry on in that way.

After the long debate in recent weeks about whether the Budget would be a moderately tax-cutting Budget or a swingeingly tax-cutting Budget, we have a tax-increasing Budget, as shown by the Red Book and our earlier exchanges. That is an extraordinary turn of events.

Although taxes have increased in the Budget, the public investment picture is bleak. Yesterday, the Chancellor again announced cuts to public sector capital investment. That investment totalled £20.7 billion in 1994-95 and £20.6 billion last year. The Chancellor now estimates that it will be £19.7 billion this year, £18 billion next year and £17.7 billion the year after that. It is an alarming decline. We are cutting when we need to invest in our infrastructure and lay the economic foundations for our future.

The Chancellor tells us that there is not a problem, because the decrease in public sector investment is compensated for by the private finance initiative, but the figures that he published yesterday show that that is not the case. Even allowing for the PFI, the total amount of publicly sponsored capital spending will fall this year and next year.

As Paul Shepherd, chairman of the Building Employers Federation, said last night:

"The worry is that cuts in public spending are real while PFI reflects hopes and expectations which in reality may not replace this lost work."

The PFI is not bridging the gap. Public investment, including the PFI, continues to fall. The Government are not doing enough on investment.

I shall make two specific detailed criticisms about the way in which the information on the PFI has been presented in the Red Book. They both relate to differences in the basis used for presenting the figures for, on one hand, the amount of capital investment being made under the PFI and, on the other, the future revenue costs of paying for it.

First, the Red Book presents the figures in a way that maximises the capital value of the PFI programme, but minimises the apparent future revenue costs. That is misleading, and it is distressing that the Government are not being frank. Secondly, the figures on future revenue commitments are not broken down by Department. That makes parliamentary scrutiny harder.

I am pleased that information has appeared on the PFI. The Red Book shows that £15.9 billion of Government spending is already committed between now and 2025 to fund PFI projects that have been signed, and that includes £1 billion every year in the first five years of the next century. But that is the tip of the iceberg. The figures that have been published apply only to signed contracts and most have not yet reached that stage.