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6.25 pm
Mr. John Garrett (Norwich, South): The right hon. Member for Worthing (Sir T. Higgins) suddenly struck a chord with me: I am now tempted to talk about budgetary reform, which I was not going to do.
I am pleased to say that I advocated a unified autumn Budget and resource accounting to the Procedure Committee in 1969. I have found in the past that my public accounting proposals take about 25 years to come to fruition, like some suggestions I used to make about state audit; but I must give credit where it is due. My party has always completely ignored my proposals, although I except my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon).
The Budget scheme and format, especially as regards public expenditure, is now far more informative than it was when I first came to the House, except for the performance indicators. Some of the performance indicators that the Government attach to spending programmes are completely pointless, and I hope that the Treasury will try to improve them.
I want to talk about some aspects of poverty, but before I do I must make a constituency point. In his speech, the Chancellor referred triumphantly to the £190 million private finance initiative project for the Norfolk and Norwich hospital. He did not acknowledge that using the PFI route has incurred not only considerable cost but a delay of at least three years in the provision of a hospital for which we have been waiting for more than 20 years. Nor did he tell us what would be the extra cost of building and running a hospital whose contractor will have to borrow money at a higher cost than the NHS would ever incur, and will also have to show a profit for its shareholders.
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I am familiar with the Government's argument that anything private is run more efficiently than anything public, but I spent more than 20 years professionally measuring productivity, and it never struck me that that was the case. I believe that there is a correlation between productivity and size, but not between productivity and the form of ownership--but I digress.
The Chancellor was not to know that the new hospital will be in the wrong location, that it will be hard to get to and that it will have only 800 beds to replace the 1,400 in the existing two hospitals in the city centre, access to which is easy, and which will have to close.
The increase in health funding for the election year will be followed by deep cuts in health expenditure. Prescription charges will rise again--the Chancellor did not mention that at all--as will the maximum dental charge, for those who can find an NHS dentist. It is extremely difficult to find one in my constituency. Capital funding for health care is being cut, and, even if we allow for the reliance that is being placed on the PFI--which, to my knowledge, has produced only one hospital so far--the total cash for hospital building is falling by nearly 10 per cent. In total, real-terms spending on health care is flat for the next two years, and will fall after that.
The background economic judgment is that there should be a pre-election consumer boom, so consumer spending is to rise by the amazing figure of 4.25 per cent. If we add rising house prices and a £20 billion handout from building societies next spring, we have a stoked-up boom that can end only in a post-election bust. The forecast is for some rise in capital investment, which is currently contracting, and for a rapid increase in export volume. It is difficult to see why there should be an increase in export volume, given the rising pound.
We learnt from the Secretary of State for the Environment the other day that we will require 4.4 million new homes in the next few years. So what do the Government do? They cut the Housing Corporation's budget from £1 billion this year to £650 million next year, whereas three years ago it was £1.8 billion. That and local authority cuts will mean that only 30,000 new homes for rent will be built each year, which is half the Government's stated target.
The Chartered Institute of Housing said that the Government do not care about housing--I think that that is true. The cut in housing will lead to 5,500 fewer jobs in the construction industry. In the six counties of eastern England, including Norfolk, housing starts will drop to 1,563, which is a drop of 2,196. In Norwich this year, housing associations will produce 119 homes. A proportional reduction will mean that 77 new homes will be built in 1997-98, 20 of which will not be newly built or rehabilitated units, but either shared ownership properties or existing tenancies released as a result of incentive schemes. We will probably build about 70 houses to cover approximately 2,500 households on Norwich city council's waiting list.
In other local government areas, the Government allowance is due to rise by 1.5 per cent. Most local authorities have little in their reserves to add to that. This year, the county of Norfolk has been able to maintain its services only by taking £7 million from balances. Allowing for inflation and other cost increases, the county will require a rise in spending of more than 7 per cent.,
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The Government are simply switching taxation from central Government to local authorities: 1p comes off income tax, and the council tax is increased by 6 per cent. What does the Budget do for our fellow citizens who are in poverty? The 250,000 single tenants suffer sweeping cuts in housing benefit to raise a mere £100 million. Future single parents will lose £6.30 a week in one-parent benefit, and those on income support lose a lone parent premium of £5.20. Existing single parents have their benefits frozen.
In the 16 years up to 1995, the number of children living in poverty tripled to just under 3 million, with more than one fifth of families on income support. The number of children living on what used to be called national assistance has risen from 272,000 in 1948 and 920,000 in 1979 to 2.9 million in 1995. I was raised on national assistance, and I remember it well.
National statistics show that 25 per cent. of our children live below the poverty line, which is defined by the European Union as less than half the national average income. A survey by the National Children's Home revealed that, for 1.5 million families, basic social security provision is not enough to pay for the diet prescribed as the minimum for a child in a workhouse in Bethnal Green in 1876.
A Rowntree Foundation report last June showed that, as a result of breaking the link between average earnings and benefits, families were £6 a week short of being able to provide "minimum essential" items for a child under two, and £11 short for each child between two and 11.
The United Nations human development report of 1996 cited Britain as one of the most unequal countries in the world--more unequal than the United States, and as bad as Nigeria. Against that background, the Chancellor stokes up a consumer boom, which depends on the well-heeled furiously spending their tax reliefs.
Let us look at the real needs of the country, such as capital investment in plant and equipment and infrastructure. The Government's capital spend will fall from £10 billion to £6.5 billion in three years. Their estimate that the gap will be made up by the private finance initiative raising £10 billion in three years is hopelessly optimistic--look at its record so far. On education and skills, we are 42nd in the world skills league. One in five families has no one in work. Since 1979, we have fallen from 13th to 18th in the world prosperity league.
As the Financial Times pointed out, the Budget is particularly hard on women, because of the loss of single parent benefit, the small tax relief for the low paid, 70 per cent. of whom are women, and the freezing of child benefit.
Sir Graham Bright (Luton, South):
I shall deal with two aspects of the Budget. First, when the measures on low-sulphur diesel fuel were announced, many people
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I appreciate the fact that we are spending another £1.6 billion on health this year. It is more important to prevent some of the problems than to deal with them once they arise. I appreciate what the Treasury has done in that respect.
The Chancellor mentioned black smoke. Black smoke is made up of fine particles. The average London bus pushes out 1.5 tonnes of soot every year, as do large lorries. That dust is carcinogenic: it is dangerous stuff. We all breathe it in, so we must address the problem.
Low-sulphur diesel is just one step. It reduces sulphur and other pollutants in the atmosphere. More important, it enables technology to introduce continuously regenerating traps into the exhaust system to take all the dust pollutants out of that exhaust. I commend Westminster city council for insisting that that system is fitted to all council dustcarts that operate around the House.
Sir Graham Bright:
Indeed, Johnson Matthey has pioneered that technology. It costs about £3,500 to fit a bus or other vehicle with that equipment. The £500 a year reduction in the road fund licence that will be offered for vehicles that conform is a real fiscal measure to encourage bus and lorry operators to be more environmentally friendly. That will have a huge impact in London and in any urban environment, including the constituency of the hon. Member for Norwich, South (Mr. Garrett). We cannot escape pollution in an urban area, so I applaud that measure.
I was not privy to the leak that most people saw the day before the Budget statement, so I was amazed at how spot on the Chancellor was, because he provided everything for which I had asked in April.
The Chancellor proposes a reduction of 25 per cent. in the duty on liquid petroleum gas and compressed natural gas. A vehicle can use natural gas--it is available to anyone through the normal gas system by means of a compressor operation that one can recharge. I am delighted that the Department of Trade and Industry has a couple of cars running on that fuel. It is the purest form of fuel and does not pollute the atmosphere at all.
That reduction is another fiscal measure that will encourage development. I have had several meetings with Shires, the bus operator in my constituency. It readily admits that natural gas is back on the agenda and that it will probably be viable. For me, an asthmatic who has been campaigning for that, the measure is very welcome. I offer my right hon. and learned Friend the Chancellor my thanks and the thanks of fellow sufferers and the medical profession for recognising the problem and for dealing with it in such a way. I am delighted to flag up that point, which otherwise might have been overlooked.
Luton is very much a microcosm of the economy. I take a great interest in what is going on and why. The environment that the Government have created
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Luton is an exception in the south-east in having a well-balanced local economy with many manufacturing and technology-based companies. It has world-class companies such as Vauxhall, Monarch, Britannia and Whitbread. It also has hundreds of successful small and medium-sized companies. I am sure that when my hon. Friend the Member for Colchester, North (Mr. Jenkin) speaks later, he will agree with me that it is excellent news that the Government are dealing with the problem of rates and intend to freeze rates for small companies. That is extremely important if we are to help small businesses grow into large businesses, as then they can employ more people.
Luton has been at the forefront in adapting to the challenges of the next millennium and encouraging the development both of its businesses for the future and of the associated skills required by the work force. Luton's record in generating exports is second to none. I take my hat off to the chamber of commerce for the way in which it has encouraged exports.
It should come as no surprise that recent surveys have shown that businesses in Luton report higher order books, more investment and higher levels of confidence, which is obviously good news for all who live and work in that town. It is living proof that the Government's economic policies are working. However, if I have a criticism of Government policy--and I occasionally have a little criticism--it is that because Luton is so successful in taking advantage of the current favourable economic climate, it suffers in comparison with comparable areas in other parts of the United Kingdom when it comes to grants.
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