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Mr. Nicholas Winterton (Macclesfield): Will my hon. Friend give way?
Mr. Clifton-Brown: No. I have very little time--in fact, precisely eight minutes.
My right hon. and learned Friend the Chancellor has built on his success as an environmentally friendly Chancellor. As a member of the Environment Select Committee, I welcome that very much. Fiscal instruments are a good way of promoting environmentally friendly behaviour--for example, the successful switch by the public to unleaded petrol. My right hon. and learned Friend built on that, among other measures, by reducing vehicle excise duty for low-emission lorries and reducing duty for ultra-low sulphur diesel. I welcome those measures, which build on his landfill tax last year, which is already causing many of my constituents to consider how to recycle their household waste. We must go on introducing such measures if we are to look after our planet's health for our children.
In his Budget, my right hon. and learned Friend announced other welcome fiscal measures. In particular, I welcome his renewed commitment to abolish capital gains tax and inheritance tax. That is a worthwhile long-term project. I hope that, in his next Budget, he will be able to produce a long-term and a short-term capital gain because that is a much more satisfactory way in which gradually to abolish capital gains tax.
Perhaps my right hon. and learned Friend might even consider a new base year of 1997. All pooled share purchases might be abolished after that date and every batch of shares purchased would then be indexed in its own right. We could have a short and long-term gain for the assets. I favour a tapering rate. Those that were held only for a year or two should be taxed nearly at the marginal rate of income tax, so that people who make short-term gains are still taxed almost as if it were income, but people who had held gains for five years or more would have to pay no capital gains tax.
I am nearly certain that inheritance tax will be a target for a possible incoming Labour Government. One of the ways in which they will radically alter the tax is to abolish the so-called PETS--partially exempt taxable transfers. That would return us to the bad old days of capital transfer tax and Denis Healey taxing the rich until the pips squeak. We all know what happened: the assets simply went offshore and were not there to be taxed. Nowadays, we do not have the exchange controls of the 1960s and 1970s, so that money would disappear offshore all the quicker.
Time is moving on, but I should like to mention the expenditure side of the Budget. A warm tribute must be paid to my right hon. Friend the Chief Secretary. To cut £1.7 billion off the expenditure total was no mean achievement. It needs to be warmly welcomed.
My only note of caution is that more than half the projected increase is to be spent on social security. This year, a staggering £80 billion will be spent on social security. That increase should have been distributed a little more evenly, particularly on to education and health. It is interesting that it is the Conservative party that is able to promise a year-on-year real increase in health
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In line with other hon. Members, I should like to comment on expenditure as a proportion of GDP. My hon. Friend the Member for Beverley (Mr. Cran) mentioned that. My right hon. and learned Friend has committed himself in the longer term to getting the rate below 40 per cent., which is to be warmly welcomed. The Red Book shows that, in 1975, under the last socialist Government, the figure rose to a staggering 47.25 per cent. Whenever we have taken over from a socialist Government, we have always had to sort out the economic inheritance that they have left behind. I do not want to have to face my electorate in five years' time with a dreadful economic position. Therefore, I hope--and am confident--that we will be able to continue with a Conservative Government.
Returning to expenditure, I believe that we can and should do something about social security expenditure. Recently, I have written a paper, published in conjunction with the Bow Group, on how to privatise the state pension. It is possible to have a privately funded pension for every person in the land, whether they are working, are housewives or are out of work. When they retired, they would have a decent standard of living and would be empowered to live their lives properly, because they would have a private pension behind them.
That is no fly-by-night idea. It has been proposed by the Chilean Government, and it is in operation in Chile, Australia and elsewhere. Each person would be allowed--indeed, compelled--to make a small pay-as-you-earn contribution into a privately funded pension. For those starting work, the contribution need be only £6 a week, which is a very small sum to establish a properly funded state pension that is equivalent to today's state pension. Due to the efficiency of the private sector, it is more than likely--it happened in Chile--that such pensions would be worth considerably more at the end of a 40-year working life.
As the Chileans discovered in the five years after the scheme was introduced, the huge funds invested in the pension funds enabled the doubling of the growth rate of the Chilean economy. I believe that the same could happen here. There was a recent leak about the state earnings-related pension scheme becoming a funded pension. I have no idea whether there was any substance to the leak, but I urge the Government, as a first step, to consider that proposal.
Mr. Mike O'Brien (North Warwickshire):
May I begin with a brief tribute to the right hon. Member for Worthing (Sir T. Higgins)--he is not in the Chamber--who said that today's speech was probably his last in a Budget debate. In his many years in the House, he has always taken a very keen interest in Treasury issues, both in the Chamber and in the Treasury Select Committee. His analysis has always been rigorous, if not always right, and we shall miss his contributions to future Budget debates.
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The right hon. Gentleman need not worry; I was not suggesting that he was one of the Back Benchers to whom the Chancellor referred today on the Jimmy Young show, when he mentioned disloyal Tories on the Back Benches. The right hon. and learned Gentleman said that
I suppose that the Chancellor no longer minds saying such things. Perhaps he knows that Tuesday's Budget was the last throw of the dice by an increasingly discredited Government. He attempted to disguise the Tories' string of broken promises on tax--the legacy of 17 years of Tory rule. It was a Budget not for the future of Britain but for the short-term interests of the Tory party.
We have heard it all before, have we not? In 1992, just before the general election, we heard the Tories' promises of tax cuts, promises of more for schools and health and promises of an economic miracle--promises, promises everywhere, and every one of them was broken. After the election, there were 22 Tory tax rises, an increased tax burden and VAT on fuel--with an attempt to double it. Conservative Members all trooped through the Lobby then, voting for higher taxes.
This is another tax-raising Budget. The Budget Red Book shows that, overall, in 1997-98--between this year and next--£350 million more will be raised in tax. The overall tax burden will rise from 35¾ per cent. of GDP this year to 36¼ per cent. next year. This was a give-with-one-hand-and-take-with-another Budget. Seven taxes were increased and a new tax was introduced extending VAT at 17.5 per cent. to travel insurance, car hire insurance and other insurance.
The hon. Member for Luton, South (Sir G. Bright) mentioned that insurance companies were coming to his constituency. I bet that they are not praising him for supporting higher insurance taxes.
There have been seven tax increases. Council tax rose by £4 billion. Tax on insurance premiums rose from 2.5 per cent. to 4 per cent. Air passenger tax has doubled, meaning that a mum, dad and two kids taking a trip abroad could pay £80 in tax on their holiday. The abolition of tax relief on profit-related pay is possibly the equivalent of up to 8p on the basic rate of income tax for someone on average wages, affecting 3.75 million people in the long term. Prescription charges were increased, fuel duties rose by 5 per cent. above inflation and, as the Chancellor said yesterday, tobacco duties rose by 3 per cent. above inflation.
As a result of the Tory tax changes since 1992, a typical family will have paid more than £2,120 extra tax by the time of the next general election. The tax burden is forecast to rise next year and every year until the year 2000 and beyond. So much for promises.
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The hon. Member for Colchester, North (Mr. Jenkin), in his own personal manifesto at the last general election, set out
The hon. Member for Sutton and Cheam (Lady Olga Maitland) told her electorate:
"the problem lies with some of those people on the Back Benches in the Conservative party in Parliament. You can lead a party, John can lead a party, but there are sometimes parties that are simply not capable of being led. And if the Back Benches of the Conservative party would only come to their senses and stop writing rubbish like that in Tribune we could beat this . . . Labour Party".
What a blast against his own Back Benchers--by a Chancellor who expects them to troop through the Lobby in support of his tax-raising Budget!
"Ten good reasons to vote Conservative."
No. 4 was "lower taxes". After the election, he voted for the biggest peacetime tax increases in British political history. When I raised the matter with him, he claimed that he was referring only to income tax. However, he did not say that in his election address; he referred simply to lower taxes.
"The Conservatives are pledged to low taxation".
Again she made no distinction between direct and indirect taxes. After the election, she voted for Britain's highest ever tax increases. She claims to be the champion of families, but she voted for VAT on fuel at 8 per cent. and tried to double it to 17.5 per cent. She pledged low taxation, but all that happened was a shift from direct to indirect taxation, leaving the burden on families.
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