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Mr. Syms: My hon. Friend mentioned interest rates. It is clear that higher interest rates will have a bad effect on
local authorities, because they are major holders of public debt, and many are already at their capping limit. There will be a huge impact on the provision of services. Combined with pension costs--many local authorities will have to spend further millions of pounds to cover the pensions of their employees--will not the higher rates have a detrimental effect on the provision of police and fire services, schools, social services and all the other important services that we all care about?
Mr. Fabricant: My hon. Friend is right. Yesterday, Staffordshire Members of Parliament--Labour and Conservative--had a meeting with their Labour-controlled county council. I asked the county treasurer whether any provision had been made for the pension scheme. Was the Prime Minister right in saying that the Budget would have no effect on pension schemes? Was he right in saying that the effect was incalculable?
Next year, £1.5 million will be taken out of Staffordshire county council's budget. It will be taken out of the budget for education or roads--otherwise, council tax will have to be put up, because of the effect on pension schemes. Is Staffordshire county council one of the biggest county councils? No. It does not even include Stoke-on-Trent any more; it is a unitary authority. It is one of the smaller county councils.
I wonder whether some of the Labour Members who are sitting over there looking smug have asked their county treasurers the same question. I invite them to intervene in my speech. Has any Labour Member asked his or her county treasurer what impact the Budget and the changes in ACT will have on their spending plans? Either Labour Members did not ask the question or, worse, they asked it, got a bad answer and, being in fear of Mandelson Towers, they are unable to intervene.
It is a time-bomb Budget. At first, even I was dazzled by it. I sat there thinking that it did not seem too bad. After all, it produced a decrease in corporation tax--I could not argue with that--and an increase in capital allowances in the first year. My hon. Friend the Member for Macclesfield (Mr. Winterton) and I have always argued for that. It then went into a number of complications which bemused and bedazzled Members on both sides of the House. However, it took just one day for The Economist to produce a front cover showing a glowering iron Chancellor and the headline, "A disappointing start".
Mr. Gareth Thomas (Clwyd, West):
I welcome the Finance Bill and I congratulate my right hon. Friend the Chancellor. In marked contrast to Budgets produced by the previous Government, it is long term in its vision. I commend that long-termism. The Budget is long term in respect of growth and stability, reducing high unemployment, tackling inflation and, perhaps most significantly, in its approach to the environment. After all, what can be more long term than the environment and the conserving the finite resources of the planet?
The Budget has at its heart a strategic approach to sustainable environmental policy. A few years ago, the Rio conference defined sustainability as the necessity for the present generation to fulfil its needs from this planet without undermining or prejudicing the needs of future generations. That is long-termism in a deep sense.
The Budget contains green measures. I agree with my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) that we must take a cautious approach to green taxes and that we must be mindful of long-term side effects, in particular the social costs of green taxes; however, the Budget contains a number of judicious measures that auger well for the future.
Mr. Loughton:
The hon. Gentleman referred to green taxes. If the Budget was such a triumph of greenism, can he explain why Greenpeace and other environmental agencies described it as disappointing at best and why the following day one of the biggest movers on the stock market was the oil sector, which might not have been expected to benefit from such a hike in effective taxes on oil? How does the hon. Gentleman explain that?
Mr. Thomas:
The Budget had all the hallmarks of statesmanship, and statesmanship requires drawing a balance between the need for an effective, competitive economy and the long-term effects on the environment.
I shall now focus on specific measures that may interest the hon. Gentleman and are of particular relevance to my constituency where mineral extraction forms an important part of the economic infrastructure. Mineral extraction, quarrying and the dredging of aggregates have a damaging impact on the environment. I welcome the provisions in the Finance Bill for a full evaluation of the environmental costs of quarrying. My constituents who live in the village of Eryrys near the quarry of Pant-y-Gwylanod will welcome the Government's declared strategic intention for the tax system to reflect the environmental impact of quarrying.
My constituents will also welcome the Government's commitment to research the costs involved and the environmental impact of water pollution. It seems eminently sensible that there should be further work to devise a regime whereby the polluter will have to pay. A great body of opinion would like policy to move in that direction.
The increase in the duty on road fuel of 6 per cent., in line with inflation, will help us achieve our international obligations to conform with the target of reducing CO 2 emissions by 2010. That measure also has a great deal of support in the country.
I welcome the reduction in vehicle excise duty for lorries with clean exhausts--those that do not pollute the environment with hot air. The hon. Member for Lichfield (Mr. Fabricant) may be interested in that. The Government intend to extend that indulgence to buses. That can only improve the quality of public transport and the local environment.
Mr. Clifton-Brown:
Does the hon. Gentleman really think that any of the measures in the Budget will help us meet the international targets to which the Government are committed? Surely the 6 per cent. real duty on petrol
Mr. Thomas:
As I said earlier, the Bill has taken a judicious approach. It sends clear signals that environmental bads will be the subject of separate tax regimes, and in the long term it is possible that the tax system will encourage environmental goods. It is eminently sensible and it is what the country wants. We all have a stake in our environment. Nothing can be more long term than the Budget's approach to the environment.
Mr. Deputy Speaker (Sir Alan Haselhurst):
Order. Has the hon. Gentleman finished his speech or is he giving way?
Mr. Thomas:
I have finished my speech.
Mr. Deputy Speaker:
That is what I understood.
Mr. Tim Loughton (East Worthing and Shoreham):
After all the hours that I have spent listening to the debate on the Budget and the Finance Bill, both in the Chamber and in my office, it is clear that the Budget lends itself to a great deal of metaphor and analogy. For me, the best analogy is a cake--a large cake, liberally deluged with bucketfuls of rich, squidgy chocolate fudge. On first sight, it provokes applause and slavering on the Government Benches, but it will bring only regret later, even to those who have sampled just a modest slice. It is a veritable death by chocolate fudge. It is a cake that we are told that we can have and eat as well. We have been treated to some extraordinary sights by the new proprietors of the cake shop on the Labour Benches who are churning out fudge.
We have been told that the abolition of advance corporation tax is so harmless that no one will suffer. It is so harmless that, in fact, as we were told by an hon. Member yesterday, no one understands--least of all Labour Members, who are not even able to spell it--that the effect on local authorities will be considered but that the shortfall will not necessarily be made up. Fudge and no fudge.
We were promised a Budget that rewards long-term investment, but the irony is that pension funds have been pilfered in the short term for short-term gain, so that prospective pensioners will face long-term pain from the holes in their pension funds when they need to draw on them when they come to retire. Fudge today, gone tomorrow.
Surely the most extraordinary sight of all over the past week has been that of the Chief Secretary to the Treasury, who last week and again today in Treasury Questions said--it was repeated by the Prime Minister yesterday--that the Government have measured the claimed success of their debut Budget by its effect on the stock market. Who would credit it, least of all those in the City? Perhaps I should at this point declare an interest as a director of a fund management company for some years.
We are now faced with the sight of new Labour, new stockbrokers' friend. I presume that the rather sparse turnout on the Labour Benches for this debate is due to
the fact that the City is empty because many have gone to Hyde park and Labour Members have flooded to tailors in the City to be kitted out in the loudest chalk stripes and pinstripes going. I confidently predict that, in a matter of weeks, the little pink ribbons attached to our coat-hangers in the cloakrooms downstairs will be a sea of City bowlers as the new stockbrokers' friends on the Labour Benches claim their places.
8.47 pm
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