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6.32 pm

Mrs. Jacqui Lait (Beckenham): I will not follow the hon. Member for Croydon, North (Mr. Wicks) by concentrating entirely on social security issues, but I begin

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by saying how much I support the principle of getting people into work. The Conservative Government did much to encourage them. I hope that the Government's changes will not be subverted by some of the adverse effects that I expect will come about.

I should like to concentrate on the child care credit and to ask the Paymaster General to answer some questions it; many questions have arisen in my mind. My hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) produced some calculations. Families who earn up to £14,000 would receive child care benefit of approximately £40 a week. On that basis, he suggested a ballpark cost of £4 billion; my calculation is a bit higher.

The Prime Minister and the Secretary of State for Social Security and Minister for Women have said that the benefit would extend to families with incomes of £30,000. For those who are on incomes of between £15,000 and £30,000, there will be, again according to my calculation, a £20 a week average benefit for child care, which comes to £1.5 billion, on top of the £4 billion--if that figure is right; as I have said, I think that it is on the low side. Will the Paymaster General give some indication whether those calculations are right? I welcome the fact that it will take two years to introduce that credit, because I suspect that it will take the Treasury two years to calculate it all.

Because the Government have hyped that benefit, many families expect 70 per cent. of £100 or £150, depending on the number of children they have, somehow to emerge in their pay packets. Most of them do not realise the effect of the 55 per cent. taper and many will be disappointed when they realise how little they will receive. I suspect that they are likely to feel cheated.

As people are rational, they will organise their affairs in such a way as to maximise the amount of child care credit that they will be able to claim. That will increase the cost yet further. Will the Treasury tell me whether that has been calculated in its estimates? Indeed, child carers will also provide to the sum that is the maximum that they can receive from the tax system. We saw it happen with rest care homes. We will see it happen with child care, too. Has the Treasury examined that?

This is a small, but crucial point. The credit is not being introduced for two years. One of the reasons for that is that it will take a long time to increase the child care provision. Is the Paymaster General aware that the loan guarantee scheme is not available to people who wish to set up nursery schools providing a curriculum? Department of Trade and Industry rules specifically exempt those who set up schools providing a curriculum. That includes nursery schools. A change there would be one way in which to increase the amount of provision. I hope that he will consider making such a change.

The hon. Member for Croydon, North made many of the points that are crucial in relation to the interrelationship between child benefit and income tax. I will not go any further, other than to say that I support his comments about the disincentive effect of taxing child benefit. It would be absurd to tax what is, in effect, a tax relief.

My right hon. Friend the Member for South Norfolk (Mr. MacGregor) referred to the effect of the petrol increases. I will not go down that particular line, but I point out that, for many pensioners, the move to public transport, if it comes about, will involve even greater costs

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than people envisage. For example, those who are a bit dodgy on their pins will need porters in railway stations. They will need conductors on buses. In pedestrianised areas, they will need buggies to get around. All that costs money--additional money. I do not think that most people realise that when they talk about providing extra public transport.

I consulted businesses in Beckenham about what they wanted from the Budget. Most of them wanted business burdens to be reduced. There are few signs that the Budget will do that. Administrative burdens have gone up. We have made much of the effects of the working families tax credit. The help for small businesses, particularly the new Inland Revenue payroll offer, will send shivers down the spine of most new businesses, I suspect. It comes in the category of, "I'm from the Government. I am here to help." What will be the effect on companies that offer payroll services? In effect, will this be unpaid--and therefore unfair--competition and put those companies out of business?

I understand that the Chancellor said that he wants to reduce red tape. There was not much evidence of that. I am a member of the Deregulation Committee and I am not impressed by the volume of legislation that is coming through for us to deregulate. I hope that we will see a lot more coming through if the Government truly wish to reduce the burdens on business.

In my opinion, the big issue that has been entirely glossed over and in which I have taken a long-standing interest is smuggling and bootlegging. Those of us who have been on many long holidays buying wine in France know all about smuggling and bootlegging. We are also learning about the effect of the tobacco tax on smuggling and bootlegging. I notice from the Red Book that, despite the increases in this Budget and the previous Budget, the Treasury is expecting only a small increase in excise this year and that is due to fuel prices. All those painful increases in alcohol and tobacco taxes are having no effect. Meanwhile, the industry of smuggling and bootlegging is expanding exponentially.

Dave West, who runs the tobacco warehouse at Adinkerke--I thank the Tobacco Alliance for arranging my visit to that warehouse--has a turnover of £107 million on tobacco alone. Since December last year, the amount of cigarettes sold has increased from 5 per cent. of sales to 50 per cent. An increase of 20 per cent. on cigarettes will mean that that percentage will go up. The percentage for handrolling tobacco has not gone down.

We are seeing the effects of those sales nationally. They are undermining the rule of law and damaging the health of the nation. In Ashford, young drinkers were disrupting the town centre because they had access to cheap French beer. In Guildford, French beer caused youngsters to damage the cathedral precincts. In Beckenham, I have had complaints about a smaller shop selling duty-free alcohol. Sales of handrolling tobacco papers have increased by 63 per cent. since 1990. In Calais, there are 66 warehouses providing cheap tobacco and alcohol.

The big city gangs are now involved, and there is evidence of firearms being used in the Kent area. Protection rackets are emerging, and the police are investigating links to terrorism.

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In January 1995, the current Financial Secretary to the Treasury, then in opposition, said:


We have a French alcohol tax, a Belgian tobacco tax and we are not in control of our own excise duty tax.

Mr. Deputy Speaker (Mr. Michael Lord): Order. The hon. Lady has used up her time.

6.43 pm

Yvette Cooper (Pontefract and Castleford): I welcome the Budget. It is the first Budget I can remember being described as a Budget for children, a Budget for women and a Budget for poor families. According to the Institute of Fiscal Studies, not one Budget under John Major treated poor families better than rich families.

The Conservatives presided over a growth in poverty, particularly child poverty--that is the most shocking. One in three children are being brought up in poverty. What did the Conservatives do? They stood by while child benefit fell from 4.5 per cent. of average earnings to 3 per cent. of average earnings. In response, the Labour Government have put up child benefit by the biggest real increase since 1978. As a result of the Budget, we have given families--some of the poorest families in the country--an extra £500 a year on average. I wish that the Opposition would welcome that because it is one of the most important things that we can do to tackle child poverty.

It is worth making it clear why the Government can do that and why they can make these changes. We can do so because the Chancellor has already taken action to sort out public finances, which were in a mess at the time of the election. Under John Major, national debt doubled--

Mr. David Ruffley (Bury St. Edmunds): Will the hon. Lady give way?

Yvette Cooper: I will give way if the hon. Gentleman will comment on that.

Mr. Ruffley: Will the hon. Lady concede that, in the Red Books published by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), it was projected that the PSBR would be zero at the turn of the century?

Mr. Deputy Speaker: Order. Before the hon. Lady replies, I remind her that we do not use proper names but refer to hon. Members by their constituencies.

Yvette Cooper: The PSBR projections of the right hon. and learned Member for Rushcliffe (Mr. Clarke) were remarkably inaccurate every time. Previous Red Books show that, over the past four years, the total PSBR was about £60 billion higher than it should have been according to the previous Government's projections. The projections of the new Labour Government have been surpassed by the tough actions taken by the Chancellor to sort out the problem of public finance. Last year, the public finances were £23 billion in the red. Now, we are

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looking at only £4 billion and that is because of the tough action taken by the Government. It is worth remembering the position of the Opposition on the Finance Bill.


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