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Mr. Ruffley: Will the hon. Lady concede that all the tough but necessary action and tax increases designed to bring down the deficit under the Budgets of my right hon. and learned Friend the Member for Rushcliffe were opposed by the Labour party? What does she have to say about that?

Yvette Cooper: The hon. Gentleman should look at the report of the Finance Bill Committee last year. His party opposed all the significant measures to sort out the public finances in the previous Budget. That makes my point. Had the Conservatives continued in office, they would have been significantly more in the red than we are today. They opposed the windfall tax and all the measures that my right hon. Friend the Chancellor took to cut borrowing. They opposed the changes to advance corporation tax and the changes to sort out the state of the public finances.

A Conservative Government would not have been able to increase child benefit or to introduce the child care tax credit. They would not have been able to give help to low-income working families. It is not so much that they did not want to, but that they could not afford to because their borrowing would have been considerably higher.

We now have the chance to make work pay. We no longer need to tolerate the absurdly high marginal tax rates faced by far too many people on low incomes. For every extra pound earned by a dinner lady on a salary of £63 a week, more than a pound would be taken away because of the way in which national insurance contributions work. That is ludicrous and it is a good reason for getting rid of the 2 per cent. entry fee for national insurance. It is also a good reason for introducing the working families tax credit. The working families tax credit is not only more generous, but it changes the tapers. It changes the rate at which money is taken away from people. Also, people will no longer find that tax is being taken on one hand while benefits are being given with the other.

Mr. Gibb: Is not one of the consequences of the working families tax credit the fact that it will extend the dependency culture by reducing the tapers? As a result of the Budget, 400,000 more families in this country will be in receipt of benefit.

Yvette Cooper: There will be 400,000 more families in receipt of extra help to make them better off, so that they will have a guaranteed minimum income of £180 per week. I think that that is worth while, and I am ashamed that the hon. Gentleman does not.

The Budget contains other measures--it is not simply about making people better off once they are in work, but about helping them into work. One of the Budget's most significant provisions, which the House should not underestimate, extends the benefits of the new deal to partners of the unemployed.

As the new deal was being introduced in my constituency, our local youth service was asked to conduct a focus group of some 18 to 25-year-olds who might be eligible to participate in it to discover their attitudes to

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work, training, education and the Employment Service. The results were fascinating--until one looked at the small print, and discovered that most of the women in those groups, because they were not receiving the jobseeker's allowance, were not eligible to participate in the new deal. The youth service had included them in the group because they were actively seeking work and wanted jobs.

For too long, the benefit system has trapped women who want to work by denying them access to training, education and help--it has dismissed and ignored them. The Budget's equal treatment of women is an extremely important change.

As my right hon. Friend the Secretary of State for Social Security and Minister for Women said, another significant feature of the Budget is the £10 million for a pilot programme that will provide education and training for lone parents. Although it does not look like much money, it could prove to be a significant factor in raising children out of poverty.

Skills and qualifications are a greater factor for lone parents in determining whether they work than they are for other people. Statistics show that 87 per cent. of people with degrees are in work, and that 88 per cent. of lone mothers with degrees are in work. At the other end of the skills spectrum, 52 per cent. of people with no qualifications are in work, and 47 per cent. of mothers with no qualifications are in work. However, only 22 per cent. of lone parents with no qualifications are in work.

Qualification levels are, therefore, immensely important in determining whether lone parents work. Child care--extremely important though it is--is not the only factor in lone parents' ability to work. We must also give women an opportunity to gain the education and skills that they need--not only to get their first job, but to get their next job, and the one after that.

This morning, the Employment Sub-Committee took evidence from various groups working in child care and with lone mothers. They all agreed that the most important next step in the new deal for lone parents is to improve availability of child care and education.

The Budget represents an important new deal for women--it is a very important Budget for women. By my calculations--on the basis of calculations in the Red Book--the Budget, on average, will benefit women five times more than it will benefit men. That is not a sexist point--

Mr. Ruffley: Yes, it is.

Yvette Cooper: It is a reflection of the fact that women are more likely to be in poverty, and that women are more likely to be looking after children in poverty. Women are the ones who are denied child care and the chance to work, and they are the ones who are lower paid once they are in work. Conservative Members do not realise that fact, which is testament to the fact that, for the past 18 years, they have done so little for women and children in poverty in the United Kingdom.

The Budget is remedying the inaction of the past 18 years. It is part of Labour's commitment to women, to children and to families in poverty. It is a chance to start turning things round.

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6.53 pm

Mr. Christopher Fraser (Mid-Dorset and North Poole): Although--as we all know--the Government inherited the strongest economy in a generation, Labour's first Budget, last year, raised taxes. Let us not forget that that Budget raised 17 taxes, or that a typical family is now £800 per year worse off because of that Budget. The increases were imposed despite the Labour party's pledge in the general election campaign that there would be no tax increases.

Last year's Budget will be remembered as one that shook to the core all those who were saving for their retirement. The raid on company pension funds hit workers, shareholders and consumers alike, and was regarded as a betrayal by the prudent and the responsible. We now learn from the Red Book that, for 1998, the Chancellor forecasts a sharp drop in personal savings. That was hardly surprising after he placed a tax on savings and pensions.

We all accept that one way in which to control consumer spending is to raise interest rates--which is what the Chancellor and the Bank of England have done. However, the effect of higher interest rates has been to raise the value of the pound. Our exports have become more expensive, and so--as is demonstrated by the fall in manufacturing output for five consecutive months--exporters and manufacturers are heading towards recession.

As if that were not bad enough, businesses now face new taxes, to the tune of--according to the Confederation of British Industry--£22 billion. Now the Chancellor wants businesses to cope with the administration and arbitration of the new working families tax credit scheme. Businesses have to take over where the Benefits Agency will no longer be responsible.

In my work with the Small Business Bureau, I have become only too well aware of how worried small businesses are about the future. They prospered under a Conservative Government, but look to the future with some hesitation. Small businesses will judge the Budget's success on whether it enables the Bank of England to maintain current interest rates, or--dare I say it--even to cut them. They expected the Chancellor to unveil measures to satisfy the Bank of England that no more interest rate rises would be necessary.

On the evidence, has the Chancellor done enough to encourage the Monetary Policy Committee to hold rates? We shall see. For how long will the Chancellor be able to continue shrugging his shoulders and blaming the Bank of England for the difficulties that high interest rates are causing to the wealth-creating sector?

Businesses employing high-paid workers will suffer also from the reform of national insurance. How will that impact on their productivity and job security?

The Budget's success in my constituency of Mid-Dorset and North Poole will be judged not only on what it has done to British business, but on how it affects married couples, people living in the rural parts of my constituency and pensioners. Many of the people in those groups were looking forward to the much-talked-about 10p starting tax rate, yet--two Budgets into this Parliament--there is still no sign of it, and no date when it might apply.

My constituents will be entitled to feel that the Chancellor has let them down. The Labour party will have to learn the difference between being in opposition--

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when it promised the earth--and the hard world of government, in which it is held to its promises. Indeed, the never-never is a feature of the Chancellor's policies--he is living on tick. He has, for example, introduced an immediate rise in fuel duty, which will not be offset by proposals that are purported to benefit my constituents until autumn 1998 or, in some instances, until next year.

I welcome, of course, the Chancellor of the Exchequer's recognition that the tax and benefit system has disadvantaged those with children--but what has he done to deal with the disadvantages of those who want to stay at home to look after their own children? He has created a huge disincentive for mothers in two-parent families to stay at home, yet he has created an entirely opposite incentive for lone parents.

The Chancellor--by introducing the 12-week linking period--is undermining benefit cuts to lone parents, maintaining lone parents' benefits at current levels and continuing the same culture of dependency. He has also created an incentive for lone parents to take short-term work, so that they will not lose their entitlement to higher benefit rates. Therefore, the new deal for lone parents is already struggling. Those added incentives will further prejudice lone parents' return to full-time work.

What has the Chancellor done to encourage stable married life? How does he reconcile a reduction in the married couples allowance with his statement that


How can the Chancellor's pledge that the Government will reduce welfare spending be reconciled with the fact that the Budget has increased the cost of welfare in the United Kingdom? He can justify it by tinkering, tapering and sleight-of-hand. The indications are that--because of the Chancellor's reforms--welfare spending will rise by £10 billion over the life of this Parliament.

Who will pay for that spending? The taxpayer will pay. The fact is that--because of this Budget alone--250,000 families will face higher marginal tax rates. Moreover, they face a third increase in the cost of petrol since May, when Labour won the general election. In rural constituencies such as mine, and that of my right hon. Friend the Member for South Norfolk (Mr. MacGregor), such price increases are crippling.

As a sweetener, we were promised that £50 million would be spent on rural transport. That equates to £1 per person spread over three years. How can that make a difference to the country? How much of it will Dorset enjoy?

The huge increase in duty on fuel is Treasury motivated and represents a further tax on the countryside. Has the Chancellor learnt nothing from the strength of feeling demonstrated by the countryside march recently when 250,000 country people filled the streets of London seeking better recognition of their problems?

How do I answer the pensioners in mid-Dorset who have contacted me in the past few days? They have received no additional help from the Budget, yet they will have to cope with the huge increase in fuel prices. Many of them cannot live without a car, living where they do, and must somehow make their pensions stretch further to cover the increase.

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It is cold comfort for them that at some stage, £50 million will be spent on community transport projects that have yet to be defined. It is also cold comfort for them that the smallest and cleanest cars will attract a lower rate of road tax. Many of them are still driving old faithfuls--cars that they have had for some time which do not benefit from the latest technology.

During the election campaign, the Chancellor told pensioners:


After 10 months in government, Labour has not fulfilled that promise. Pensioners face increased costs and lower private pensions following the abolition of advance corporation tax. Many of them pay more in council tax, thanks to the extravagance of Labour-controlled local authorities and, in Dorset, the equally damaging Liberal Democrat councils.

Perhaps media reports are accurate when they tell us that the Prime Minister intervened to soften the blow of some of the Chancellor's proposals--but what did he do? He spoke to the Chancellor--but for whom? Was it for industry, the middle-income taxpayer, the stay-at-home mother and the pensioner? I suggest that it was not.

The success of the Budget, which in many ways is better than I had expected, hangs on future growth, yet we still have higher interest rates and we are soon to have a minimum wage. I wonder what the impact will be on the golden economic legacy that the Chancellor has inherited and to which many of my hon. Friends have referred.

The Chancellor should remember that the Budgets that are cheered the loudest are often regretted the longest. I fear that he will live to regret a significant part of the Budget that he presented on Tuesday and that the country will rue the day that it was announced.


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