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7.56 pm

Kali Mountford (Colne Valley): I am very pleased to be able to speak in this debate on what I believe to be a stonking good Budget which will herald a turning point in our economy. It will restructure the economy and the tax and benefits system, and it will refocus benefits for everyone, especially the poorest in our communities. Moreover, the Budget is non-judgmental; it does not distinguish between people according to the size and shape of their families; nor does it exclude people from work and assume that people who are workless are workshy.

I represent a largely rural constituency and I must tell the House that the poverty that people in rural communities face is worse than that almost anywhere else. It is unhelpful of Conservative Members not to recognise the benefits to rural communities that the Budget and other measures will bring. My constituents who live in villages are far from urban centres where most of thehelp resides, including voluntary organisations, the Employment Service and social services. Few of those agencies have outposts in villages. Evidence shows that fewer and fewer resources are available in villages, which are literally crumbling under the strain.

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What of the poorer people in those communities? People who live in my village--

Mr. Ruffley: Will the hon. Lady give way?

Kali Mountford: I am sorry, but time is short--although I am grateful that the hon. Gentleman is interested in what I am saying.

People who live next door to me, for example, have great difficulties accessing the resources that are available to people in urban areas because there are so few buses. The village along the road had its bus service cut so dramatically that the residents had to form a bus action group to press for the reintroduction of the rural bus.

I think that £50 million will go a long way towards helping with that, but let us not forget the £500 million that is being made available for all public transport. Conservative Members have said that that is too little, too late, but I do not remember Conservative Chancellors of the Exchequer making such resources available. They took the dogmatic approach that the private sector will reap all--it certainly reaped my bus services. Hon. Members may think that bus services are not important, but for my constituents they are, as they are the access to everything else. For young people who can now get a pass for the bus service and so access the new deal, it could be the turning point in their lives.

Since September, the number of young unemployed people in my constituency has almost halved, I am pleased to say. Only 150 are left without work. We are already seeing the effects of economic restructuring to enable people to get access to work. There is money for research and development, money to encourage people to invest in the long--and not the short--term and money so that we can have a more stable economy. All of those developments will help small businesses in my constituency and elsewhere to make long-term investments to provide jobs.

In another debate, I said that the new deal would be an important part of the strategy to encourage small businesses to take on young people so that their businesses can grow. Few young people in my constituency still need the new deal, so I am particularly glad about its extension to other people who need it at least as much, in particular lone parents. The new linking rules for benefits for lone parents and people with disabilities are welcome indeed. They will take away the fear of trying out a job.

A couple of weeks ago, I met someone at my surgery who had recently found herself a job. She is disabled and had pointed that out during the job interview, but everyone agreed that she would be suitable and she was given a date to start. Sadly, on her first day she was unable to perform her first task because of her disability and her immobility, so it was amicably agreed that she should not even start the job. I was disappointed that the firm took that decision and I hope that we can reverse it in the near future. Knowing that there was no fear of her losing benefits if she tried the job for a time to find out whether it could be redesigned to suit her needs might have helped both her and her employers.

Sometimes it is difficult for employers to imagine how someone with severe disabilities can fit into the new style of working to which they are being introduced, but, with a little imagination, people can often find ways of fitting

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the job to the person with the disabilities rather than trying to make that person fit into an old style of working. The change will be a magnificent improvement for people such as my constituent.

A major step forward is the fact that we are focusing on children instead of the family structure. I have long argued that children are the most important consideration when we make decisions on tax, benefit and work. It is wrong to design child care strategies to suit the needs of parents or employers. I have made many mistakes by encouraging people to take particular styles of child care only to find that they do not suit their families. It is about time that we considered a strategy that suited the child.

I was disappointed to hear the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) suggest that, by introducing this child care strategy and help for parents, we would be doing children a great disservice. We have been doing them a great disservice for many years and it is a disgrace that this country has the worst record on child care in Europe.

To assume that making child care available is doing some disservice to children and to make a moral judgment on families who choose to take up such services says a great deal about our attitude to families. They have made their decisions about partners and whether they will be married. Many people make decisions against their best wishes. Partners die, or leave, and people are often left with complex family structures. Are we to make a moral judgment about such people?

In spite of those complex family structures, people still need to work because a lifetime on benefits is abhorrent. Are we to say that if people go out to work their children will be less well served than the children of their neighbours who are fortunate enough to have stayed in one marriage and who do not need both partners to work--a rare family these days as less than one third of families are like that? The majority of families probably need access to some child care at some point. Should we tell them that their children will be so ill served by that system that they should not make that choice and that a lifetime in poverty on benefits is preferable? I hope not.

My children have been in child care at times--I hope that they are in pretty decent child care right now--and I would like to think, or in fact I know, that they are well-rounded and lovely people and have not had any disbenefit from that experience.

There is plenty of evidence to show that children in child care, especially those who go to nurseries, benefit a great deal. The IQ of some children who have been in child care builds up, although immediately they come out of that constructive environment it often tapers off because the stimulation is no longer available. In those early years, stimulation is good for children and I very much welcome the pilot programme of early excellence centres that will bring together all sorts of child care elements. Working in partnership is a good way forward and will provide the best for our children. I hope that the whole House agrees with me on that.

8.6 pm

Mr. David Ruffley (Bury St. Edmunds): I think that it was the late Iain Macleod who said that the Budgets that were cheered loudest on the day looked the worst six

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months down the road. Conservative Members believe that this Budget is one such. It is a triumph of style over true substance and the most over-hyped Budget in the history of modern politics. It was distinguished by grandiloquent language. We heard that the Chancellor is the "people's guardian" and talk about this being a once-in-a-generation opportunity to modernise tax and benefits. Such terms and style of language are ridiculous.

Mr. Fallon: Perhaps it is time that we changed the people's scriptwriter.

Mr. Ruffley: My hon. Friend is right. It is language as ridiculous as a Chancellor who borrows someone else's children for a cheap photo opportunity the weekend before the Budget.

This Budget set up great expectations; we contend that the people will be disappointed because it fails three tests by which it should be judged. The first relates to the welfare and tax proposals. No doubt, the aim is to increase incentives to work and the number of jobs, and to reduce the welfare budget, but it will fail.

The second test relates to the delivery of stable macro-economic management; the Budget will fail to do that. It will not be able to sustain the rates of growth that are necessary and desirable for our country.

The Budget also fails the third test, which is to deliver on new Labour's promise not to increase the tax burden on middle Britain.

The Labour party is very keen to invoke the words of the Institute for Fiscal Studies. Paul Johnson--not the Conservative commentator, but the deputy director of the IFS--said that Labour's welfare proposals certainly do not represent "a major reforming package".

The working families tax credit is essentially a rebadging of family credit under the Conservative Administration. But it is much more expensive, as it goes higher up the income scale. We cannot see how it can possibly deliver cuts in total Government expenditure. It may be classified as other than social security spending, but it will result, as night follows day, in a greater liability for the British taxpayer.

No Labour Member has made any serious attempt to answer the questions about wallet versus purse. We hope that the Minister will answer the questions posed by Conservative Members.

The child care proposals are of interest to a party--the Conservative party--that introduced a disregard for child care in 1993. We are certainly not against child care in principle, and it is a calumny for Labour Members to suggest that we are. But we have real concerns about the package proposed in the Budget.

The IFS and Mr. Paul Johnson are also concerned. He says that

There is no sensible forecast in the Red Book of the ultimate cost of the proposals.

We are concerned about the nannies and grannies who do valuable care work in the home for no pay. They will not be favoured by the proposals. Money for child care will be claimed for services rendered by registeredchild carers, but not for work done by volunteers. The Conservative party has an excellent solution to that: the transferable tax allowance. Many of my constituents would have liked that to be in the Budget.

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The state-registered nature of the child care allowable under the proposals amounts to nothing less than the nationalisation of child care. [Laughter.] Labour Members may scoff, but they must understand that incentives will be provided for those whose children are currently cared for by nannies, grannies or other relatives to buy child care at the state's expense, and that must be an undesirable outcome. The proposals, together with the cut in the married couple's allowance, show that the Budget is not especially a Budget for the family.

The proposals are meant to provide work incentives and encourage people back into the labour market, but the Labour party has not even begun to deal with the critical question of what is the chief determinant in creating jobs. Mr. Kaletsky in The Times pointed out that the true determinant is economic growth, not packages and tax incentives of the kind set out under the welfare proposals.

The Budget also fails the test of proper macro- economic management that delivers stable economic growth, which is the real determinant of jobs. The fact that the Chancellor departed from the long-established convention of opening the Budget statement with a proper detailed analysis of the macroeconomic environment and outlook was telling. He skated over the issue, and the reason is no surprise: he did not dare to address the issues of the high pound and high interest rates.

Nothing in the Budget does anything to address those two central problems for the real economy. It is no coincidence that the high pound is going even higher. As speculators fear an interest rate rise on the back of the Budget, they are buying sterling and pushing up its value. The Budget has failed in that respect, too.

Labour Members always ask what we would have done differently, to ensure that the pound and interest rates were not so high. I am happy to tell them. The bad economic management since 1 May has destroyed the golden economic legacy, primarily through the transfer of control of monetary policy to the Governor of the Bank of England. Under a Conservative Administration, there would not have been a Monetary Policy Committee packed with people who do not understand monetary conditions or the real economy.

I am sorry that the hon. Member for Bolton, West (Ms Kelly) is not in her place. She would certainly have joined us in calling for confirmatory hearings for nominees to the Monetary Policy Committee, as then we might have had a bit of common sense on that body. The net result of mismanagement since 1 May and the Budget proposals is that we face a recession. All the serious commentators say that there is a serious risk.

The Red Book shows us why. Consumer spending is set to fall, with the tax burden rising, the balance of payments surplus turning to deficit and the savings ratio falling. I remind Labour Members to look at page 116 of the Red Book. They will discover--

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