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Mr. Deputy Speaker: Order. I call Mr. David Drew.

8.16 pm

Mr. David Drew (Stroud): My hon. Friend the Member for Bolton, West (Ms Kelly) referred to this as a radical Budget, and I am only too happy to concur, except that I would add that it remains within a well-rehearsed set of themes announced on numerous occasions by my

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right hon. Friend the Chancellor. I want to re-rehearse those themes quickly, to set the context, before coming to the substance of my speech.

The themes are stability, with low inflation; fiscal rectitude; ending boom and bust; reducing our indebtedness; fairness, the centrepiece of which is the welfare-to-work strategy, with the evolution of a national anti-poverty strategy now locked in place; help for business, with increased transparency and clarity in the way in which we shall offer help, and a taxation structure that adds to the benefits of long-term investment and rewards entrepreneurship as well as giving specific help and advice; and, last, but not by any stretch of the imagination least, a concentration on the rebuilding and, indeed, enhancement of public services.

My right hon. Friend the Secretary of State for Social Security gave us a sense of the excitement of our getting to grips with a proper, integrated national child care strategy. That has been universally welcomed by the child care organisations.

I want to discuss the implications for child care in rural and semi-rural areas. I was interested to hear the hon. Member for Bury St. Edmunds (Mr. Ruffley) calling the proposals the nationalisation of child care. They are anything but that, because they allow flexibility in rural and semi-rural areas, where there is little competition or even a monopoly of care. Women in particular, and parents in general, need to know that their children are in safe hands. That can be assured only if there is quality child care provision, with genuine investment and appropriate regulation. I am pleased to see that that is a key part of the Government's proposal, from which rural areas stand to gain as much as urban areas.

I shall restrict my remarks to two of the Opposition's lines of attack. The first concerns their environmental allegations in regard to the petrol tax escalator. I remind the Conservatives that they initiated the petrol tax escalator when they once claimed to have environmental credentials. The Conservatives' torch logo is appropriate, as it sums up how out of touch they are with the environment. Perhaps the colour of that logo should change from blue to brown, as the Conservatives have no credibility left on the environmental front.

We welcome the fact that the Government are trying to do something about one of the most damaging pollutants and prevent the depletion of the quality of our environment. It is tough, and we must rely on a carrot-and-stick approach. We must talk to our constituents and rationalise: we must explain that they cannot have it both ways. However, I believe that people are genuinely beginning to get the message; they are realising that they will not see an improvement in the environment if they continue to use their cars whenever they want.

I served on the Committee that examined the Road Traffic Reduction (United Kingdom Targets) Bill, and the Opposition spokesman, the hon. Member for Christchurch (Mr. Chope), did his best to filibuster and block that legislation. The Opposition should understand that people want to see those measures put into effect at the earliest opportunity. They are prepared to make sacrifices so long as there is a reward. We can provide that in the form of the carrot, by rebuilding our public services, including our bus and rail services. That will not be easy; the Budget has made a start, but we must go further.

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The Budget contains other measures that affect the environment. My hon. Friend the Member for Nottingham, South (Mr. Simpson) talked at considerable length yesterday about the reduction in value added tax on the installation of home insulation materials, so I shall not go over the same ground. The Government have increased landfill tax, and we have pledged to examine other difficult issues. For example, we shall consult about the impact of a carbon tax on business, industry and commerce. We shall consider how we can introduce a sensible environmentally sensitive tax regime that is both fair and comprehensive.

We must recognise that we are moving inexorably towards some form of green taxation. Although Labour Members welcome that, we do not wish to put the Chancellor of the Exchequer in an impossible position: we must take the nation with us. However, there is a clear demand for such taxation, as people know that the alternative is worsening health, the depletion of resources and an increase in pollution and associated dangers for them and their children.

The Opposition's second line of attack stems directly from their petrol tax accusations. It concerns principally the people who live in rural areas, of whom I am one. I am proud to represent the constituency of Stroud. We must appreciate that the rural economy is extremely complex and does not rely simply on the motor car--although that is an important feature of rural life. One must ask why Conservative Members did not argue against all the previous increases in petrol tax. They did not recognise the impact of that tax in terms of poverty, loss of services and the fact that people could not travel to find work.

We shall address those issues. We must find other means of enabling people to get to work--or, more particularly, we must provide work in rural areas. I am pleased to see that teleworking is a fast-growing industry. There are some dangers in that field in terms of low pay and poor conditions, but people may choose the type of work they do, when to work and when to be with their children. Teleworking provides tremendous opportunities and people do not have to use their cars to travel to work. That is one way of addressing a very difficult problem.

My remarks have been sparked partly by thespeech last night of the hon. Member for Cotswold (Mr. Clifton-Brown)--who is near me geographically, if not politically. He launched a full-frontal attack on what he considered to be the Government's failure to assist public services in the county of Gloucestershire. That is total and absolute gall on his part. Although it is only a start, we have begun to turn around education in Gloucestershire this year. All our schools have received a budget increase of between 1 and 2 per cent. That is not a huge amount, but it is better than cut after cut, which head teachers grew used to under the previous Government. They are now much more confident that the present regime understands what the schools want and will finance them properly.

The hon. Gentleman's attack on health and bed blocking in my authority was also totally unjustified, because we are dealing with problems caused by the previous Conservative Government. It is totally unjust to claim that we do not care about public services. We will rebuild public services and we shall see this country into the next century with the quality services that it deserves.

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8.26 pm

Mr. Steve Webb (Northavon): There are many elements in the Budget that I welcome warmly. I shall touch on three of them before moving on to what I consider to be an important omission.

The first measure that I welcome particularly--I have argued for it for many years--is the sensible reform employer national insurance contributions. It has always seemed anomalous that, when employee contributions were more or less sorted out, the previous Conservative Government did nothing about employer contributions and allowed the entry fee and the absurd tiered structure to remain.

This Government sensibly produced a pre-Budget consultation document, to which the Liberal Democrats responded. In our response, we argue that employer national insurance should be restructured, perhaps with a uniform rate above the lower earnings limit. Except for the fact that the Government have raised the lower earnings limit, they have done precisely as we recommended. We warmly welcome the move, which we regard as a sign of a responsive Government. We are grateful for that.

Secondly, we welcome the closer alignment between income tax and national insurance contributions, by merging the Contributions Agency with the Inland Revenue and aligning thresholds. We wonder whether that presages an eventual integration. I shall be interested to hear from the Paymaster General whether the Government have decided that the contributory principle has a future and that those basically direct taxes will eventually be merged. I hope for a response to that question, but I do not expect one.

The third element of the Budget that I welcome sincerely is additional money for the poorest children. I welcome very much the provision of extra money on the rates of child premiums for income support, for children under 11. It is sensible that that measure focuses on younger children who have the greatest need. However, I part company with the Chancellor on one point. He said:

The evidence is clear that one-parent families on income support are much poorer than two-parent families on income support. When measured by all the yardsticks of deprivation--such as durables, debt and all the things that affect quality of life--lone parents on income support are poorer than two-parent families on income support, and therefore require extra, rather than the same, help. We welcome additional money for all poor families on income support, but, on the Chancellor's own argument that support should be on the basis of the identified needs of children, lone parents continue to have a case for additional money.

As I said in an intervention during the Secretary of State's speech, it is regrettable that, in 1998-99, we have the anomaly that new lone parents will face the cut that was so controversial, whereas in 1999 all families with children will, essentially, get the money back.

It is a particular misfortune to become a lone parent in 1998-99 and to have to get by for a year without that £5 of family premium. It would cost the Government

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relatively little, even at this stage, to defer that cut. One element of that cut is still before the other place, and I hope that the Government will take the opportunity to defer it. Then we shall really believe that they are concerned about all poor children in poor families.

I welcome much of the Budget, but there is one important omission, which is housing costs. The words "rent" and "housing costs" do not appear in the Budget. Yet an important table on page 36 of the Government's first consultation document issued last July, "The Modernisation of Britain's Tax and Benefit System", lists the aspects which, according to research commissioned by the Department of Social Security, are barriers to people leaving benefit. The cost of child care is on the list, but in sixth position. After wage worries, second and third on the list come fears about losing help with council tax and with housing costs--mortgages and rents. That has been clearly identified by DSS research as stopping people on benefit moving off benefit into work. Regrettably, there was nothing in the Budget for that cause.

The working families tax credit with extra cash will help to some extent, but as soon as a person with a mortgage of £100 a week, which is not implausible, works 16 hours a week, he will have to find all that money from his net pay, quite apart from child care and all the other costs. That is a huge disincentive, which the Government have not even shown signs of reviewing.

The Government are reviewing housing benefit, which we welcome. During the past 10 years, rents have shot up hugely more than inflation and, like mortgages, rents are a huge burden on the low-paid. I should like to see--I speak in a personal capacity--social rents, and private rents for that matter, brought down. That is a slightly old-fashioned notion, but, as most people in the local authority and social rent sector are on low incomes, cutting rents would be a well-targeted universal subsidy. Universal subsidies are not as popular as they were, but, from a welfare-to-work point of view, it is much more effective to give people lower rents and enable them to obtain work, than for them to have high rents that they cannot afford when they take jobs.

To summarise, there are many welcome things in the Budget, but one important omission is the treatment of housing costs--rents and mortgages. It is regrettable that the matter was not considered in the round. The Budget measures on welfare to work--the working families tax credit, and so on--were not integrated with housing. The minimum wage will help, as will lower starting rates of tax or a higher allowance, the tax credits and the national insurance reforms, but everything should be taken together. Let us bring in housing costs. Let us not suffer from departmentalitis, whereby, because a matter comes under another Department, it is considered separately six months later. Let us include housing and have a comprehensive response to the problems of the low-paid. I shall then be able to welcome the Budget even more whole-heartedly than I already do.

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