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8.32 pm

Mr. David Chaytor (Bury, North): I, too, welcome the Budget, particularly its emphasis on making work pay, the steps that it has taken to reform the appalling anomalies within the welfare state that we have inherited, its support for families and its new help with child care, the new

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investment for public services, particularly schools and hospitals, and the various measures that will support small businesses and job creation.

Those measures will be welcomed by my constituents in Bury. For too many years, thousands of them have suffered from chronic levels of low pay, from too little full-time work and too much part-time work, and from the absence of child care. The increase in child benefit will be appreciated by the 27,000 families in my constituency, particularly as one in nine are lone-parent families.

My local authority in Bury has one of the lowest levels of per capita funding for children in primary and secondary schools of any local authority in Britain. Therefore, the new investment in schools will be particularly welcome. Equally, our hospital has one of the lowest levels of per capita funding of any hospital trust in Britain. The new money for reducing waiting lists will be significant.

The Budget is in marked contrast to the successive Budgets of the Tory years, which served simply to reinforce inequality, progressively to disfranchise more and more families and young people, and to exclude increasing numbers of people from mainstream society. I am proud that my Government, through the Budget and the new deal, are starting to rebuild hope for the next generation, whereas the previous generation saw nothing but exclusion and the progressive eradication of its opportunities.

The significant changes to national insurance, the introduction of the working families tax credit and the tax credits for child care will help to transform the lives of many of my constituents, particularly women who are struggling to combine work and child care, or women who have been excluded from the labour market for too many years simply because of the limited availability of child care.

Within my general welcome for the Budget, I wish to raise one or two specific points, which I should be grateful if my hon. Friend the Paymaster General could mention when he replies.

First, I have to agree with one or two Conservative Members about the unfortunate absence of any reference to pensioners, either in the Chancellor's speech on Tuesday or in the Budget report. We understand and welcome the important help with fuel costs that was given to pensioners before Christmas, and we know that the pensions review will be published in the first half of this year. Clearly, this is not the time to make major changes to the pension system. Nevertheless, it would have given some hope, confidence and comfort to the nation's pensioners had there been some reference to them, even a simple one to the forthcoming review, in Tuesday's speech or in the Budget report.

With regard to lone-parent families, I understand the Government's point about separating out the issue of need and the issue of family structure, saying that need, not family structure, should be the basis of public support. I have tried hard to agree with that, but I simply cannot accept that the needs of a two-earner family paying the higher rate of income tax are equal to those of a lone-parent family. I cannot believe that the difficulties of bringing up and caring for children are the same for two parents as for one. I welcome the fact that the Government have responded to the previous changes in the Social

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Security Bill last December. Most lone parents will be pleased with the measures announced in the Budget, but, in line with the comments of the hon. Member for Northavon (Mr. Webb), I appeal to the Government to keep under review the question of need and lone-parent families.

Similarly, I welcome the fact that my right hon. Friend the Chancellor has flagged up the future status of child benefit in terms of taxation. But, again, I simply cannot justify that the child benefit received by two-earner families, paying the highest rate of income tax, should not be subject to tax, yet the lone-parent benefit was taken away last December. I hope that if it is finally decided that child benefit should be subject to taxation, the revenue from that taxation will be earmarked for further help for the poorest families in Britain, many of whom will be lone-parent families.

Another important technical point concerns the merger of the Inland Revenue and the Contributions Agency. That is one of the most profoundly important measures in the Budget because of the changes that it flags up to the future financing of the welfare state. I hope that there will be a lively debate on the continuation of the contributory principle under a merged bureaucracy. I also hope that, whatever happens to the contributory principle, it concentrates our collective mind on the harmonisation of tax and national insurance rates and thresholds and, in particular, flags up the enormous anomaly of the national insurance threshold. I appeal to hon. Members to ask themselves how they can justify the fact that, above £22,000--or thereabouts--a year, one stops paying national insurance? That is one of the most regressive features of our tax system, and, sooner or later, a Government will have to address it.

My major point concerns environmental taxation, about which my hon. Friends the Members for Stroud (Mr. Drew) and for Peterborough (Mrs. Brinton) have already spoken. I add my voice in support of the green tax measures in the Budget, particularly the increase in landfill tax, the cut in VAT on energy-saving materials and the various changes to road fuel duty and vehicle excise duty. Those measures are important and positive, but are comparatively limited in terms of their effect on greenhouse gases or traffic reduction.

To meet our Kyoto targets, there is scope for other measures, such as taxing employers' car parking spaces; urban road pricing; heavier taxation on dirty and fuel-inefficient vehicles, and taxing out-of-town retail parking spaces. I look forward to the forthcoming White Paper on the integrated transport strategy, which will, I am sure, deal with some of those points.

I particularly welcome the Chancellor's decision to investigate industrial and commercial energy taxation. It is critical that we carry industry and commerce with us in moving towards green taxation, and to demonstrate the value of green taxes, not only the cost savings to business, but the potential for growth in energy efficiency and environmental technologies. I look forward to other developments such as, for example, water pollution charges, following the recent Department of the Environment, Transport and the Regions consultation paper.

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Not only does green taxation help to conserve the natural resources on which our future health and prosperity depend, but, in the main, green taxes are cheap and easy to collect. They are difficult to avoid and serve to legitimise the whole concept of taxation. That legitimisation is sorely needed following the disastrous record of the previous Government in encouraging tax evasion and introducing taxes that were widely considered unfair and inefficient.

Most important, as we have seen already, green taxes enable the Government to cut taxes in other areas, most notably labour and wealth creation. That is already happening under our Government. It started to happen under the previous Government, and it is happening across Europe. It needs to be extended further as part of a general policy of shifting the burden of taxation away from goods and processes that are intrinsically good and towards those that are intrinsically bad.

I welcome the achievements on green taxation so far, but there is much further to go. I draw the House's attention to two documents published recently. The report of the Environmental Audit Select Committee contains a wealth of evidence from different sources on the state of green taxation. It rehearses most of the arguments in favour of green taxation. I hope that, over the next few months, the Government will take careful note of it when framing the 1999 Budget. I urge all hon. Members who have an interest in this issue to give their support to early-day motion 1108, which relates to the--

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. Time is up.

8.43 pm

Mr. Oliver Letwin (West Dorset): I am profoundly grateful to be able to speak while our Whips have vanished from the scene, as--perhaps unusually for an Opposition Member--I think that some aspects of the Budget are admirable. It is an immensely tough Budget in terms of the fiscal balance that it establishes. In fact, it outdoes most Conservative Chancellors in that respect. Other aspects that should be welcomed include the general principle of transferring from one form of benefit to a tax credit.

Alas, I do not think that the welcome for the Budget can be unreserved, as the transfer of taxation to the corporate sector, which will be discussed on Monday, will, I think--only time will tell--turn out to have been grossly misjudged and will contribute to what is already a far more severe recession in the manufacturing sector than the Treasury's models recognise. Throughout the past 25 years, the Treasury's models have been notoriously inaccurate in these respects.

I shall concentrate on a matter on which my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) began to elaborate. The Budget has a most important effect--one that I very much doubt that the Government intended. I am delighted to be able to speak about this in the presence of the Paymaster General, because, presumably, he was the Minister responsible for the most welcome U-turn. I presume that he was responsible for ensuring that individual savings accounts would not involve a retrospective breach of the trust of those who had engaged in tax-exempt special savings accounts and personal equity plans. If the Government

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were able to make that welcome U-turn, perhaps, under the Paymaster General's inspiration, they will be able in subsequent legislation--or even in the next few days, if one is to indulge in one's wildest dreams--to alter their position on the matter to which my hon. Friend referred.

I am speaking of something that is far more important to the children--at whom in great part, as many hon. Members on both sides of the House have referred, the Budget is aimed--than the money involved in the child care tax credit. Many issues were raised about the practicalities of the child care tax credit. The jury is out on that. We shall see what happens to mothers, to registrations, and whether it is used as a mechanism for simply increasing family income. If that happens, the predictions of the Institute for Fiscal Studies may come true, and there may be a £3 billion or £4 billion cost, as opposed to the £1 billion asserted by the Treasury.

Be that as it may, I regret to say that the child care tax credit is just a matter of money. How could I possibly say that anything is just a matter of money in relation to a Budget? This Budget intends to have--and does have--profound social effects. It is intended to create incentives, one of which I warmly welcome--the incentive for people to work. If the Chancellor were asked for his proudest achievement of the Budget, he would presumably tell us that it was to create a greater incentive to work. That admits immediately that the Budget's main point is its social effects and the effects on social incentives. If that is the case, it is not the money with which we should be most concerned but the social effect.

Anybody on the Conservative Benches has to admit that, until the last day of the previous Administration, the Conservative Government--much more out of oversight than intention--gradually tilted the balance, I regret to say, against marriage. Many of us, including my hon. Friend the Member for Chingford and Woodford Green, preached against this throughout the time of the previous Government and regret it. However, that is not a reason for the present Government to repeat and amplify the mistake that we made. Any hon. Member who has children will agree that the sad truth is that the most important thing--above money and poverty--for children is how they live in their family.

I do not wish to moralise about this. It is a dreadful error for politicians to moralise. Perhaps we on the Conservative Benches stand convicted from time to time of having moralised too much. If the Chancellor genuinely believes--I think that he does--that his Budget is intended to achieve social effects, he must believe that it is right for the tax system to be viewed from the point of view of the social effects that it is likely to have. That means that the Government have to make a conscious choice about the society that they are trying to tilt towards through the tax system. If that is the case, it is undeniable that the Budget quite specifically militates against marriage.

It is no part of my purpose to argue in religious or moral terms for the institution of marriage. My argument is a practical one. It is about children. There is ample evidence--I do not think that the Secretary of State for Social Security would deny this, as her Department has evidenced this in its own work, and the Select Committee has reiterated it over many years--that, by and large, children prosper more when marriages stick together. It has been shown over many decades that although the

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divorce rate is alarmingly high, marriage is a better means of keeping parents together than any known human institution.

A Budget that starts from a series of mistakes made by a previous Government--perhaps from mistakes made over the previous 100 years--allied to social trendsthat have gradually undermined marriage, and that unnecessarily amplifies those mistakes for a small gain of roughly £1 billion by reducing the married allowance, and further amplifies them by making it easier for people to enter partnerships and still enjoy reasonable incomes for their children, unconsciously and unintentionally does gross damage to the structure of our society. If I am right that that is not what the Government intend, it can be easily remedied at little cost. If I am wrong, however, and that is part of the Government's intention, they should say so--and 30 million, 40 million or 50 million would howl them down.

There has been a tremendous reaction against ideas that were prevalent in the 1950s and 1960 that suggested that there was no difference between partnerships that stuck together and those that did not--hence, between partnership and marriage. That is a dated idea, because the modern view--the Labour party much prides itself on speaking about modernity--is that marriage is a glue that sticks society together, holds families together and helps children.

The Minister should admit either that the effect to which I have referred is not what the Government intended and that they will reverse it, or that it is what they intended and try to make an argument for what most hon. Members, even in this thinly populated Chamber, would find difficult to defend.

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