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8.51 pm

Mr. Jonathan Shaw (Chatham and Aylesford): All hon. Members would agree that the remarks of the hon. Member for West Dorset (Mr. Letwin) about marriage and children were sincere. Having spent 10 years in social work, I agree that children prosper if families remain together. It is regrettable when parents split up because it has a detrimental effect, but for families on low incomes the pressures and strains of having insufficient resources to pay their way add to discord between couples and ultimately may lead to a marriage or relationship breaking up.

One of the positive measures in the Budget is the working families tax credit, which provides child care support for families.

I wish to focus on three areas--the main welfare to work and social security measures and two related issues. In my 10 years in community and social work, I endeavoured to assist people living in poverty and disadvantage to achieve change. Indeed, that is why I entered politics and joined the Labour party. I welcome and applaud the Budget. It provides essential solutions to tackling deprivation, and it will enhance the lives and opportunities of many people and families.

The new deal was introduced last July. Its proposals have been met with considerable enthusiasm in my constituency, especially among employers and young people. We recently launched the Medway towns new deal in the House, at which I was pleased to see the chairman of Gillingham football club. The Budget's proposals are the next crucial step after the new deal in

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helping to tackle poverty. The key test for the Labour Government is to turn back the tide of poverty that has crept over the country in the past 18 years.

Being on benefit should not mean that someone must live in poverty. My hon. Friend the Member for Bury, North (Mr. Chaytor) referred to pensioners, many of whom live in poverty. That is particularly true of those who served in the war, who now have only a couple of ha'pennies to rub together. That is an indictment of us all. I was pleased to hear my right hon. Friend the Secretary of State reiterate that not everyone will be able to work and take advantage of the Budget's proposals. People with disabilities should not feel guilty about being on benefit; they should be secure in the knowledge that we value them as equals.

Being trapped on benefit is a real existence for many people, and in my previous work I saw the manifestations of that, which were eloquently described by my hon. Friend the Member for Bradford, North (Mr. Rooney). In constituencies such as mine, in which unemployment is about 5 per cent., there are pockets of unemployment where the rate is twice as high, and that has applied for far too long. As economic prospects improve for the majority, little seems to change for such people.

I recently attended a business breakfast, at which we were again launching the new deal. An employer said, "To tackle deprivation, surely all we must ensure is that the economy continues to improve." That is right, but if everyone is to benefit, especially those communities about which I am speaking, the necessary structures must be put in place, which is what the Budget aims to do.

It is not simple to get people back to work: a number of measures must be used. Shaming people and telling them to get on their bikes, which we heard many years ago, will not work. That only alienates people and defeats the desired objective.

We must also have a change of culture. It is hardly surprising that young people from the second or third generations of a family that has not experienced work have little aspiration other than the dole queue. I recently travelled to London on the train and spoke to two 18-year-olds from my area who had no expectation other than benefit. Indeed, they were surprised that I felt that they should be looking for an alternative life style. Perversely, they argued, albeit wrongly, that they were better off on benefits.

My hon. Friend the Member for Bradford, North eloquently stated that, tragically, many families are better off on benefit. The communities on the estate where those 18-year-olds live have been increasingly excluded and deprived. Many parents on such estates feel that they have not been able to offer themselves as a role model because they have been unable to work. I do not condemn them, but we must provide opportunities for parents so that as their children grow up they see that the aspiration to, and expectation of, work are the norm and do not say when they are 18, "We're better off on benefit."

The Budget's tax and benefit proposals will enormously assist low-income families and those on benefits and will effect the change in culture that I have described and provide opportunities.

The current family credit system has many faults, and there is a stigma attached to it. People have to fill in reams of paper when applying for it, and there is an

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unsatisfactory take-up rate. People generally prefer not to be in receipt of welfare benefits. The Chancellor's proposals will give more cash help to 400,000 families and will break the benefits link, as the credit can be paid through a wage. That is a far more dignified way of assisting low-income families. I look forward to hearing whether it will be paid through the purse or the wallet.

Child minders and nurseries were part of my responsibilities when I worked in social services. There are many unregistered, and therefore illegal, child minders. They do not necessarily have a wanton desire to flout the law and put children at risk: they are neighbours and friends, particularly in poorer communities, who act together to support one another. There is a massive shortage of good-quality child care. The working families tax credit, coupled with the improved child benefit, will allow parents to work and will be an income and a regenerator for poorer communities, because money spent on child care will remain within those communities. I welcome the debate on who should receive child benefit and who should be taxed on it.

Another 50,000 child minders are required. That would put further pressure on local authorities' registration and inspection units.

9.1 pm

Mr. Robert Walter (North Dorset): I shall take a different approach from other hon. Members, although my right hon. Friend the Member for South Norfolk (Mr. MacGregor) referred to the matter that I shall raise. The Budget is very unfriendly to those who live outside urban Britain. It is an attack on the countryside, and shows Labour's lack of understanding of rural issues and rural problems. My argument has nothing to do with country sports: it is about the people who live and work in rural Britain.

Britain's hard-hit farmers were left stunned by a Budget that offered them little or no comfort. I declare an interest as a farmer. The Budget did nothing to tackle the overall impact of the strong pound on agriculture and although the Chancellor acknowledged the problem, he did nothing to address it.

The deputy president of the National Farmers Union, Mr. Tim Bennett, said:

Farmers remain seriously concerned about the strength of sterling, which is forcing up their costs and drawing in cheap imports, with catastrophic effects on market prices.

Farmers can draw little comfort from the Red Book. Under "Changes from previous plans" in the section on the public finances, it shows that spending by the Ministry of Agriculture, Fisheries and Food was down £140 million in 1997-98, and is down £50 million for 1998-99. Apart from the special circumstance in the Department for Education and Employment, they are among the largest reductions in spending plans.

Hon. Members may think that the changes to capital gains tax have little to do with farming. The retirement relief on capital gains tax is to be phased out over five years from 6 April 1999. That is bad news for anyone who is contemplating retirement from farming after April 1999, as it is for the disposal of any smaller business.

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The Chancellor has chosen not to synchronise the withdrawal of retirement relief with his reductions in the rate of capital gains tax.

The proposed changes will ultimately result in people being unable to retire because they will have to use their money differently. That is contrary to intentions announced in the House by the Minister of Agriculture, who is seeking European Union support for an early- retirement scheme. He is asking Brussels for money for early retirement, yet he is allowing the Chancellor of the Exchequer to remove one of the most advantageous early-retirement schemes available to farmers. Farmers who want to retire are not helped by the increases in stamp duty. It is not only large farms that are worth £250,000 or £500,000; they and smaller farms will now be affected by the 3 per cent. rate of stamp duty.

Farming, market gardening, forestry and timber production have been excluded from the new enterprise investment scheme and from the venture capital scheme.

The Chancellor announced with some glee that he was reducing the mainstream rate of corporation tax to 20 per cent. Most farmers do not run their farms as corporate bodies. Farmers are individuals, so their businesses will not benefit from the reduction, and they will still pay the 23 per cent. rate of income tax.

Labour Members have suggested that the increase in petrol tax is in line with increases introduced by the previous Government. We have had two increases in petrol duty in just 10 months, whereas the previous Government did not increase petrol tax twice a year.

Drivers in rural areas--mothers who take their children to school and those who drive to work out of necessity rather than by choice--will suffer immediately as a result of the increase in petrol prices.

The deputy president of the NFU said:

Britain's rural parishes will have to bid for cash from this £50 million fund, which seems ridiculously small if it is to have a sensible effect. The Times suggested:

    "If the three quarters of rural communities without any bus service at all share Gordon Brown's promised £50 million investment in rural transport they will end up with little more than a wheel nut each."

I contend that £50 million is not much spread across the country.

Let us take a typical couple with two children and a mortgage, living in one of the shire counties of rural Britain. Such a couple will be about £1,000 worse off as a result of the measures introduced by the Government in two Budgets. There are the increases in petrol duty, which I have already mentioned; there are the increases in mortgage interest rates, which, as we know, result from high interest rates that led to a rise in the value of sterling; and, of course, there are the increases in council tax, which in my county amount to a minimum of 12 per cent. in any district year on year. That represents an 11 per cent. decline in the disposable income of the typical couple whom I have cited.

The Government have demonstrated their insensitivity to the needs of rural Britain. They have hit rural industry, especially agriculture. In the first year of the current

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Administration, agriculture has become £2 billion worse off, and the Budget has done nothing to redress that. In fact, in many of our rural industries and communities, it has made the position much worse.

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