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Mr. Loughton: Will the hon. Gentleman admit that the chemical industry, which is so important in his constituency, will be hit hard by the energy tax that the Chancellor has announced this afternoon?
Mr. Twigg: If the hon. Gentleman will hold his impatience for a second, I will explain exactly why the problem exists.
At the presentation--a number of the hon. Gentleman's colleagues were there, by the way--it emerged that the cost of energy was a massive problem for the chemical and other industries. That problem had been raised with the previous Government on numerous occasions. When the previous Government privatised the power companies, they made things worse: the cost of energy went up. Therefore, not only did the previous Government decimate the manufacturing industry with their economic policies generally but, on issues such as energy, which is so important to manufacturing industry, they got it wrong completely.
I understand what the Chancellor said today about the energy tax. He has made it clear that there will be a reduction in national insurance contributions. I am pleased that he will continue the consultation. I did not hear anything that would in any way damage my particular industry, given the commitments that he made.
I was pleased to see the Chancellor's commitment to renewable energy. Because of the problems that the energy strategy and policy of the previous Government caused ICI, it was worth its while building its own power station, or certainly getting a company to build it; Intergen did the work. It is still looking at another source of renewable energy--steam--but it has made numerous savings in energy cost by reusing energy that is produced in its plant. That is the sort of strategy that the Government will want to encourage in the industry as a whole, so good practice is there.
Let me conclude my remarks--[Interruption.] I could also read out the tax increases that the Conservatives introduced when they were in power. If they want to talk about tax, we can do so.
Without doubt, today's was another confident performance by the Chancellor; my right hon. Friend's performances are confident. Even the International Monetary Fund is saying that what the Chancellor is doing should be regarded in other countries as a model of good practice. What a change from what the IMF said under the previous Labour Government. There has been a change in strategy and in the way in which we are dealing with the economy. There is now confidence in the handling of the economy by the Chancellor and Government. This week, the IMF again praised the Chancellor and said that Britain's policy should be used as a good example elsewhere.
Mr. William Ross (East Londonderry):
I have sat through quite a number of Budgets and I have rarely heard the two Front-Bench spokesmen behave with the vividness with which they both behaved today. Whether there was any more content in it today, and whether it will mean any more at the end of the week than after many past Budgets, remains to be seen.
One of the things that has always concerned me is the public sector borrowing requirement. It seems, from what we are being told, that that, at least, is going very fast and far in the right direction. I have always thought that a nation should try to balance its budgets. I do not see much point in paying a lot of taxpayers' money in interest: we have paid far too much over the past few years.
I welcome many of the minor items--and there were many--that will have a good effect. For example, the 10p starting tax rate is welcome for both business and individuals. I also welcome the fact that the capital expenditure for Northern Ireland will go up by £50 million. In particular, I welcome the announcement that there will be £2,000 for books for each school in the land. What I am not clear about is whether, when the Chancellor was expressing that good news, he was
including Northern Ireland--or whether the £2,000per school is restricted to Britain, as the last announcement was. Perhaps that could be made clear before we leave the building this evening.
I listened with interest to the Chancellor's growth forecasts. I hope, for all our sakes, that we hit the 3.75 per cent. increase that he thinks we will achieve in 2001. As I have said, I have sat through quite a number of Budgets in this place, and I have found out by hard experience over the years that it does not take much to go wrong, and to go from a Budget surplus to a £50 billion deficit. Anything can go wrong given the fragile nature of the world economy. Most people are behaving as though it is in a robust state, but I think that the full effects of last year's Asian crisis have not yet worked through the system.
Mr. Tyrie:
Has the hon. Gentleman noticed that the Chancellor's growth forecasts are extremely optimistic compared with those being provided by independent forecasters? The Chancellor's forecast for growth this year is 1 to 1.5 per cent., against independent forecasters average forecast of 0.6 per cent. For 2000, the Chancellor's forecast is 2.25 to 2.75 per cent., compared with independent forecasters average forecast of 1.8 per cent. Does it not very much reinforce the hon. Gentleman's point that, if that growth is not forthcoming, the public finances could be gravely imperilled?
Mr. Ross:
Economics is called the dismal science. As it is such a dismal science, many economists try making a wide range of forecasts, in the hope that at least one of them will be right and happy for a day or two. All Chancellors fall into that general trap. Heaven only knows what the effect on public revenues will be if we have only 1 or 0.75 per cent. growth instead of 3.25 per cent.
I noticed that the Chancellor announced, with much cheer and a great flourish, that the inheritance tax band will be raised. Everyone thought that that was quite a substantial sum. However, a check of the books reveals that the band is being raised only to match the inflation rate of the retail prices index. I wonder by what percentage house values have increased in the past one or two years. I suspect that that increase is rather higher than the inflation rate and the RPI. Therefore, perhaps the Chancellor is not being quite as generous as he is telling us. Whenever I discover the Chancellor telling us one such story, I wonder how much more smoke and how many more mirrors are around the place. Usually, there are quite a lot more.
I do not smoke for many reasons--not least because I could not afford it when I was young and foolish enough to start. When I was old enough to understand the ill effects of smoking on health, I backed away from it very rapidly. However, other people in Britain smoke--a figure of 15 million was mentioned earlier. Only education will stop smoking, if it can be stopped at all.
The Government have previously, through the tax system, applied quite a lot of pressure on people to stop smoking. However, page 149 of the Red Book shows that, in the next few years, the tobacco tax take is forecast to fall. Are the Government trying to tell us that there will be a tremendous decrease in the number of people who smoke? Or are the Government being pragmatic and realising that the tax take will decrease not, because of a drop in the number of smokers but because of a very large increase in the amount of smuggled tobacco?
Every year, the Gallaghers firm, in Northern Ireland, comes to see us. In Northern Ireland, 3,000 people are employed in tobacco factories. Gallaghers' representatives told us that, in the United Kingdom, seven out of 10 packets of hand-rolling tobacco are smuggled. An awful lot of that is produced in Ballymena. It goes over to the continent, but is back in a fortnight or less.
Although there is no tax increase on hand-rolling tobacco, there is an increase on pipe-smoking tobacco and on cigarettes. The tax increase on cigarette prices works out at 17.5p per pack of 20. However, where is that revenue disappearing? The reality is that the Government are factoring in a very large increase in cigarette smuggling. This year, the Gallaghers representatives warned us about the problem. I hope that Ministers will take heed of the dangers inherent in smuggling.
I should like also to draw the attention of the House and the Chancellor--if he needs his attention drawn to it yet again--to the road fuel tax. In 1996, Northern Ireland accounted for 2.8 per cent. of the total United Kingdom road fuel market and provided 2.8 per cent. of United Kingdom fuel excise duty. Until today, duty in the United Kingdom was 43.99p per litre for petrol and 44.99p for diesel. In the Irish Republic, duty was 24.54p per litre of petrol and 21.35p per litre of diesel. Today, in the United Kingdom, leaded petrol duty went up by 4.25p per litre, unleaded petrol duty went up by 3.79p per litre, ordinary diesel duty rose by 6.14p per litre and low-sulphur petrol duty by 4.96p per litre.
Smuggling from the Irish Republic into Northern Ireland was already immense, even without those duty rises. A tanker of 25,000 litres gives the smuggler a profit of £4,450 in saved excise duty. Additionally, UK VAT, at 17.5 per cent., also is not paid, taking the smugglers profit to £6,380.50.
Diesel smuggling began in 1997. Large-scale petrol smuggling began after last year's Budget, which increased United Kingdom duty far above that in the Irish Republic. How much is smuggled? Although that is very difficult to determine, a few months ago smuggled fuel was being openly advertised on roadsides. Although the Revenue cracked down on it, the Revenue is short of staff.
We do know that, in the past year, 48 vehicles and 400,000 litres of fuel were seized. However, the Government know that 24 million litres have been smuggled into Northern Ireland in the past year, resulting in a Treasury loss estimated at £100 million. Such extensive fraud is not acceptable to any hon. Member. It is even less acceptable to honest traders in Northern Ireland, who are left in the position of having either to break the law or to close the doors of their businesses. The loss of those businesses would have a real effect on local residents.
Very often, in rural areas and smaller towns, service stations have replaced many corner shops. Local fuel oil and distribution companies are also suffering grievously, as they supply low-volume fuel stations and sustain the operations of smaller companies that the major companies, such as Shell and Esso, simply ignore. They have all been very hard hit. The major oil companies are making an effort to combat smuggling, and have said that their year-on-year losses by value are up to 40 per cent. They are subsidising some of their outlets, but they cannot continue to do so. No one should expect them to do so.
Taxes on road traffic affect transport companies, contractors and construction firms and the aggregate trade. They are all being hit very hard. I should like to know how the Chancellor plans to address the issue. Buying smuggled fuel is not a matter of having to go across the channel, but of driving a mile or two down the road, filling up the vehicle and coming back. The difference in large vehicle excise duty between Northern Ireland and the Irish Republic is, in some cases, several thousand pounds. I am speaking specifically about the heavy vehicles used in the aggregate sand quarrying industry, but also about many other types of vehicles.
Some time ago, I tabled a question on the amount of duty paid in each European Union country on comparable vehicles. No one knew the answer--or at least that is what I was told by the Treasury. I leave it to hon. Members to judge whether the Treasury did not know the answer or did not want to tell me the answer. Regardless, the Treasury was not able to tell me, saying that the figures were not available.
Recent reports show that fuel operators in Great Britain have been hit by vehicle excise duty, as they have been hit by fuel duty. Companies are moving across the channel. In the past week, I saw a report in the newspapers on the Stoddart company's decision to consider moving across the channel.
British traders and lorry owners have difficulty in comparing prices between Britain and those on the continent. However, it is not difficult for people who live in Northern Ireland to compare prices with those in the Irish Republic. Nor is it difficult for them to drive down the road. Firms are transferring their vehicle fleets across the border, taxing them there and operating out of the Irish Republic into Northern Ireland. Those Northern Ireland jobs and companies--which are United Kingdom jobs and companies--are being exported because of the tax structure that operates in the United Kingdom.
Although not too many changes have been made today, higher rates will apply to lorries with axle weights over 11.5 tonnes. There are quite a number of those heavy lorries on our roads. Many of them operate on the continent and many of the firms that use them trade with the continent. I suspect that, by upping the tax on heavy lorries that operate out of the United Kingdom, the Government will simply make it easier for firms that operate out of the Irish Republic, France, the Netherlands and elsewhere in Europe. So where is the benefit? If we are trying to get rid of the heavier axle loading in order to save our roads and bridges--after all, we spent many millions of pounds on upgrading them to EU standards to accommodate the 38-tonners--what is the point of making life difficult for the owners of such vehicles in the United Kingdom, given that everyone else can run them much more cheaply? It is just crazy, and the sooner the Treasury wakes up to that, the better. The Treasury should go back and look at it again.
Green Budgets are a very good idea when one is not in competition with others, but, in practical, terms they will produce real greenery--there will be weeds growing in many business premises in Northern Ireland and ultimately Great Britain as well.
I echo the words of the right hon. Member for Penrith and The Border (Mr. Maclean) on the use of cars in rural areas. I agree with every word that he said. The car is not a luxury for rural families. It is certainly not a luxury in
Northern Ireland; it is absolutely essential. People who live in large conurbations with a bus service that actually works and gets them from A to B within a reasonable time can manage without cars. Where I live, there is no bus unless one is going to school. After that, one has to walk, ride a bicycle or drive. If one lives five miles out into the country, one does not walk or ride a bicycle; one has to have a car. We are continually upping the cost of transport for some of the lowest-paid people in the community to get to and from their places of work. It is not fair and it is not right. The whole system of green politics does not work in the real world.
The right hon. Member for Bishop Auckland (Mr. Foster) began by expressing his regrets that he not got a job in the Government, or something like that. I have no spite against the right hon. Gentleman, who is not in his place. In fact, I have known him for many years and I hold him in very high regard. However, I think it is a good thing when a person who has been close to the centre of things in government or in opposition does not get a job because he knows where all the bodies are buried. He is an invaluable source of information to the House and we are glad to have him here. I was most interested in what he said and he made an excellent speech. However, I was disappointed when he said that he was attracted to the single currency--as the Chancellor undoubtedly is--as an aid to trade with Europe.
The hon. Member for West Worcestershire(Sir M. Spicer) spoke about the need to transfer money within Europe. I thought that he was going to refer to the United States, which is often held up as an example when we debate Europe. However, he did not do that. I am sure that he and other hon. Members know that, in the United States, it is not necessary to transfer very much money because, due to their common language and culture, people move to where there are jobs. That does not happen in Europe because the language barrier creates difficulties for workers, so it becomes necessary to transfer money. In my view that is where the euro will run into immense difficulty.
If all our trade were with Europe, the idea of a single currency producing easier trade and simpler systems would have great force, but that is not the case. A great deal of our trade is outside the EC. Whenever we lift our eyes from the channel and look to the open sea that leads to the rest of the world, our perspective changes about where Britain's future lies. I believe that the open sea tilts the balance decisively in favour of retaining sterling for world trade. It also brings into focus the simple fact that the single currency is not just an economic issue, but a political one from which certain economic and revenue-raising implications would inevitably flow.
For example, taxes would have to harmonise right across the Community. They would be set not by the House, but by others who would seek economic and employment benefits for their own communities. They are bigger and stronger than we are and we know that, whenever they have the power, they will seize the advantage. It has always happened and it always will. I wonder whether the Chancellor really wants his successors to become the puppets of others. He may say that the future will be one of equals contending for common policy on revenue and on expenditure, but I do not believe that. I think that it will be dog eat dog and that we will lose out.
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