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8.43 pm
Mr. Jonathan Sayeed (Mid-Bedfordshire): I congratulate the hon. Member for Shipley (Mr. Leslie) on a fluent speech, very little of which I agreed with. For the sake of brevity, I wish to take him up on one issue only. He said that he was delighted with the measures for families and children, but I urge him to read page 112 of the Red Book. Item 17 states that the married couples allowance will be abolished from April 2000, with a saving to the Exchequer of £1.6 billion, but its replacement, the children's tax credit, will not be introduced until a year later. That is the way in which this Chancellor has consistently clawed back money.
In preparation for the Budget, I organised a survey of a large number of organisations in my constituency. Those organisations are not economists, statisticians or even politicians: they are businesses that employ people and produce profits. Out of the employment that they provide and the profits that they produce, they supply the taxes that Parliament spends.
It is against the yardstick of what those businesses think of the Government that we should judge this Labour Chancellor. A wide range of businesses were included. Some are manufacturers, some are in construction; some are in wholesale and others are in retail. Some are in the service sector, and 23 per cent. of what they produce, they export.
Over the past 12 months, business has grown for one third of them, has contracted for one third, and has stayed the same for one third. Before Labour Members congratulate themselves on that stand-still policy, I should tell them that quite a few companies said that they had been doing so well despite the downturn in the economy because they were living off the good times under the Tories.
I asked what the companies predicted for the next 12 months. Anyone who has run a company will know that one knows a lot about what will happen during the next 12 months. One knows one's contracts, wage bills and much else so that one may make a fairly clever, careful prediction. It is true that 38 per cent. of the companies thought that business would improve, but 62 per cent. thought the situation would remain the same or get worse. That is a statement by business that we are in for a period of economic stagnation, and no Government should be satisfied with that.
I thought that I should check that the companies were wide awake and that they were not sitting on their laurels, but looking to the future and trying to invest. I asked whether they were ready for the millennium and whether their computers were ready, the computer chips in their lifts were checked, and their weighing machines with microchips in them were fully tested. Ninety-seven per cent. said yes.
I asked whether the companies were prepared for the euro, and 49 per cent. said that they were, and had been for some time. I asked how many were in favour of joining a single currency, and three fifths said, "No, never." They said that it was perfectly simple to run a business that deals with many currencies--as I have--without the need to join a single currency.
The companies wanted a Government that they could chuck out when they needed to do so. [Hon. Members: "They did that."] They wanted a Government that they could elect when they wanted to. [Hon. Members:"They did that, too."] Labour Members may laugh,
but the same may happen to them. However, only if we are a sovereign nation will chucking out a Government matter. Most of the businesses want to be part of Europe, but they do not want to be run by Brussels or Frankfurt.
I asked what the Government had done that most affected the businesses, either positively or adversely. Top of the list for three quarters of them was the European working hours directive. They said that, the Government had increased labour costs by 7 per cent. One commented that no overtime could now be permitted. Administration has become more complicated, and there has been a net increase of 1,980 regulations. They said that, under this Government, administration has become more expensive and less flexible. Shift coverage will be difficult. Put all that together with the minimum wage and the increase in upper levels of national insurance, and the companies are finding life hard.
What do the companies want? They want more flexibility and less bureaucracy. They want reduced fuel taxes. They want the Government to encourage capital investment, and to keep their promise to deal with the payment terms of larger companies. The companies were relieved to hear the Prime Minister recognise at long last that taxes are increasing under his Government, and that they would continue to rise. They said that, until the Prime Minister understood that, there was no chance of taxation coming down.
Cutting taxes matters and that is where the Government fail consistently. They trumpet that they cut corporation tax by £800 million, but what they failed to tell us was that, at the same time, by abolishing advance corporation tax and changing the system of collection, they increased the cost to business by £3.6 billion. We have the headline figure for reduced corporation tax, but the figures for ACT and the system changes are hidden. That happened in the previous Budget, and is apparent again in today's Budget.
It is not only headline figures that matter. The Chancellor claims that corporation tax in this country is the lowest in Europe, but he is wrong. Sweden is in Europe, and its corporation tax is 28 per cent. However, Sweden suffers from a brain drain and a capital drain because all its other taxes are so high. It is the totality of tax that matters.
Foreign companies based in Britain produce 40 per cent. of British exports, so it is essential not only that we get them to invest in this country, but that we keep them here. Those companies owe no loyalty to this country and we shall not keep them here unless we can prove that they have a better fiscal environment here than elsewhere. It is critical that the totality of tax, in whatever form it comes, is lower here than it is in any other place where those companies might want to settle.
I believe that a Budget that lacks transparency lacks honesty. This Budget is at best translucent. However, amid the Chancellor's obfuscation, the hidden figures and the unannounced tax increases, some things are clear: tax is too high; tax on mortgages will go up; tax on marriage will go up; and tax on petrol, company cars, pensions, savings, home purchase and business is set to go up. All that from a Prime Minister who said a few weeks before the election that Labour had
Now and again, we hear nice things, for example, that there will be more money for health, education and the police; but then we read in the Red Book that those modest sums will be paid over three years. Furthermore, it is not new money; it was announced almost a year ago. But then I consider Bedfordshire police and remember that the Labour Government cut the funding to that police force during this financial year. The Government say that they will give money in the future with one hand, but this year they have taken away more money with the other hand.
Some would call the Budget dishonest and they would do so because it hides the truth--[Interruption.] As you see, Mr. Deputy Speaker, I am trying to keep within the rules. What is clear is that the Chancellor is anxious to hide some truths.
Ms Diane Abbott (Hackney, North and Stoke Newington):
It is with considerable amusement that I have sat in the Chamber all afternoon and evening watching the Tories floundering in response to a Budget that is, in many ways, a symphony on their best themes: the family, support for business and enterprise, and low taxation. Of course, it was presented with considerable panache and flourish by my right hon. Friend the Chancellor of the Exchequer.
However, I warn my colleagues who have, again and again, prayed in aid the International Monetary Fund in support of the Government's economic strategy that, if I were them, I would beware of plaudits from the IMF. It is a ferociously monetarist organisation, which is not interested in poverty alleviation, the redistribution of wealth or a strong public sector. Some of my colleagues have said with great pride that one of the Government's achievements has been depoliticising monetary policy. That is a contradiction in terms.
Of course decisions about economic policy are political, but those processes and decisions must be accountable and transparent. We mislead the public when we say that we can depoliticise issues that have a bearing on the life and liberty of our electorate. What some of my colleagues call "depoliticising monetary policy" others might call "abdicating responsibility for monetary policy". We shall see the consequences of that in the long term.
"No plans to increase tax at all".
Worst of all is what has been done to the savings of people in this country. It is a monstrous disgrace that the savings ratio has declined so dramatically, from nearly
11 to 7.5 per cent. Savings protect the future of the elderly people of our country; they are our future. By damaging that, a Government make certain that more people will be dependent on the state in the future. To damage the savings ratio is a profound mistake for any Chancellor and the current Chancellor has done so in every Budget that he has delivered.
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