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Mr. Tyrie: May I give my hon. Friend another example of a surreal aspect to the Budget? We are told that there is £20 million for a venture capital challenge competition. The venture capital industry is to be revived, somehow. Of a total investment in the country of £132 billion per annum, what difference will £20 million make?
Mr. Green: As the debate continues, others of my hon. Friends will find more nuggets in the Red Book that reveal the enormous gap between rhetoric and reality. For example, the university for industry, which is one of the Government's big ideas and a major training initiative, has funding of £5 million for 1998-99. That is fair enough, because it is for the start-up costs. Will funding be serious next year, when the university is established? Funding for 1999-2000 is zero, funding for 2000-01 is zero and funding for 2001-02 is zero. There is no money for this major Government initiative to promote lifelong learning.
Mr. David Taylor: If the hon. Gentleman reads the Red Book in a little more detail, he will see a footnote that makes it clear that the funding for the university for industry is taken over by departmental totals at that stage. Although the funding does not appear in the table, it is referred to.
Mr. Green: I am grateful to the hon. Gentleman, because I was coming on to that point. Footnote 7 on page 58 states:
- "Other costs of the UfI are funded from within departmental expenditure limits."
9.23 pm
Ms Sally Keeble (Northampton, North): I am pleased to speak in a debate on a Budget that will greatly benefit my constituents. I agree with the hon. Member for Ashford (Mr. Green) that the British public will see the Budget for what it is--they will see it to be a resounding success. In particular, the families and the pensioners who make up the bulk of my constituents will feel the benefits of the Budget.
I had a rather rueful thought as the hon. Member for Ashford talked about the problems of smuggled alcohol. Such smuggling has, from time to time, been a real problem in my constituency and an extremely dramatic case was splashed all over the papers. Alcohol was smuggled in from France and sold in the local Conservative club, and there was an extremely high-profile raid.
I want to comment on some of the facts that were put forward by the hon. Member for Mid-Bedfordshire (Mr. Sayeed), who is no longer present. He said that, year on year, the Chancellor had damaged the savings ratio, but, from my understanding of the Red Book, that is not true. The ratio will edge up slightly, from 7 to 7.5 per cent.
I also take issue with the incorrect information that the hon. Gentleman provided about the increase in taxes on ordinary families. What he said was untrue. Page 157 of the Red Book shows that the tax take is lower than it was for most of the Tory years and page 71 shows that it is lower this year for families with two children than in any year since 1992, which--surprise, surprise--was an election year. Apparently, by 2001, the tax burden on families with two children will be roughly half what it was for most of the Tory years. Many families will feel the benefit of that, and will realise that it is due to the Chancellor's sound management of the economy and his generous and thoughtful tax and benefit arrangements.
Let me now deal with the Budget's impact on families. Children's tax credit is to replace the married couples allowance. That will produce real benefits that will be much more carefully targeted. There will be a dramatic increase in child benefit. Moreover, the working families tax credit and child care tax credit will shortly be introduced. Taken together, those measures will radically transform the living conditions of many of my constituents, and, in particular, will end the outrage, which has existed for many years, that children are always those most affected by poverty. Many will be relieved when children receive the greatest support from the Government.
The Budget contains a number of other measures to benefit children, which many families will see coming into effect very quickly. For instance, extra money is being put into education. Cash for books will constitute a substantial improvement for many schoolchildren, while improvements in maternity grants will plug a gap in our tax and benefit system, providing support for women and children at the point at which it is often most needed--the point at which they are most vulnerable. Families of the type that constitute the bulk of my constituents will benefit by roughly £40 a week as a result of all the changes in the Budget.
In my constituency, I have been constantly lobbied by pensioners, not just about the level of their state pensions but about the impact of tax on their incomes, and the importance to them of their long-term savings. I was pleased to hear confirmation that the increase in the minimum income guarantee would be linked with earnings. That will provide a cushion for pensioners who are having to struggle on the lowest-possible incomes. I am sure that the national savings bond for pensioners will also be very welcome in a community in which people understand that, to a large extent, they must provide their own security for long-term retirement.
I recently engaged in a consultation exercise with a number of pensioners, from which it emerged that most would prefer to make their own choices, and to have the support and the tax structure that enabled their income to be protected. I was therefore pleased to note that the tax structure would be changed to provide larger allowances for pensioners over 65 and over 75. I am sure that will go a long way towards persuading those whose private income takes them above the minimum level, who have felt bitter about their inability to increase their income, that the Government are supporting them and helping them to make ends meet.
I single out the winter allowance, which, again, for many people addresses a real need: they face real hardship. The increase from £20 to £100 is dramatic: it is beyond what anyone expected. It will make a substantial difference, not just easing the costs of heating, but making people more likely to keep the heating on, rather than turning it off in the coldest months.
One further aspect might be overlooked, but will certainly affect many of my constituents. Most people in Northampton are in work. They will benefit from all the measures that will help families in work. Many people are self-employed or run small businesses. It is a town with a huge amount of enterprise and many small firms, which remain small and do not have any ambitions to grow into multinationals or anything like that.
For those businesses, the 10p tax rate, the continuation of the capital allowances and the changes in the payment of PAYE and national insurance contributions will make a substantial difference in cash terms, and will also make them feel that their enterprise and work are rewarded.
It is not just people in this country who will feel the benefits. The changes in the Budget and the skill with which the Chancellor has handled the economy have made us the envy of the rest of the world. My hon. Friend the Member for Shipley (Mr. Leslie) mentioned the praise from the International Monetary Fund. I quote, perhaps in more practical terms, the fact that, last year, this country had record levels of inward investment--not because it is the sweat shop of the world, as the Tories tried hard to make it, but because of the opportunities and skills that we offer.
People in Northampton, North will find that the Budget echoes all the things that are important in their lives. It will make work pay, reward thrift and planning, encourage saving and reward and help those people who have--[Interruption.] People scoff. At the same time, there is the support for pensioners' savings, and individual savings accounts are coming into line, and they will provide a big draw for people on low incomes who have smaller savings.
The Budget will encourage enterprise and support families. It comes between international women's day and mother's day, and it will be incredibly popular with many women. It will support all those things that make our society work. It will make Northampton, North one of the benchmarks of the country. In future years, it will be seen as a Budget that marked a real turning point for our country and put things on an upward curve for many people.
9.33 pm
Mr. Tim Loughton (East Worthing and Shoreham):
One Minister leaking to the Financial Times over the weekend promised a "substantial, surprising and important" Budget. What is substantial is the amount of revenue that the Chancellor is filching by stealth from the back pockets of the British public--£40.7 billion over the lifetime of the Parliament. Before he got up this afternoon, £6.4 billion of extra taxes were already guaranteed without his having to say a word.
At least the Prime Minister last week came clean on the tax burden going up under the Government. It is a shame that the Chancellor did not follow his example. The whole Budget was an illusionist's dream. Labour Members cheered the 10p tax rate, but failed to realise that, by scrapping the 20p tax band, the Chancellor was taking it back with the other hand.
There has been no let-up from many of the iniquitous, unfair and shameful tax rises that have already been introduced by the Government. There has been no reprieve for 300,000 non-taxpaying pensioners who will lose their dividend tax credits, or for those people about to sell their lifetime businesses, who will lose out on retirement tax relief. There has been no reprieve from the extra taxes on business of £5 billion over the past two Budgets, which it is now estimated will cost some £20 billion over the next two years.
It was a Budget of failed opportunities, disguised with a series of technical measures for start-up companies, promises of jam tomorrow, recycled announcements that we had heard over the past few months and downright gimmicks.
Tax breaks for small companies, which, by their nature, do not make profits, are not exactly very useful. The truth is that, by 2001, the Budget will increase the tax burden as a proportion of gross domestic product, to 39.5 per cent. or more. That is the highest level in 12 years.
The Government have also vastly complicated the tax system, so that now we have over 54 different rates, three new bands of stamp duty, two rates of value added tax, two rates of insurance premium tax, dozens of rates of capital gains tax, differential rates of vehicle excise duty, five new rates of income tax and five rates of corporation tax. Overall, the Budget contains 23 tax increases.
I should like briefly to mention green taxes. The Minister said in the Financial Times that the Budget would be surprising. One surprise, which has been cleared up, is the absence of the Deputy Prime Minister, who is away scuba diving in the Maldives. That caped crusader for the environment has been sidelined yet again. From a Government who promised to place environmental concerns at the heart of decision making, the Budget has been an enormous let-down. Last year's Budget was described by environmentalists as "as green as mud." Tomorrow, environmentalists' verdict on today's Budget will be less kind.
We have heard so little today about the energy tax. The Marshall report was remarkable in dealing with that tax, and not only because it--a report from a former chairman of British Airways--did not propose applying the tax to aviation fuel. It is a downstream tax. It is not a real carbon tax, as it will not tax energy production at the power station. It also does not discriminate against the least environmentally friendly energy production, such as coal-fired power stations, for example.
Yet again, the gas-fired power station industry--which contributed most to reducing our carbon dioxide emissions--is to be sidelined in favour of propping up the coal industry and the Government's friends the miners. The Government's target was to generate 10 per cent. of power demand from green sources by 2010. The Budget will do virtually nothing to achieve that target. For starters, the Government should end the moratorium on gas-fired power stations.
The energy tax--a downstream tax that is not a carbon tax--will encourage a further switch from manufacturing to services. Which sectors will pay most? How will the Government persuade households to use less energy? How will it reduce CO 2 emissions by 3 million tonnes? How will the Government hypothecate tax back to different types of businesses? What incentives are there for power generators to fit scrubbers to treat emissions? How much lower will tax need to be if the system is not rigged to be pro-coal? The tax will have an enormous effect on manufacturing industry, particularly in northern Labour constituencies, and especially in the chemical industry.
We heard absolutely nothing today about emissions trading permits. The Budget was tokenism of the worst kind--as demonstrated by the provision of only £50 million to encourage business investment in renewable fuel and cleaner technology. The Government are interested only in gloss. On green taxes, the Budget is a damp squib.
Other minor provisions in the Budget were intended to encourage use of smaller cars and lower-emission lorries, but the Government demonstrated no serious intention to achieve the objectives. Last year's token Budget provisions completely failed to give the Government a veil of environmental friendliness.
On 1 February, in a written answer, the Minister for Transport in London admitted that, in the lifetime of this Parliament, the number of buses that have been encouraged to convert to road fuel gases has risen from 20 to 53. The number of heavy goods vehicles able to use road fuel gases has increased from 41 to 96. That is hardly a testament to the Government's green credentials or to the green measures provided in last year's Budget.
Today's token measures will achieve the same token result. The Budget provides no specific tax incentives to manufacturers of motor vehicles powered by road fuel gases. We need a bold move--of the kind that the previous Government made--to encourage lead-free petrol. We need a five-year plan for the road fuel gas industry properly to establish the necessary capital structure.
The Budget contains nothing to equalise VAT treatment of new-build and green-field sites, renovation of existing properties, and redevelopment of brown-field sites in towns. Landfill tax is to go up, but there is absolutely nothing in the Budget to facilitate alternatives to the 84 per cent. of waste that goes into landfill. There is absolutely nothing in the Budget about recycling, reusables or composting.
Similarly, raising the fuel escalator on petrol--so that a gallon of petrol now costs £3.10--does not reduce car mileage travelled but simply adds £120 per annum to the costs of the average middle-income family and discriminates against those living in the country, those who have to take children to school, and the disabled who rely on their vehicles.
On capital taxes, the Government have completely complicated the capital gains tax system. They missed the opportunity to raise CGT allowances to £10,000 which would have exempted about half the people who currently pay CGT, accounting for just £27 million.
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