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Mr. Byers: I want to make some progress; I will give way shortly.
We need to ensure that those opportunities are provided, but other, non-tax, measures will benefit industry. As I said in my statement, we will be setting up the new Small Business Service to improve Government assistance to those vital businesses. It will have a strong voice for small business at the heart of Government, and it will improve Government services to small businesses and ensure that those services address the real needs of the sector.
We have not forgotten the importance of science. The Budget shows our commitment to investing in Britain's capabilities, and our science and engineering base must be world class. Scientific discovery underpins our quality of life and is an invaluable source of wealth creation, economic regeneration and employment. That is why my right hon. Friend the Chancellor yesterday increased the Government's contribution to the university challenge fund, which will make a real difference in respect of the commercialisation of scientific research.
I want more British inventions to be transformed into British products--creating jobs and wealth here in Britain. That is not the case at the moment. Our proposals and the measures announced in the Budget will change that and ensure that we can take advantage of our own ideas and do not see them exploited by other countries.
Mr. Redwood:
I think that the right hon. Gentleman inadvertently misled the House when he replied to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). I have checked the Red Book. It is very clear that the tax breaks for small and medium enterprises and the research and development tax credit do not come into effect in 1999-2000, the year about which my hon. Friend asked. I hope that the record will be corrected. The fact remains that there will be a big increase in tax in 1999-2000, mainly from the first two Labour Budgets, but also from the cumulative impact of this third Budget, which also raises taxes in that year.
Mr. Byers:
I think the record will show that I was referring specifically to the £325 million that we are providing for write-offs--in the coming year. When the right hon. Gentleman has time to look at the record, he will doubtless reflect on that. I was talking about the year specified by him--the year ahead.
Mr. Townend:
Will the Secretary of State give way?
Mr. Byers:
I want to make some progress, given the number of hon. Members who wish to speak.
There can be no doubt that the economy of the future will succeed for our people only if it respects the environment. Protecting the environment remains a priority for this Government, and getting the environmental framework right will be good for businesses as they move into the clean technologies of the future. Yesterday's decision to implement the recommendations of Lord Marshall, the former president of the Confederation of British Industry, will make a significant contribution to the improvement of energy efficiency in business, and will also meet the United Kingdom's climate change targets.
Notwithstanding the claims of Conservative Members, the new tax will entail no increase in the burden of tax on business. The revenues will be recycled in full for business, through--among other mechanisms--a cut in national insurance contributions.
We welcome the strides that have already been made by many firms--especially those in more energy-intensive sectors--to improve their energy efficiency. Special consideration will be given to particularly energy-intensive industries. We intend to set significantly lower tax rates for energy-intensive sectors that improve their energy efficiency, and we have asked them directly to submit their proposals. Businesses will also gain from an additional £50 million for schemes to promote energy efficiency and renewable sources of energy.
We need to consider the skills gap. We must ensure that we equip everyone in Britain with the skills that they will need to succeed in the computer-driven world of the future. That is why we will create a national networkof 1,000 computer learning centres--one for every community in Britain. That network will have one purpose: to ensure that Britain and our people are equipped for the information age. Inequality in computer
learning today will mean inequality in earning power tomorrow. Anyone who is left out of the knowledge revolution will be left behind in the knowledge-driven economy, and that is unacceptable to the present Government.
This Government believe that the best way in which to address inequality and social exclusion is the creation of a more affluent, more successful Britain, providing everyone with opportunities to achieve their full potential--opportunities that accompany the success of British business at home and abroad. Equally, however, the fairer Britain is--the more open it is to the talents of all, whatever their class or background--the more enterprising and prosperous all Britain can be. That is why yesterday's Budget reformed the tax system in favour of work, enterprise and families. It made the tax system fairer by announcing the new 10p rate of income tax, which will be introduced in just a few weeks' time, and a cut in the basic rate of tax from 23 to 22 per cent., which will be introduced in April next year. Those two cuts will increase the rewards of work for all working taxpayers, while targeting the benefits on the low-paid and making work pay.
Our first principle in supporting the family is that the interests of children must be paramount. For the past 30 years, families with children have been the losers in the tax system: their tax burden has risen by nearly 20 per cent. under successive Governments. That is why we are increasing child benefit by 3 per cent. in real terms from April next year. It will be worth £15 a week for the first child, and £10 a week for subsequent children. That will make a real difference to families who are supporting parents and have other responsibilities.
Yesterday's Budget also guaranteed a better deal for all pensioners. It provided a fivefold increase in the winter allowance, from £20 to £100, and took an extra100,000 pensioners out of tax altogether. It provided for pensions to increase in line with wages rather than prices. It also provided a guaranteed income for pensioner couples of £121 a week, nearly £800 a year more than the amount that obtained when we took office in 1997. On average, pensioner households will be £240 a year better off.
I was particularly interested by the comments of Stella Hague, the mother of the Leader of the Opposition. Commenting on the £80 rise in winter fuel payments for pensioners, Stella Hague, aged 71, said, "It's very nice to have it. The £100 will be very acceptable." Given that the Leader of the Opposition now believes in "kitchen table" politics, perhaps he will get around the kitchen table with his mother, and take some of her advice in regard to the Budget.
Yesterday's Budget is a Budget for enterprise and fairness, a Budget which could be brought about only because of our prudent economic management of the economy. It will ensure a better deal for children and the elderly, a better deal for the hard-working majority and a better deal for Britain's enterprising small businesses and risk takers. It is a Budget for the many, not the few. It is a Budget which is radical and forward looking. It is a Budget for prosperity, fairness and social justice, and I commend it to the House.
6.6 pm
Mr. John MacGregor (South Norfolk):
Given what the Secretary of State said about the mother of my right hon. Friend the Leader of the Opposition, I must say that I do not consider the £640 million that has been devoted to those cold weather payments to be a prime example of the concentration of massive sums on those who are most in need.
Although I have escaped the 10-minute limit, I intend to limit my speech to 10 minutes anyway. Let me begin by making two declarations of interest. First, as I want to say something about savings--if I have time--I should declare that I am a non-executive director of Friends Provident. Secondly, I am a member of the Magic Circle--and, more precisely, an associate of the inner Magic Circle. It is for that reason that I shall say what I am going to say about the Budget.
In magic, or conjuring, what matters is not what people see on the stage, but what is hidden from their view. Yesterday, it was not what the Chancellor said that mattered, but what lay in the detailed notes behind it. Listening to the speech, as all the so-called goodies unfolded, I was somewhat bamboozled as to how it all added up--until, reading the press briefing later, I found that it was explained by two factors, as well as the windfall of the £4 billion reduction in debt interest payments resulting from lower interest rates worldwide.
First, the Chancellor has introduced a new principle in Budgets. I am something of a connoisseur of Budgets, having been involved in framing some. The new principle is this: "We have not got enough to announce in this Budget, so we shall announce next year's as well, and some of the following year's too". That explains why so many goodies could appear. Reading the press briefing, I could not believe my eyes. Time after time, I came across something that had been announced--something that we all thought would appear this year--which, we now find, will be introduced in the Finance Bill in 2000, or, in some cases, in the year after that. The presentation of the Budget involved an enormous number of conjuring tricks, if I may put it like that. It takes one to recognise another.
That is best illustrated by a table at the front of the press briefing. According to the table, the average household will be £380 better off. The implication is that that is a result of this year's Budget. It is necessary to turn to the notes for editors to discover that the measures involved are those announced in both the 1999 and the 1998 Budgets, and that they will take effect over the three years from 1999. Moreover, the national minimum wage will have an impact. Everything has been thrown in to produce the highest possible figure.
The other factor is this. As my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out, the Government--as is so common with them, especially in regard to public expenditure increases--have reannounced measures that had already been announced. When I started to look through them, I recognised, as a former Chief Secretary to the Treasury, that the Government had done what we used to do: they had taken some sums out of the year two contingency fund and put them into year one programmes. The number of additional programmes is small. The Government received lots of plaudits from Labour Back Benchers, but their actions are no different from those conducted in the past. We should not be overimpressed by the figures that the Chancellor announced.
It is dangerous for the Chancellor to take a three-year view in a one-year Budget. A possible trap lurks, especially given that the big tax reductions are earmarked for the later years--as usual with the Chancellor. Overall tax reductions total £1 billion in the year ahead and £3.5 billion in 2001--surprise, surprise. However, the danger is that, if the reductions in debt interest fail to materialise in the later years, or, more particularly, if growth, which, again, is expected to rise much more in the later years than this year, fails to materialise, the Chancellor will not be able to introduce additional improvements and benefits on top of those that he has announced. Therefore, he will depend on economic performance worldwide and in this country over three years to implement the Budget fully.
Of course, I welcome some of the measures in the Budget. Even more, I welcome the fact that it does not include measures that previous Labour Chancellors would have been tempted to introduce.
By introducing lower direct tax rates, the small business and enterprise measures, and employee share-owning schemes, the Chancellor is simply following policies and approaches that we Conservatives pioneered over18 years. Naturally, I am pleased that Labour has been converted to what until now has been an entirely Tory approach, but the Chancellor should not claim, as he did yesterday, that he is embarking on new directions. He has simply recognised the success of the policies that we pursued over 18 years and carried quite a number of them on. It is those that I welcome.
I thought that the small business measures were going to be classic. In fact, I had a great sense of deja vu because some of them were extremely like the measures that the Conservative Government introduced when I was the Minister with responsibility for small business between 1981 and 1983. However, I looked at the details and too many of the measures were too small and fiddly.
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