| Previous Section | Index | Home Page |
Mr. Howard Flight (Arundel and South Downs): Will my right hon. Friend give way?
Mr. MacGregor: No, I will not, if my hon. Friend will forgive me.
The Government propose to establish the Small Business Service. When I was Minister with responsibility for small business I was responsible for the Small Firms Service. Then we used business people to advise small firms; at that stage, there were not many self-employed and small businesses. We changed the culture successfully over the succeeding years. The service was designed to advise small businesses on practical measures such as marketing, financial control and so on.
I was amused by the highlight of the press release for the Small Business Service:
I have grave doubts as to whether it is right to have publicly financed venture capital funds of the sort announced in the Budget when one of the great successes of the British economy is the growth of venture capital funds from the private sector. The £20 million is peanuts compared with what is being raised from the private sector, including that from venture capital trusts this year, so, again, it sounds like a gimmick.
The main point I should like to make about small businesses is that, overall, all the measures have few pluses when we compare the minus side of companies having to pay at least £4 billion more in tax in each of the next four financial years. The changes that reduce tax are very small compared with the measures introducing those big increases.
The Secretary of State for Trade and Industry did not deal with that point in answer to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). If the Secretary of State looks at pages 112, 113 and 120 of the Red Book, he will see just how big the increases in tax in the corporate sector are in the 1997, 1998 and 1999 Budgets. They include road fuel duties and the changes in advance corporation tax, which, as Sir Clive Thompson, the Confederation of British Industry president, has pointed out, will add considerably to the tax burden of the business sector over the next four years.
I should like to mention only two more points, because I want to keep within the 10-minute limit if I can. I am really bothered that the fuel duty escalator is inflicting real damage to the economy and to rural areas, and is producing very little environmental benefit. It was originally introduced some years ago to deal with the effects of greenhouse gases and to meet the targets under the original Rio de Janeiro convention, which was followed by the Kyoto convention.
It was felt--as a former Secretary of State, I understand the reasoning--that there had to be some reduction in emissions and that pricing was one way in which to achieve that. With the escalation in that fuel tax, however, and given that the Government increased the escalator beyond what the Conservative Government established, and, in their first year of office, doubled the amount of tax by taking a second chunk of it, we have the highest petrol costs in Europe. Tax represents a higher proportion of the cost of fuel in the UK than anywhere else in Europe.
We have overdone it. We are getting to the equivalent of the law of diminishing returns in relation to the environmental benefits. Frankly, people want to use their motor cars. The damage inflicted by the tax on petrol is seen in rural areas in a constituency such as mine. Most of the representations that I receive are fiercely against the escalator. For many people in rural areas, there is no practical alternative to the car for going about their daily business: getting to work or taking children to school. That tax increase, which is bringing in vast revenue, will have serious consequences for such rural areas, on top of the consequences of earlier measures. It is often those on
lower incomes who will have to pay the cost--at least £60 more this year--thus removing the benefits of many of the measures to help the lower paid.
The measure's effect on the economy and its competitiveness is also great, as many road hauliers point out. In addition, there has been a savage reduction in the road programme, which I strongly criticise because I believe that there will inevitably be an increase in road transport. That, combined with the fuel duty escalator, means that we are in danger of adding a factor of considerable uncompetitiveness to the British economy. The Secretary of State, who endorses the competitiveness White Paper, should deal with that issue. The time has come to stop the fuel duty escalator--it is one of the most damaging parts of the Budget.
There is not much in the Budget to encourage the saver or more people to take out pensions. That fact, and all the various measures that the Government have taken before, mean that I am not optimistic that we will achieve the increase in pensions that we seek from all age groups, but particularly younger generations.
The removal of £5 billion from pension funds in the Chancellor's first Budget, the impact of which the ordinary person has not yet understood, has helped him to fund quite a few of the tax reductions in the current Budget, but that measure will do long-term damage, disadvantaging those who retire on pensions. It is already taking away money from pension funds and increases the danger that companies will have to make higher contributions and, therefore, face a higher cost to fill that gap.
That problem is exacerbated by the fact that individual savings accounts are no substitute for the TESSAs and PEPs which we left to the Government. Moreover, the capital gains tax reforms are a huge missed opportunity and are not well directed, while non-tax paying pensioners are being treated appallingly by not being allowed to reclaim their dividend income. We can add to that the confusion over the pension schemes created by the Government and the discouragement of traditional occupational pension schemes as a result of their action on pensions and other matters. There is also the problem of personal pensions, for which I do not blame the Government; and the drop in annuity rates, caused partly by actuarial calculations and the fact that people are living longer, and partly by lower interest rates and yield on gilts. The latter factor is becoming a matter of common comment in the press and is bothering many people who are shortly to retire. It is clear that the overall cumulative effect of the various changes since 1997 has been disadvantageous to pensions and will ultimately be disadvantageous to pensioners. I regret that the Budget has done nothing to put that right.
Mr. Martin O'Neill (Ochil):
Yesterday's Budget has done more to help relieve family poverty than probably any other Budget in the past 30 years. The Budget offers, for the first time in many years, a clear chance to those
Such praise for a Labour Government from the Child Poverty Action Group is rich praise indeed. In the past 25 years, that organisation has been among the best-focused critics of Government, regardless of colour. I also well remember the problems that my right hon. Friend the Member for Birkenhead (Mr. Field) caused previous Labour Governments, in the 1960s, through his analysis of how those Governments tried to attack family poverty.
In discussing working people and their life chances, we should start by acknowledging that this Budget will make a bigger difference to them than any other Budget in many years. Certainly in my own constituency of Ochil, the Budget will benefit 10,000 families. The living standards of many pensioner families in my constituency will also improve.
The right hon. Member for South Norfolk(Mr. MacGregor) said--at least I think that he said--that the way in which the money had been allocated to pensioners to help them with heating--the £100 instead of the £20--could have been improved. We are aware of the problems--perhaps he knows about the problems better than most of us do. As I recall, he had occasionally to stand at the Dispatch Box to try to defend schemes that helped some parts of the country, but not others, or helped some people, but not others. We know that, from start to finish, those attempts were a shambles.
We realise also that if we are to deal with an issue such as providing winter fuel payments, it makes a lot more sense to make the benefit universal. The11,616 pensioners in my constituency who will benefit from the Budget's generous treatment will realise that it is much simpler simply to get the money in hand. Better-off pensioners may do whatever they want with the money--they might even wish to give it to charity. They might choose simply to benefit from the Government's generous provision. However, for the poor pensioners in my constituency, who have been frightened to heat their homes, the prospect of receiving an additional £100 is one not to be missed. I think that most hon. Members appreciate that.
Many hon. Members have already said, quite correctly, that the Budget is about enterprise, work and employment creation. In the past month, my constituency has suffered just over 300 jobs in the textile industry. Although the losses--40 here, 30 there or 25 elsewhere--have been in various companies, the case of one company, Coats Viyella, is perhaps worth mentioning. It supplied Marks and Spencer. Once the contract between the two had been settled, it was assumed that--for a long time to come, if quality was maintained--Marks would buy the blouses that the women at Coats Viyella made.
We know the saga of Marks and Spencer. We are aware of its boardroom battles, and the drop in its share price. We know that it has lost its direction as a company. We know also that it is no longer sufficient for Marks and Spencer to try the old trick of sending back all the stock
if there is one flaw in one garment--which was how it used to exercise stock control and get the stock burden off its back. Marks and Spencer now realises that that practice alone is not enough if it wishes to compete with the other high street retailers which import large quantities of stock. Marks and Spencer is therefore going elsewhere for its business.
I am not attacking or criticising Marks and Spencer's investment policy, or making a severe criticism of the wages that employees at Coats Viyella are being paid--although those employees are not overpaid, and some of them could probably benefit from introduction of the national minimum wage. Nevertheless, the fact remains that Marks and Spencer--because of the mess that it is in--is forcing textile jobs out of Britain. Those jobs would have been forced out regardless of which party was in power.
Other textile companies, including those that are operating at the upper end of the market, look not only to the United States, France and Germany as potential customers, but to Taiwan and the countries of east and south-east Asia. The Japanese are not buying a new cashmere sweater, or any other sweater, every time they plan a trip to the golf course. They are not spending money as they were. The situation in those countries is part of the reality in the downturn in demand for United Kingdom textiles.
It comes a bit rich for a Europhobe, such as the right hon. Member for Wokingham (Mr. Redwood), to criticise the Government's approach to the negotiations on bananas or the cashmere industry. Certainly, both in Scotland and elsewhere, there is frustration and impatience about the plight of textile workers as a consequence of the banana negotiations. However, let us not forget that the Conservative Government brought the original banana appeal.
There is no disagreement on the banana negotiations between us and the French. There is no disagreement on it between the United Kingdom, France and even Ecuador--which, although it is one of the mainland Latin American banana producers, is not one of Chiquita's customers. Ecuador is just as much under the cosh as the African, Caribbean and Pacific countries are. It is a complicated issue, and it does not do to simplify it, to try to make a party issue of it in the House.
Perhaps the current Administration have a better relationship with the Clinton Administration than the previous Administration had. Although it would not be difficult to improve on the previous Administration's relationship with the United States Administration, we should realise that other forces are also at work. I think that, in a Budget debate on trade and industry, it is harmful to dwell unduly long on the issue.
The Government have been attacked because we have not given away enough money--only £1 billion--and should have given away more. If more money had been given away--I ask Opposition Members to consider this--what would have been the reaction of the Monetary Policy Committee, at its next meeting, when it considers reducing interest rates? Would an interest rate reduction be the consequence of massive fiscal largesse? In today's press, Adair Turner made a reasonable point when he said:
When one examines not only the Red Book fine print but the proposals announced today by my right hon. Friend the Secretary of State for Trade and Industry, one begins to see from where new businesses will come, and where Government assistance will be available.
Hon. Members have mentioned the new tax rate for small businesses. Let us face it: the majority of businesses that collapse are fledgling businesses. We have to do two things in the United Kingdom: first, help fledgling businesses through the very tough period when they are starting and profits are not very great; and, secondly, remove the stigma of failure from businesses and business people who fail. We have to make people realise that they should get back into business at the earliest possible moment and give them access to the maximum financial support.
I was interested in the point made by the right hon. Member for South Norfolk about the number of names that have been given to small business support organisations. However, we now have a plethora of organisations, something which we did not have when the right hon. Gentleman had responsibility for the issue. Previously, there was the Small Firms Service and nothing else; there was not the support system that we have now. There were occasional bits of support from the chambers of commerce and there was a wee bit from the DTI, but not much else. Nowadays, we have business links, about which we do not disagree across the Chamber.
We need a formal structure that can directly advise Government of the needs of small businesses. I am happy to welcome the establishment of the Small Business Service--I acknowledge that it is another agency, but it is one which is worthy of our support. It will be able to provide small amounts of money and appropriate advice. For businesses beyond the early stages of growth, it will be able to provide appropriate managerial skills supported by funding from outside. Companies that need experienced hands during a worrying period will have access to people who are used to running bigger businesses.
I could go through the whole Budget, but, in the short time at my disposal, I will not abuse the courtesy of the House, so I will touch on one important area. Much is made of our attempts to meet the Rio and Kyoto targets. The carbon taxes are probably a more sensitive way of meeting them than a blank energy target such as the multiplier. The Marshall report was a model of lucidity and fairness.
The Government have picked up the points on fiscal neutrality and they have nodded in the direction of the Institute for Public Policy and Research report, which suggested that if there was a reduction in national insurance contributions from employers, something like a quarter of a million jobs could be created. The Government's proposals strike a reasonable balance between the carrot and the stick. I hope that if the Government's proposals are successful, we can see some easing of the problems facing the road haulage industry.
"The SBS will have a new role helping businesses comply with regulation."
That is like someone saying, "I am going to torture you, but I have good news for you. I have a therapist who will help you to endure the pain."
"We asked for a boring budget and this is not a bad result. The fiscal balance is reasonable."
The Monetary Policy Committee has made successive interest rate reductions, to give the country an injection of confidence. In the past month, the MPC's message has
been quite clear: "We are not going to cut interest rates this month, but will let the Government take on the responsibility of increasing business confidence."
| Next Section
| Index | Home Page |