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4.18 pm
Mr. Barry Gardiner (Brent, North): It is an honour to be called to speak in the Budget debate. I have listened carefully to the speeches in the Chamber over the past three days. The contributions that I have not heard, I have read in Hansard. Many of the speeches show great knowledge and economic understanding. Many have been sharp and politically incisive. Occasionally, a speech has been both.
I have no doubt that my speech will be neither. My adversaries will say that I am no great economist, and my friends, I hope, may say that, by nature at least, I am no politician. I hope that the House will understand if my remarks depart somewhat from the consensus of the debate.
The consensus seems to be that the question that arises from the Budget concerns the level of taxation. Has it risen or has it declined? What was promised and what was delivered? The Leader of the Opposition--for the sake of clarity, let me say that I am referring to the right hon. Member for Richmond, Yorks (Mr. Hague), not the right hon. Member for Yeovil (Mr. Ashdown)--stated that it was no good the Chancellor claiming that taxes were not rising. He said that, the previous week, the Prime Minister had finally let the cat out of the bag. He went on to misquote the Prime Minister selectively, saying that that was a betrayal from a man who had said at the general election that there would be no tax increases at all.
The hon. Member for Mid-Bedfordshire (Mr. Sayeed), who may well be a better economist than the Leader of the Opposition, but is only half the politician, made the cardinal mistake of quoting the Prime Minister correctly, saying that Labour had
Mr. Deputy Speaker:
Order. The hon. Gentleman has been a Member of the House long enough to know how he should address other Members of the House.
Mr. Gardiner:
I thank you for that correction, Mr. Deputy Speaker.
Economics is the scientific study of the allocation of scarce resources, but Budgets are not simply about allocation; they are about ensuring that that allocation achieves specific policy objectives. In other words, people do not mind paying money to the Government as long as they think that it is spent wisely on projects of which they approve. When we spend money in a shop, we want to feel that we have obtained good value for it. When the British people spend money on taxes, they want to feel that they are getting good value for their money as well.
Mr. Grieve:
Will the hon. Gentleman give way?
If the Leader of the Opposition is proved right and there has been a betrayal of the people of this country, that betrayal can have happened only if the Government have failed to deliver the new politics that the people of the country elected them to deliver. That new politics has been characterised by my right hon. Friend the Prime Minister as the third way. If we are truly to examine the merits of the Budget, we should do so against the values and objectives of the third way.
What are those values and objectives and what does the Budget do that relates to them? The values are human dignity, opportunity, responsibility and community. Human dignity is the equal worth of all our citizens, irrespective of their background, their religion, the colour of their skin, their age or their disability.
We must assess the Budget on what it has done for pensioners. It has provided a £3 billion package to give people dignity in old age and the £100 winter allowance,
which increases the previous payment fivefold; the minimum income guarantee of £78 a week, and £121 a week for couples; and the linking of that guarantee to earnings, which makes average pensioner households £240 a year better off.
Another of those values is opportunity, which means the ability to shape one's own life free from either the overbearing interference of the state or the stifling bonds of poverty and inequality. Here we must assess the Budget on two distinct fronts. For children and the poorest in our society, the Budget has brought real relief. It has eliminated the poverty traps, which produced the obscenity of people losing money when they took up a job, through marginal rates of more than 100 per cent. The new national insurance contributions structure will raise the starting threshold from £64 to £87 a week and 900,000 people on low pay will be relieved of NIC payments altogether.
Child benefit rises mean just that--children will benefit. That measure, taken with the new children's tax credit and the working families tax credit, means that families will receive the financial help that they need at the time they need it--when they have to meet the expense of bringing up children. As a result of the Budget, no family with children will pay any income tax until it is earning more than £235 a week.
I said that the Budget should be judged on two fronts against the value of opportunity. Opportunity is not only freedom from poverty; it is freedom for people to shape their lives without excessive interference from the state. I admit that my party's record in that area is less than perfect. Before being elected to the House, I ran an international business for 10 years, and I will judge the Budget by its encouragement for small and medium-sized enterprises. The 10p rate of corporation tax for small companies is a real boost and, combined with the 20 and 30 per cent. rates for small and larger corporations, amounts to the best fiscal climate for business anywhere in the industrialised world.
However, most business decisions are not governed solely by the fiscal system. They are front-loaded, not end-conditioned. That is why the incentives for research and development through tax credits and the £100 million to upgrade our university laboratories are part of the Budget's delivery of opportunity to business. The Government could do more at the front end. Although I welcome the extension of 40 per cent. write-offs in the coming year, I must add that making a real difference to business investment will depend, in my view, on the Treasury considering capital allowances of up to 100 per cent.
Finally, in this respect, I cannot help but record my disappointment that my right hon. Friend the Chancellor did not adopt a tonnage-based tax for British shipping. In Holland, such measures have boosted employment in the industry by 23 per cent. and boosted GDP by 19 per cent. Such measures would provide a wonderful boost for United Kingdom jobs and prosperity, particularly in the north-east and in other traditional shipping areas, and would maintain the pre-eminence of maritime London. I look forward to Lord Alexander's report and trust that it will give the Chancellor the necessary background to introduce a tonnage tax next year.
Responsibility is our third value of the third way. It means recognition that the benefits that society brings come at a price. That price is our obligation to care for
ourselves if we can, and to care for others where we can. Nowhere is that better illustrated in the Budget than in the measures to reward work. The 10p rate of tax and the new 22p basic rate do so proportionately more for the low-paid. Our new deal has made it clear to the young unemployed that there is a responsibility on them to get work. That expectation will be backed up by practical help and advice through the gateway.
"No plans to increase tax at all."--[Official Report, 9 March 1999; Vol. 327, c. 251.]
The shadow Trade and Industry spokes-Martian returned to the Opposition's theme yesterday. He said:
"we know their true priority--it is tax, tax, tax."--[Official Report, 10 March 1999; Vol. 327, c. 391.]
Are the British people really concerned about whether the fiscal burden is rising or falling and, if so, whether in cash terms, in real terms or as a proportion of gross domestic product? I make no claim to be a great economist, but even I understand that, when the Office for National Statistics tells me that the tax and prices index has risen by 4.9 per cent.--a good deal more than inflation--the next figure that I need to look at is in the average earnings index for the same period. When that shows a rise of 8.2 per cent., my poor politician's brain tells me that the people of Britain will not be following Mr. Hague and Mr. Maude to the barricades.
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