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7.26 pm
Dr. Desmond Turner (Brighton, Kemptown): I must take issue with the curmudgeonly remarks of Opposition Members about what was a carefully crafted Budget. Officially, we are not supposed to call it a redistributive Budget, but it is wonderful to see how many people at the lower end of the income scale are benefiting from it--people who, throughout 18 years of Conservative government, were robbed year after year by Tory Chancellors, who took money directly out of their pockets and gave it to higher-income earners. This Budget has reversed that process without skinning anybody. That is quite an achievement, on which I commend the Chancellor.
The Chancellor has proposed measures that will underpin growth and stability within the British economy. It is a totally different kind of Budget--it is integrated, and hangs together--from those we were used to from Tory Chancellors, which might have been written on the back of a fag packet.
The first matter which I wish to raise is not remotely concerned with social security, for which I apologise--it is the climate change levy. I wonder how consistent the scale of the levy is with the £50 million identified for promoting the use of alternative and renewable sources for producing energy. Government policy is that we should be aiming to produce 10 per cent. of our energy from renewable sources. However, the Budget proposes that 3 per cent. of the money to be taken by the climate change levy should promote replacement by renewable sources. I wonder whether the Chancellor will wish to review that matter in future Budgets, as a further
stimulation of the commercial advantage to producers using renewable sources would help to achieve that policy aim.
The implications of the royal commission's excellent report on continuing care for the elderly will have a considerable price tag. The royal commission tackled a problem that had defied some of the best brains in the country, and tried to find a rational answer to the totally unsustainable situation left to us by the implementation of the care in the community legislation in 1993, taking the burden of domiciliary or residential home care for the elderly away from the Exchequer and handing it tolocal government, with inadequate resources, making individuals pay, even if their means were modest.
The transfer of responsibility was the worst poisoned chalice ever received by local government from central Government. I was involved in implementing the change in my local council, and it was an horrendous job. Many stresses and injustices were exposed. It got to the point where there were so many problems that in some areas there was a race between the undertaker and the social worker; sometimes the undertaker won because there were not sufficient resources. Local government was made to do a deeply unpleasant job of rationing which it was not set up to do.
If we adopt the royal commission's main recommendations, we will return to the principle to which we have adhered for most of the post-war years--of the state paying for the care of elderly people. There is a great deal of justice in that. The report is excellent in its analysis and demonstrates conclusively that there is no way in which the problems can be tackled through private insurance--the figures simply do not stack up, and the premiums would be insupportable--but that, if the burden is spread across the state and paid for from general revenues, the system will be sustainable, affordable and just.
It is essential that the Government adopt the principal recommendation that personal care, as opposed to board and lodging, be paid for from general revenues. That has a cost, which the royal commission estimated at between £800 million and £1.2 billion a year. I do not have total confidence in those estimates, because they seem to be calculated from the premise of existing service levels, which I know are inadequate.
The eligibility criteria are unsustainably tight, and some extraordinary things have happened. In some authorities, before a person can receive a care package or residential placement they have to wait for someone else to die. There is an extraordinary policy of one out, one in. I do not know of a social services authority whose community care budget is not overspent, however harshly it rations the care that it delivers.
A more realistic assessment of the likely cost of providing an adequate and sustainable service would be £2 billion. Given my right hon. Friend the Chancellor's magnificent capacity for finding money in the back pocket, that is peanuts, but it has to be found. Society can and must afford it. We must find the means. A society may be judged by the way in which it treats its sick and elderly, and we must face up to that challenge.
One way in which extra revenue could be raised, should it be necessary--drastic measures may not be needed--is to reconsider the ceiling on national insurance
contributions, which was set when marginal rates of taxation on high earners were extremely punitive. Was there not a time after the war when the income tax rate was 19s 6d in the pound? In those days, there was some justification for capping national insurance contributions.
I am not making specific suggestions, but I ask my right hon. Friend the Chancellor to re-examine the national insurance system. If the cap were removed, the blow could be softened by reducing the percentage contribution, but making it payable across the whole income spectrum. It is just a thought that--
Mr. Deputy Speaker:
Order. The hon. Gentleman's time is up.
Mr. John Bercow (Buckingham):
Last year's Budget was a triumph of style over substance. In this year's Budget, the Chancellor has progressed in the former and regressed in the latter. I want to focus on tax, regulation and tobacco smuggling, for their handling of which the Government deserve a triple condemnation.
It is clear that Ministers believe that the British people are taxed too little, although they did not say that before the general election. The Labour party manifesto explicitly stated:
Let us scotch once and for all the absurd untruth peddled by the Prime Minister at Question Time last week that the Budget represents a net tax cut of £4.5 billion. It does nothing of the kind. Anatole Kaletsky is not ordinarily a supporter of the Conservative party, but in The Times he described that prime ministerial utterance as a straightforward untruth.
By the end of this Parliament, there will be an additional £40.7 billion in tax and regulatory costs. In the coming financial year alone, the tax burden will be £7.1 billion higher as a result of the Chancellor's decisions. The cumulative impact of his Budgets is that, at the end of this Parliament, people will pay about £19 billion a year more than at the end of the previous Parliament. That is the reality, as distinct from the propaganda with which Ministers regularly favour us.
I want to draw attention to two especially acute and serious examples. The first is the savage increase in excise duty on petrol. That will hit people in rural areas especially hard, not least in my Buckingham constituency, and my constituents have not been slow to make their protests heard about the Chancellor's move. I quote from one letter from an 81-year-old constituent, Mrs. Zettl, from Buckingham, who wrote to me:
The second significant measure that will be damaging is the colossal rise in national insurance contributions for self-employed people, amounting to £240 million a year. The Government have the brass neck to introduce that damaging change under the chapter in the Red Book entitled "Increasing Employment Opportunity". This is a tax-raising Government and £533 million of the additional tax take during this Parliament will be paid by the people of the county of Buckinghamshire.
It is clear that the Government believe that this country is under-regulated. Before the election, the then shadow Chancellor said that Labour would not impose burdensome regulations on business because it understood that successful businesses must keep costs down. The right hon. Member for Hartlepool (Mr. Mandelson) said:
What have Ministers had to say about regulation during the Budget debates? There was nothing about it in the Chancellor's speech, nor in the statement on competition by the Secretary of State for Trade and Industry or in his 36-minute speech on Wednesday in the continuationof the Budget debate. Instead, he talked about the establishment of the Small Business Service. The biggest service that the Chancellor of the Exchequer could do for small businesses is to get out of the way, let them make their products, market their products, sell their products and be successful.
To cap it all, the Secretary of State for Trade and Industry said to the House, in what should have been a joke but apparently was not:
7.36 pm
"How and what governments tax sends clear signals about the economic activities they believe should be encouraged or discouraged, and the values they wish to entrench in society."
From the record of his first three Budgets, the Chancellor has given a people's performance of a very curious sort. They have been people's Budgets: people who have mortgages, people who are married, people who own cars, people who put petrol in cars, people who have pensions, people who acquire savings, people who buy houses and people who run businesses all face a higher tax burden as a direct consequence of the Government's decisions.
"Those of us who are lucky enough to run a car suffer so much from the constant increase in petrol. Without my car I would have to get rid of my dogs as I cannot take them for a walk in a built-up area. I would have no social life as my friends are scattered round
15 Mar 1999 : Column 773the villages. At 81 years old I am too old to bicycle or wait in draughty unheated bus shelters for buses which run at the wrong time, if at all, and in this violent age, I do not like to walk in lonely places in the dark."
She adds that she works voluntarily for two small charities, neither of which can afford to reimburse her petrol costs, and in pursuing her duties for them she is obliged to visit people in remote and outlying areas. She is the sort of person who will be affected. She has been clobbered by the Budget and she is very angry about it. The gas guzzling Secretary of State for the Environment, Transport and the Regions may not be too bothered and the Chancellor may be insouciant about the effects of what he has done, but my constituent is angry and she has not hesitated to tell me so.
"we have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms."--[Official Report, 25 November 1998; Vol. 321, c. 214.]
But that is what the Government have done. Some 2,400 additional regulations have been introduced. For example, the fiendishly complex working time directive regulations alone take up 72 pages of A4 paper and the national minimum wage regulations, until amended, take up 112 pages of A4 paper.
"I am reviewing arrangements for business rescues".--[Official Report, 10 March 1999; Vol. 327, c. 367.]
That might be wise, in view of the likely exponential increase in the number of candidates for rescue. Small businesses will need rescuing from the sea of regulation under this Government, which is now deeper and more hazardous than any that British companies have previously had to negotiate. The Government are increasing regulation.
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