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8.4 pm
Mr. Stephen Hesford (Wirral, West): So far, the debate has been confusing. I agree with my hon. Friend the Member for Colne Valley (Kali Mountford). It begs the question, is the debate about measures or philosophy? I want to deal with the philosophy behind the Budget.
Some members of the Labour party--I certainly know some in my constituency party--ask whether this is the first Budget of a real Labour Government. I can understand why. I ask the House and the wider public to look at the Budget as the third Budget of this new Labour Government. One has to see it in that context, not taken out of context, or fiddled about with as, with respect, the hon. Member for Twickenham (Dr. Cable) fiddled about with various measures. He did not seem coherent about what he wanted from policy.
The right hon. Member for Fylde (Mr. Jack) asked what was the coherence and purpose behind the Budget, and that is the question that I hope to answer. When my right hon. Friend was created Chancellor, he found a deficit of
£28 billion--a public spending black hole. He found that social security spending was heading out of control, much because of fraud. Those are the issues that we have begun to tackle in a series of Budgets and other measures. What he found created a difficulty. For the first two years, we had to live within inherited spending plans. There were severe restraints in certain areas, which caused alarm to Labour Members. The public asked what the new Labour Government were about.
The history of previous Labour Governments--certainly those of recent memory in the 1970s--was optimism when the party came to power, optimistic social policy spending at the beginning of the Government, followed by the brake, which was applied half way through the term in office or towards the end in a storm of economic uncertainty. This country could not have repeated that and that is what we had to avoid at the beginning of this Parliament. I suggest that we are doing so.
That is the backdrop to what my right hon. Friend the Chancellor calls prudent management of the economy--the traditional Labour aim. The history of the party has not, of course, always been favourable in that regard. We have not always attained economic stability. We are doing so now and we will do so for the next two to three years until the next election. The value of sterling has not crashed. Interest rates are falling and we are weathering the storm of the south-east Asian difficulties while 40 per cent. of the world is in recession. Inflation is stabilising at the target rate of 2.5 per cent., Government borrowing is under control and coming down at less than 40 per cent. of gross domestic product and is due to fall in the next two years at an annual rate of 2.5 per cent. per annum. That is stability and it is the backdrop to the Budget.
As Labour Governments--and the country--have found to their cost, the Labour party cannot achieve anything if there is an economic crash or a perceived or actual lack of economic confidence and that it is then voted out of office. If we are out of office, we cannot put in place the measures that many of my right hon. and hon. Friends have already mentioned.
I want to put the Chancellor's measures in the context of his Labour predecessors and set the scene about what has gone wrong in the past with a brief review of four Labour Chancellors. The response of the Labour Chancellor in the 1929 Government to the economic crash was simply to ask for cuts in unemployment benefit. That split the party, and it took almost a generation for it to recover from that mismanagement. Stafford Cripps in the 1945-50 Government applied a credit squeeze and rationing from 1948. Roy Jenkins, now Lord Jenkins, applied a credit squeeze in 1969 and 1970. In the1974-79 Government, Denis Healey, now Lord Healey, famously said that he would tax the rich until their pips squeaked. Those measures were attempted, but we ended up going to the International Monetary Fund cap in hand, followed by the winter of discontent.
In summary, two former Labour Chancellors ended up in different parties, while two, indirectly or directly, split the party. Three presided over financial crises, Lord Jenkins having taken over from Lord Callaghan, who devalued in 1967. In effect, all lost the following election, two losing majorities of 96 and around 140. That is not good for the country and certainly not good for the party.
There is a coherent philosophy behind many of the measures that my right hon. Friend the Chancellor outlined in this and previous Budgets.
What do the Opposition say about the Budget? The Liberal Democrats' bladder continues to ail them: they want to spend the 1p again and again. Unfortunately, that condition is often accompanied by excessive wind, some of which we heard tonight.
The Tories are against the rise in petrol duty. The Conservative party is the polluter's friend. They are hypocritical into the bargain because it was they who set the measures in train in the previous Government. The Tories are against the £40 billion increase in spending on the health service and schools. What do they want to put in its place? That is a rhetorical question. They are against the new deal. Many of my constituents across the range--the young and single mothers, and now the disabled and the over-50s--are benefiting from it.
The Tories ask where the £8 billion that the Chancellor was able to save against previously forecast social security spending came from. It came in part from the Government's success in putting people back to work: 400,000 jobs created since 1997. Thousands of people in my constituency continue to benefit from those measures. It is an £8 billion improvement on what we would have got under the previous Government because they would not have embarked on those measures. They would not have had the money to play with. That is how my right hon. Friend will pay for many of the measures on families and the elderly, to which I shall come shortly.
Conservative Members want to continue their policy of grinding the 6 million senior citizens on basic pay, many on income support, into poverty. They do not want the linked minimum pension--
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order.
Mr. John Randall (Uxbridge):
Last week's Budget was greeted by Labour Members with much enthusiasm, but rather like a boozy night out, what seemed like a good idea at the time has been followed by a nasty hangover. The Red Book makes less than pleasant reading. All Chancellors tend to gloss over the bad news and hide the detail, but this one has turned the practice into a veritable art form. That makes it more difficult for the ordinary public fully to grasp the overall implications of the Budget for themselves and for the economy.
In opposition, the Government said that they wanted to simplify the tax system. That would have reduced the earnings of accountants and lawyers and made the cost of government clearer to taxpayers. Unfortunately, the opposite has happened. There are now no fewer than 54 personal tax rates compared with four 10 years ago. We have become more reliant than ever on experts to filter out the truth.
Let me turn to the Budget's consequences for some of the things that directly impinge on many people's everyday lives. It has made petrol the most expensive in the developed world when oil prices have fallen to an historic low. Since 1997, pump prices have risen by 15 per cent. while the price of crude has fallen by a third. The average price of petrol in Britain is 68.6p per litre, compared with 15.9p in America and 41.1p in Greece.
I know that the Chancellor has defended that as an environmental measure, but, sadly, he is treating the motorist as a cash cow for the Treasury.
Since the above-inflation duty escalator was introduced in 1993, car traffic has grown by about 2 per cent. a year. It is failing in its primary function of reducing the number of journeys made. Millions of drivers depend on their cars. This tightening of the screw particularly affects the elderly, the disabled and those who live in the country. Such people have no alternative to using the car. There will be Labour Members who say that the Government are only continuing the strategy of their predecessors, but if something clearly is not working, it is not working, whoever was responsible for its introduction. In case I am accused of being too partisan, may I say that I welcome the tax break for employers and employees who encourage use of public transport? I believe that it is time for more carrot and less stick.
In addition to the high cost of petrol, several concerns have been raised about the decision to provide a £55 road tax discount for the 8 per cent. of cars with engines below 1100 cu cm. According to the Automobile Association, many such cars have less environmentally friendly engines than bigger, more modern cars. That will give drivers a perverse incentive to hold on to less eco-friendly cars. An AA spokesman said:
On top of the high cost of petrol for the ordinary motorist, there is the increased burden on the road haulage business. The vehicle excise duty increase will push the duty on a 38-tonne, five-axle lorry from £3,310 to £5,750 a year, compared with £296 in Spain, £459 in France and £651 in Holland. The European average is £1,100, compared with £5,750 here in the UK.
It is not difficult to see the impact that such large tax differentials are having on our road haulage industry. British hauliers currently carry 1.65 billion tonnes of goods a year--about 81 per cent. of domestic freight. That can only be threatened by the punitive tax regime being created by the Government.
The Road Haulage Association has launched flagging out packages to its members, to encourage them to register their vehicles abroad. The Freight Transport Association has warned that up to 53,000 jobs could be at risk as a result of the combined increases in duty on diesel and excise. Already, some estimates put the loss in revenue to the Treasury at £400 million, rising to £1 billion by 2002, as a result of hauliers buying their fuel in mainland Europe. The combination of taxes and fuel duty is slowly but steadily strangling the road haulage industry.
Another sector of the economy that is suffering is the tobacco and drinks trade. Duty on tobacco and alcohol continues to fan the flames of the black market for cigarettes and alcoholic drinks. It is estimated that 1.5 million pints of beer are smuggled into the UK every day, which damages the long-term prospects for the brewing industry, especially small independent brewers. High duties are helping to fuel the black market and attract the involvement of organised crime. It would be helpful if the Minister gave the House some indication of the long-term approach to tobacco and alcohol duty.
8.15 pm
"This £55 could mean the difference between scrapping the car and putting it through one more MOT."
What at first sight seems to be an environmentally friendly measure turns out on closer examination to have precisely the opposite effect.
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