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8.42 pm
Mr. Gerald Bermingham (St. Helens, South): As someone said a moment ago, it is difficult to find something to say after all these days of debate and after having read carefully in Hansard what has been said, so I decided to be honest and say how I look at the Budget.
I get married and the married couple's tax allowance is removed; I buy a house and MIRAS is taken away, so I began to feel very pessimistic. But I read on, and I began to see that there was in the Budget the seedcorn of development and growth. To a constituency like mine, development and growth is the elixir of life, but we have had so little of it.
St. Helens has been a deprived area for the 16 years that I have represented it, and certainly for many years before that. We lost the glass industry, the mining
industry, a large part of our chemical industry and the pharmaceutical industries. What did we have in return? Between 1983 and 1987, we got very little of anything. We were always, as it were, outside the pale. Since 1997, we have slowly begun to grow again. Slowly, we are beginning to get the development that we need, but does the Budget hurt or help? The answer is that it helps.
The Chancellor decided not to pursue the policy with regard to aggregate tax. We are grateful for that, because it would of course have hurt the glass industry. I know that there will have to be further discussions, and I understand the environmental argument on the one hand and the needs of the glass industry and other industries on the other. It is a fine balance, because what to one person can appear to be a great advance can cause pain and trouble to another.
I hope that the Government will look again at the issue of diesel fuel costs and the duty levies on lorries. I have in my constituency one of the biggest haulage companies in England--Suttons--and were it to send even half its lorries abroad, the effect on St. Helens would be disastrous. I say that quite openly. There is always a natural balance between the interests of both sides.
I can understand the need to restrict motorists and to push people to use public transport. I fully endorse that, and of course we want to encourage the haulage industry to move freight by rail rather than road. However, the minute we do that, there is a backlash in the other direction. There must be a middle way. I hope that when the Finance Bill goes through Committee, such matters will be considered.
I also noticed in the Budget the provisions for pensioners. When I was in St. Helens over the weekend, such matters were brought back to me time and again. For once a Government seemed to understand the needs of the elderly. The £20 increase in winter fuel payment to £100 may not seem much to many of us, but to the old it means an awful lot. The increase in the pension itself and the new tax arrangements may mean little in financial terms, but to the people concerned, they mean an awful lot. If the Government are pleasing an awful lot of people, they are getting something right.
One aspect of the Budget has caused me concern, because I think that we must drive harder and deeper at it. I declare an interest as a practising lawyer. There has been much talk in the House about the smuggling of tobacco. It has been estimated that the trade is worth about £1 billion. Whoever produced that estimate did not know Monday from Friday, because the figures are much, much higher. I know that from my personal knowledge of what is going on.
I know of the vast volume that is being smuggled through. I know that 70 per cent. of all the rolled tobacco in the south-east, the midlands and the north is smuggled. It comes in costing virtually nothing, it is sold at virtually nothing, and honest traders buying legitimately are losing their livelihoods.
There are several ways in which we can tackle that problem. I suggested to the Home Secretary some months ago that we should start bilateral conversations with the Belgians about the matter. Where is the tobacco bought? It is bought in Antwerp, Bruges and so on. There are warehouses--I have seen them--where the lorries drive in, load up with rolled tobacco, drive out and drive back to the UK. There are bus-loads of people and car-loads of
five or six people going across on "day trips" to get that tobacco. They are flooding through Dover, hour after hour.
The trade is so profitable that, it is said, even the drug dealers of old find it a much more convenient way to make their crooked money. The profits from importing tobacco are greater, the risks are lower and the penalties are far smaller.
How can the smuggling be conquered? All we have to do is to say to the Belgian authorities, "Come on, we are both in the European Common Market. This is wrecking our home trade. There is a way to solve it. If we find that a warehouse"--there are seven in Antwerp, which I can name--"is involved in the smuggling of tobacco, the warehouse owners will be deemed to be part of a conspiracy to defeat the United Kingdom importation rules under section 170 of the Customs and Excise Management Act 1979."
We must get the Belgians' co-operation. They should agree that we can extradite the warehouse owners to stand trial in the United Kingdom. The Belgians will not let that happen. I know from professional experience of case after case in which we know the source of supply, but there is nothing that we can do to stop it because we do not have the co-operation of the Belgian authorities.
The latest scam is the export of cigarettes to Benidorm and one or two other places. They go out entirely legitimately and come back totally illegitimately. Our major cigarette companies say that there is nothing to worry about--they are just exporting to Benidorm. It is surprising how many packets come back to the UK. Why do we not simply insist that any packet of cigarettes exported from the UK has stamped on it in thick red, black or green--the colour matters not--"Made in the UK"? If such packets come back, they will stand out like beacons on the shelves of superstores and everywhere else that they are sold.
In practical ways like that, we can begin to cut the illegal trade. Similarly, bottles of alcohol should be stamped. There have been cases where the villains, if I may use that word, bought their own distillery, so that they could have their own whisky bottled, exported and brought back. That product is on the supermarket shelves of southern England. When the problem is as bad as that, how much is the Treasury losing?
We need practical measures, such as an agreement with the Belgians, and we need more Customs officers. When people drive through Dover, who is there to check for drugs, fags or booze? I do not blame the Government for that. I remember speaking in the House many years ago when I criticised the removal of the cutter barges and the reduction in the number of Customs officers, yet here we are 10 years later paying the price in billions of pounds. What could we do with those billions if we had them?
It is a good Budget. Two little matters tweaked me, but I realise what the Government are doing for pensioners. I am getting near to pension age, so I shall no doubt go off into the sunset with a wonderful pension for my retirement. That will not be for a while yet, so before I go perhaps I can impress on Treasury Ministers that positive action is needed to stop the smuggling. That would pour billions into the Government's coffers, and then perhaps the hospitals and schools in St. Helens would get more money, over and above what we have generously been given, and perhaps we could have some industrial
grants to get factories into the constituency and thus reduce the problem of long-term unemployment among the over-50s.
Mr. David Ruffley (Bury St. Edmunds):
Among the many deficiencies in the Budget is the absence of a clear statement of gratitude from the Chancellor to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) for his brilliant stewardship of the British economy in the previous Parliament. My right hon. and learned Friend bequeathed a legacy of falling borrowing, historically low inflation, low interest rates and record exports.
In the past three Budgets, the Chancellor has done his best to squander that legacy. The principal means by which he has done that has been to load tax on to taxpayers and business. Statistics produced by the House of Commons Library--rather than anyone else--clearly show that during this Parliament £40 billion extra tax has been loaded on to the British economy.
That fact is underscored in table B9 in the Red Book, which clearly shows that the tax burden has been rising. In 1996-97, the last year of the Conservative Government, the share of gross domestic product accounted for by net tax and social security contributions was 35.4 per cent. That figure was given in a written answer provided by the Chief Secretary two weeks ago. In the first year of this Parliament, 1997-98, the relevant figure is 36.6 per cent. In the last year of this Parliament, 2001-02, the figure will be 37 per cent. That is proof positive that the tax burden is rising under this Government. Conservative Members would like to hear the Chief Secretary apologise for denying that the tax burden is rising under the Government in the lifetime of this Parliament over the five financial years to which I have referred.
The Budget was received with a certain amount of euphoria, but since last Wednesday there has been a cascade of critical commentary to the effect that the Budget was produced with smoke and mirrors; that it gave with one hand and took with another; that it was a pick-pocketing Budget; and that it was not all that it seemed. But Ministers on the Treasury Front Bench are still as smug and self-satisfied as they were on Tuesday. They remind me of a bunch of arrogant confidence tricksters who think that the punters are so stupid that they will not realise that they have been taken for a ride. The punters to whom I refer are the people of middle Britain. When they look at the abolition of the married couple's allowance, they understand not only that will it be abolished in April 2000, with an alleged replacement coming in one full year after, but that a recognition of marriage has been abolished from the tax system. They also understand that there are anomalies in the new system. The children's tax credit--some £400 per annum--will be available, for example, to a two-earner couple on £32,000 a year, which is just under the top-rate threshold. But a single-earner couple on more than £38,500 a year will not get that, or any compensation, in lieu of the abolition of MCA. That is a ridiculous anomaly, but the people of middle Britain are spotting it.
Those people also understand that the pensioners who were told that they would keep their MCA will not keep it. If an individual is unlucky enough to turn 65 after
April 2000 and does not have any dependent children in the household, he will receive no credit and no compensation for married couple's allowance being abolished.
Furthermore, middle Britain understands full well that national insurance contributions, the direct tax that that represents, will be increased for them; the increase in the upper earnings limit to £575 a week represents nearly an 18 per cent. increase in direct tax. In addition, self-employed individuals, some typically on £20,000 per annum, will pay around £110 a year more in NICs as a result of the Budget.
As a result of the abolition of MIRAS, the mortgage payments of middle Britain will go up. It is no use Ministers talking about the fall in interest rates. We all know that interest rates went up in the first 18 months that the Government were in power as a direct result of the botched transfer of control of monetary policy to the Bank of England, leaving interest rates higher than they need have been.
Business has borne the brunt of the £40 billion tax increase. We know that businesses are important. As John Kay and Mervyn King have described in their classic text "The British Tax System", there is no such thing as a tax on firms. The incidence of tax is always on individuals in the end.
The president of the Confederation of British Industry said the day before the Budget that some £20 billion had been loaded on to industry. Of course, since then, more taxes have been loaded on to it, the energy tax and the diesel tax being the two biggest hits on manufacturing industry in particular.
Small businesses in my constituency derive no benefit from the Budget. They wanted a cut in business rates. A correspondent from Stowmarket, a small market town in my constituency, said, "What we want is a cut in the business rate burden. Without that, the future of village shops and small businesses is in grave danger," but there is nothing in the Budget to help hard-pressed village shops.
Those shops also face higher delivery costs as a result of the fuel duty increase. The corner shop tax is looming as a result of the future levy to help to set up the Food Standards Agency.
The Government need a better understanding of rural areas. There has been a savage and brutal increase in the cost of motoring for rural dwellers. Labour has givenus the £3 gallon of petrol. That burden falls disproportionately on rural areas such as the one in Suffolk that I represent.
In the face of higher fuel duties, the prospects for rural areas are not good. The people of middle England, who reside in shire counties, will not be able to afford a Mondeo upgrade. They will be scratching around to see whether they can buy a second-hand Sierra, given the burden that the Government have put on them in the Budget.
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