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Mr. Milburn: Perhaps the shadow Chancellor was right not to give way. As usual, the hon. Gentleman is wrong. The Budget cuts taxes by £4 billion.
Mr. Ruffley: I am most grateful to the Chief Secretary. Can he explain why table B9 of the Red Book clearly demonstrates that the tax burden will be higher in the last year of this Parliament than in the first year?
Mr. Milburn: The tax burden will fall next year and will continue to be broadly flat over the remainder of this Parliament. More important, it is lower than the Tories had planned for if they had been in government.
Our approach to tax is symbolised by the two new low starting rates of taxes introduced in this Budget. There is a new 10p starting rate of corporation tax to help companies create the wealth to sustain the investment to create the jobs that a fair society needs. There is also a new 10p rate of income tax to help people move from welfare to work, to harness their potential to stimulate the productive economy that our country demands.
These are Budget measures to create wealth and opportunity, as my hon. Friends the Members for St. Helens, South (Mr. Bermingham) and for Stafford (Mr. Kidney) rightly pointed out. The point was also made by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who welcomed the Budget. He said that it was the first in 30 years, most of them under the Conservatives, that he could wholeheartedly welcome. I am grateful to him for his support. He is in good company, because the Budget has been warmly welcomed by pro-business organisations and anti-poverty groups alike.
I have a word of advice for the Leader of the Opposition and the shadow Chancellor. If they are serious about the Budget, they should practise what they preach and go out and listen to the people of Britain. They should listen to the British Retail Consortium, which said that the Budget would
Wearing not his politician's hat but his business man's hat on Budget day, what did the hon. Member for Tunbridge Wells (Mr. Norman) have to say?
Mr. Milburn:
I say to the hon. Gentleman in all candour that if he had been listening on Budget day, as I
This Budget is the product of this Government's sound and prudent economic management--a point that was reinforced only a week ago by the IMF. When we entered office, we inherited a national debt that had doubled, inflation was back in the system and the public finances were spiralling out of control. While the Conservative party is only now owning up to its mistakes, we have been busy putting them right: inflation is under control, unemployment is down and employment up, long-term interest rates are at their lowest for many years and mortgages are cheaper than they have been for thirty years.
The Budget continues to lock in the stability that we are creating by keeping the public finances under control, while at the same time giving a £6 billion boost to the economy at just the right time in the economic cycle. The platform of stability that we are creating allows us to tackle the fundamental problem facing our country--how to raise our productivity performance. Therefore, in the Budget we introduced major reforms for a new, knowledge-based enterprise economy open to all.
There is to be a new research and development tax credit for firms with the brightest ideas and the best potential. There are to be new allowances for smaller businesses to help to bridge the investment gap between Britain and our competitors--just as the right hon. Member for Cities of London and Westminster (Mr. Brooke) called for in his useful contribution. There are to be new rewards for the best entrepreneurs and new incentives for the best inventors. Finally, as my hon. Friend the Member for Chorley (Mr. Hoyle) emphasised, there are to be new company tax cuts that will help two in three of all firms that pay corporation tax. The right hon. Member for Fylde (Mr. Jack) said that that measure would help only companies making profits of up to £10,000 a year, but he was wrong; it will help two in three of all companies paying corporation tax--those earning up to £50,000 a year in profits.
Mr. Jack:
Will the right hon. Gentleman give way?
Mr. Milburn:
This Government have already created the lowest company taxes of any major country in Europe. When, on Tuesday, my right hon. Friend the Chancellor said that we are now to give small British firms the lowest starting rate of company tax of any major industrialised country in the world, I swear I could almost hear the blood draining from the faces of the Conservatives, especially the Leader of the Opposition. The new 10p corporation tax will leave more money in the hands of those who are best placed to create wealth and jobs.
Mr. Jack:
Will the right hon. Gentleman give way?
Mr. Milburn:
Because of our prudent approach, there will be more money for our essential public services. Next month, an extra--
Mr. Bercow:
On a point of order, Madam Speaker.
Madam Speaker:
I suspect that I have heard it before, but go ahead.
Mr. Bercow:
May I ask for your guidance, Madam Speaker? Is it not a matter of the grossest discourtesy for
Madam Speaker:
I refer the hon. Gentleman to the response I made a moment ago. He was here, so he knows what I am talking about.
Mr. Milburn:
Thank you, Madam Speaker. There will be more money than ever before for our public services, but for some, more is never enough. As the hon. Member for Gordon (Mr. Bruce) confirmed, the Liberals will vote against the 22p rate of income tax, because the record £19 billion that we are putting into schools in a month's time is inadequate--this from the party that promised only £2 billion more for education: £4.5 billion less than we will spend each year.
The more Labour delivers, the more the Liberals demand. They have proved once again that they have an insatiable appetite for spending other people's money. If they had their way, the Liberals and the nationalists alike would land the average family with higher tax bills. This Budget cuts taxes for low and middle-income families.
Mr. Malcolm Bruce:
Will the Chief Secretary confirm that the increase in current spending on health and education across the Parliament will be half the rate it was under the Conservative Government? Is that true or false? If it is true, how does the Chief Secretary think he will solve the problems of health and education?
Mr. Milburn:
I know that the hon. Gentleman has a reputation for torturing the statistics until they confess, but this is a record investment in our health and education services. There will be £40,000 million more for our hospitals and schools--more than the Liberals promised the British people at the last general election.
This Budget cuts taxes for low and middle-income families, but it does even more than that. The independent Institute for Fiscal Studies says that people in every decile group--from top to bottom--will gain. The average household will be £380 a year better off, and the tax burden on the average family will fall to below 20 per cent. for the first time in more than 20 years.
"give a tremendous boost to small retailers."
They should listen to the Institute of Directors, which welcomed the reductions in company taxes, and to the Child Poverty Action Group, which welcomed the measures to tackle child poverty. It was even welcomed by the chairman of Asda himself, a well known and respected member of the Conservative party and of this House. He would be a fitting person to sit round the kitchen table that the Leader of the Opposition is so concerned about.
"We'd welcome the help for small businesses. I think that's good. We'd welcome the reduction in corporation tax and lower corporation tax for smaller businesses. That's good. As I said, we welcome, particularly in Asda . . . we're very keen on employee share ownership. I think everyone in the country is dead keen on it, and that's good."
"Overall," he concluded,
"not a bad business budget".
Mr. Bercow:
I am most grateful to the Chief Secretary for giving way on that point. In light of the remarks that he has just quoted, how does he explain the fact that, in a 70-minute Budget speech, a 10-minute statement on enterprise and competition and a 36-minute speech in Wednesday's debate on the Budget, neither the Chancellor nor the Secretary of State for Trade and Industry said anything about the need to reverse the burden of slothful regulation on the industry and commerce of this country? Might it be that they want to impose regulation on the productive businesses of this country?
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