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Mr. Ian Bruce: I am a little wary because I see that the Ministers sitting on the Treasury Bench are taking notes of the Liberal Democrat suggestions. Does the hon. Gentleman remember that, before the Conservative Government introduced VAT on domestic fuel, a Liberal Democrat policy document called for a carbon tax on domestic fuel? Indeed, the Liberal Democrat candidate who fought me at the general election said that the very minimum that should be done was to put VAT on domestic fuel. Surely, if the Government were to follow that policy, they would be criticised for doing what the Liberal Democrats had suggested.
Mr. Malcolm Bruce: It has often been said that Liberal Democrats provide policy initiatives for the Tories. Perhaps that was one that the Tories should not have taken up. The hon. Gentleman cannot cite the words of one candidate as the official policy. The truth is that our policy--[Interruption.] It has never been Liberal Democrat policy to put VAT on domestic fuel; it has been our policy to have a carbon tax and it remains our view that there should be pollution taxes. We would use the yield from such taxes to raise the threshold at which people start paying tax, so that we can remove people on low incomes from tax altogether. One can make a connection between green taxes and helping people on low incomes to have more take-home pay and life-style choices--including choices that do not pollute the environment.
However, we must be realistic as to the choices that people can make; it is clear that the impact of the escalator on the haulage industry does not allow that industry the necessary latitude. The Government must acknowledge, or explain in ways that are acceptable to the industry, which choices they believe can realistically be made. I assure the House that there is no way other than trucks to transport timber from the depths of the forests of the highlands and the north-east of Scotland. It is a joke for a Minister at the Scottish Office to produce a brochure showing timber being drawn by trains, when some of those forests are 100 miles from the nearest railhead. It is absurd to suggest that that is a viable solution.
The Liberal Democrats want the Government to reconsider those particular concerns about the Budget. I hope that it is accepted that many of them have been expressed in a constructive way, because we share some common objectives, even though we disagree about the means to achieve them and the speed at which they might be achieved.
The one matter on which we shall not have the opportunity to vote was referred to in the last words of the Chancellor's speech: his announcement of his intention to cut the standard rate of income tax by a penny in his next Budget--presumably, therefore, in the next Finance Bill. What astonishes Liberal Democrat Members is why, if the Government can find money to cut the standard rate of income tax, they cannot find enough money for the investment required to deal with the problems of health and education. That certainly astonishes many people throughout the country who have spoken to me since the Budget. I know what the Government's reply is: "We are finding £40 billion; it will all be sorted." However, Ministers fail to grasp the fact that damage was done, not only by the Conservative Government's squeeze, but by the continuation of that squeeze--with intensification--during the first two years of the Labour Government. There is a long way to go before even the Government's own objectives of reduced class sizes will be achieved.
The other day, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) very effectively challenged the Deputy Prime Minister. We are told that the Government's priority is to cut class sizes for the first three years of primary education, but that is done at the cost of increasing class sizes for the remaining years of primary and secondary education. Achieving that priority will require more resources than the Government have identified. The fact is that the cost of reducing class sizes has exploded, to about six times the Government's estimate, and that is only for the first three years of primary education.
In the health service, there is a major problem with recruitment and retention of nurses and doctors. We simply cannot go on plundering the third world for its scarce trained nurses and doctors; we have to redeploy and train our own staff. Although it takes several years to train such staff, Ministers should remember that there are many nurses and quite a few doctors who are not working in the national health service, and some who are not working in the health sector at all--because staff calculations do not have built into them the ability to produce flexible rotas that take account of people's real circumstances, or provide rates of pay for part-time work that, once transport and split-shift problems have been taken into account, are adequate to cover child care and other expenses. Such sorts of issues need to be addressed,
but they are not being addressed; solving them will require resources that the Government have not even begun to think about.
In every Minister's speech, we hear of the Government's determination to end boom and bust in the economy, but I want to know when they are going to end boom and bust in the public sector and let that sector have clear access to a long-term climate in which real investment and real redress of their problems can be costed through. The Budget gives an indication of changed priorities--a mind change within the Government. The Government tell us that they have sorted out the problems in health and education, even though not a single person in this country believes that. In the second half of this Parliament, the Government are going to move to an agenda of fighting the next general election on the basis of cutting taxes, before they have delivered material improvements in health and education. Following that course will cost the Labour party dear.
Mr. Mohammad Sarwar (Glasgow, Govan):
I am pleased to be able to speak in the debate and to welcome the Finance Bill. I am glad that, by putting families and pensioners at the heart of the Bill, the Government have gone a long way toward helping those who suffered the most during the 18 years of Tory rule. For that reason, I shall focus on the Bill's provisions relating to pensioners and families.
In my constituency, we are extremely lucky to have active and public-minded pensioners. There are several pensioner groups and organisations which not only help pensioners with their individual needs but take a close interest in issues that affect the wider community, such as the problem of drug taking among young people or environmental matters. The elderly play a central role in the life of the local community in Govan.
However, those same people, who worked hard all their lives and made a valuable contribution to society, have found that their needs and concerns have been ignored by the state to such an extent that they have become one of the most disadvantaged groups in our society. It was time that that was put right, so I am glad that the raft of measures in the Bill that are directed at the elderly will help to reward pensioners for the contribution that they have made, and continue to make, to our society. Increasing personal allowances above inflation, linking rises in the minimum income guarantee to earnings and retaining the married couples allowance for pensioners will substantially improve the quality of life for the poorest pensioners.
I should like to mention particularly the decision to increase winter fuel payments fivefold from £20 to £100. Combined with the reduction in VAT on fuel, that move
has been welcomed by pensioners in Scotland, where the colder climate makes the increase all the more important for the elderly. The decision contrasts with the increases in VAT on fuel introduced by the Conservatives in government and demonstrates the importance that this Government attach to improving the lives of pensioners. The measures provide an additional £3 billion for the elderly, which will help to assist some of the poorest members of society and will ensure that the elderly are not left behind as Britain continues to prosper under this Government.
At present, 700,000 pensioners do not claim income support and will, unfortunately, lose out on the increases in the minimum income guarantee. I hope that the Government will introduce initiatives to encourage such pensioners to apply for the benefits to which they are entitled. Perhaps the Government could launch a public information campaign targeted at such pensioners. That would ensure that all pensioners who need help are able to benefit from the measures in the Bill.
Equally importantly, this is a Bill for families and for work. The welfare system that we inherited from the previous Government has failed to bridge the gap between benefit and work. In fact, the benefit and tax systems have constructed increasing barriers for people on benefit who are desperate to return to the workplace and have thus contributed perversely to widening inequality and increasing poverty. That has served to undermine families, resulting in family breakdown and an increasing number of families living in poverty and on low pay. The system needs drastic changes, and I am glad that the Bill delivers them.
The new tax credit for children, set out in clause 27, is a radical and innovative policy which is designed to meet that challenge. The married couples allowance was given at a flat rate to all married people, regardless of income and irrespective of whether they had children. It was very ineffective at directing help where it was needed most. By contrast, the new children's tax credit will direct support to families and people with responsibility for children. As it will not go to those on high incomes, the measure will ensure that help is channelled to those who are most in need.
Five million families will benefit from that bold measure. Together with the working families tax credit and the increase in child benefit, the children's tax credit will go a long way towards easing conditions for families with children--particularly the poorest families. Combined with the measures that my right hon. Friend the Chancellor introduced earlier, the reform will serve to lift 700,000 children out of poverty.
In addition to tackling child poverty and low pay, the changes will help to break down the barriers between benefit and employment. By making work pay, they will make the transition from benefit to work much smoother and easier. The proposal to reduce national insurance payments for low earners and the working families tax credit will assist children whose parents are out of work or receive means-tested benefits by making work more financially attractive through enabling those who depend on benefit to make the difficult transition to employment without being impoverished in the process.
The far-reaching changes that have occurred in the economy, particularly in the labour market, and the impact that they have had on other areas--most notably the welfare state--make the need for an interrelated and integrated approach to welfare policy even more urgent. However, the fragmented benefits and tax system that we inherited from the Tories has served to increase unemployment, the social security budget, inequality and poverty.
The approach embodied in the measures in the Bill and the working families tax credit takes account of the close, complex connections involving benefits, families and employment and how they impact on each other. By introducing measures that will increase the income of poorer families and at the same time enable people to make the difficult transition to work and to stay in work, the Bill and the Chancellor's other reforms mark an important step forward in meeting the challenges presented by the radically different economic environment that we face today.
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