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Sir Robert Smith (West Aberdeenshire and Kincardine): The hon. Lady said that agrimonetary compensation would be seen as a short-term fix and that bigger structural problems faced the industry. The common agricultural policy contains a mechanism for agrimonetary compensation which other countries use to help their agriculture. Does she not accept that, if the Government do not want to use that mechanism, they should not unilaterally opt out, but should reform the common agricultural policy across the European Union rather than penalising British farmers?
Ms Keeble: Substantial amounts of compensation have been provided under this Government, but we have to top
that up ourselves--it is not free money that comes from Europe--as a result of agreements into which this Government and the previous Government entered. The package of measures available helps at the edges, but it does not deal with the deep structural problems of agriculture. I completely agree with the hon. Gentleman about the need to reform the common agricultural policy, and the Government have led the way in getting agreements through Europe. Had it not been for this Government, I suspect that we would have achieved an even worse deal on CAP reform. I was about to discuss the skills gap. Agriculture, even in rural areas such as South Holland and The Deepings and parts of Northamptonshire, is a small sector of the economy, and the skills gap is particularly important for new and growing sectors. That gap puts pressure on what should be an expanding and thriving national economy.
Mr. Hayes: The hon. Lady is right in terms of the percentage of the population employed in agriculture, although I would point out to her that the number employed in that sector in South Holland and The Deepings is well above the national average. She is wrong, however, in the sense that agriculture is pivotal to many other related industries. In my constituency, as in many others, the food and food-related industries are based on our having a strong agricultural economy.
Ms Keeble: Agriculture is important in many ways other than in employment and financial terms. It is important to the food industry, to the environment and to leisure and recreational activities. The Government have shown their support for those aspects of agriculture, not least in terms of the importance attached to access to the countryside and the need for proper land management. However, the Conservative party opposed the Bill on those issues when it came before the House yesterday.
The skills gap is a problem nationally. In Northamptonshire, the A-level pass rate in schools is below that for comparable counties and, at almost all other stages, achievements in schools in Northampton are the lowest in the county. That is a source of great concern to me. That means that the extra money in the Budget that is earmarked for schools will not just meet some public service pressures, but will deal with pressing economic pressures.
The extra money for the health service will relieve some of the biggest pressure points in that service. Conservative Members have scoffed at what that money will mean but, in practical terms, it will mean that my health authority will be able to makes plans for winter fuel with some certainty. On the scale announced, the money could also provide extra intensive therapy unit and high dependency beds that will make it possible for heart surgery to be carried out in a more planned way.
Most important of all, that money means that it will be possible to provide the extra services that are needed to keep old people out of hospital. It is a disgrace that many old people in my constituency and elsewhere see their own homes for the last time from the back of an ambulance as they are taken to hospital. From there, they go to nursing homes. If we are serious about providing high-quality health care for old people, we must consider developing the new services that can support them in their own homes and give them much more dignified care if they suffer from illness.
The Budget and in particular the Tories' response to it show up weaknesses in Tory thinking and policies. That point will be strongly echoed by people outside the House. Sometimes, Tories say that they welcome extra health spending, but sometimes--and we have heard this today--they describe it as taxation by stealth. They must come clean about what they want. Do they want improvements to the health service, and are they, therefore, prepared to support the tax and spending programmes that are needed to achieve that?
Mr. Oliver Letwin (West Dorset):
I do not know whether the hon. Lady heard the speech given by my right hon. Friend the Leader of the Opposition, but he made it perfectly clear that we welcome the increased spending on health. That does not imply accepting tax increases, because we are talking about a heap of other spending that she has not mentioned.
Ms Keeble:
The hon. Gentleman proves my point. When one talks about increased spending on the national health service, one must explain to the public how that increase will be achieved. I heard most of the speech of the right hon. Member for Richmond, Yorks (Mr. Hague). It was extremely amusing, but it did not deal with any of the issues that face my constituents and are of major concern to them.
The Conservatives have now welcomed the minimum wage, but they have not accepted the other side of the equation--the working families tax credit, which will ensure that families have not just the minimum wage but a decent living wage. Conservatives have rejected virtually all our measures to combat child poverty, but they talk to us about the moral duty of Government to cut taxes.
Conservative Members have not shown any understanding of the measures that this Government have taken to help women. I understand from today's announcement that women on maternity pay will be able to receive the working families tax credit, and that is a substantial benefit to women who wonder what they will do when their maternity pay tapers off and fear that they will have to return to work because they cannot afford to live on statutory maternity pay. I am pleased about that provision, but the Opposition do not seem to understand such measures.
Conservative Members do not seem to be prepared to admit that they still believe in a minimalist role for Government and that the Government's purpose is to create the right conditions for some sections of the economy, such as the south-east service sector, but not for all. Everything else will be left to trickle down. After 18 years of Conservative Government, the public know that trickle-down does not work: they want the much more responsible approach that this Government are showing. They want a dynamic economy and public services. That is why the sense of social justice shown by the Government and, in particular, by the Budget will be so important and will resonate so well with the public.
The public will enthusiastically support policies that progressively lift out of poverty the 4.4 million children whom the Tories left in poverty when they left office. The public will support the short-term measures for pensioners--and see them for the real gains that they are--and long-term restructuring.
The Tories have shown no understanding whatever of what it means to bring up a family in middle England when one earns only £12,000 or £13,000 a year. The public will fully support the Government's strength of commitment, as shown in the Budget, to provide a stable economy so that families can plan securely for the future; to provide low interest rates so that people can pay their mortgage; and to provide incentives for small business men to enable them to build up their business and plan for the future so that they can be part of a growing, dynamic economy.
Mr. Peter Bottomley (Worthing, West):
I congratulate the hon. Member for Northampton, North (Ms Keeble) on being the first hon. Member to mention measure 5.112, which is the £35 million a year tax relief on sanitary products. Sanitary towels and tampons are significant. I have calculated that people will save about £3.30 a year because there will be a 10 per cent. drop in price as a consequence of the much greater drop in VAT.
That measure is the result of a successful campaign over many years, and it is right that the Chancellor has acknowledged that campaign. It would have been slightly more impressive if he had not tucked away the press notice on that measure right at the back of the bundle, because many people will have spent some time trying to find it.
It is curious that in No. 19 of the notes for editors in press notice HMT/DETR 1 we hear about 44-tonne lorries being approved for use in this country. That proves my old rule: "Read the notes for editors and you will find the interesting points that the Minister doesn't want to say in public." I shall spare the House the greatest excitement, which is in example 3 in the annexe to Inland Revenue press notice BN2A; it is probably indescribable, and I am not surprised that the Chancellor did not mention it in his speech.
Page 176 of what is commonly referred to as the Red Book--not that it has been red for some years--details the forecast issues and risks. There is an interesting overall question about what has happened and what will happen to household disposable incomes, household spending and the savings ratio. What I am about to say is qualified by the fact that we do not know what will be the impact of stakeholder pensions. The forecasts suggest that the cost of stakeholder pensions to the public revenues will be about £650 million a year, and that implies a fair amount of extra saving for retirement, which will be welcome.
The Treasury, looking back at the last year and forward at the next two or three years, has rightly said that household incomes grew more slowly than expected, but household spending rose faster than expected, and that is the explanation for the savings ratio dropping from about 10 per cent. to about 5 per cent. Projections show that the
savings ratio may increase to 6 per cent., but that is a vulnerable figure. If we had continued to have a savings ratio of about 10 per cent., that would have had a greater impact on people's retirement incomes. We need to watch those figures.
We need to be aware also that the way in which the Chancellor dealt with the alterations to self-assessment taxpaying led to a significant increase in the amount of tax paid by many people during the transition period, and that increase is now slowing down. Such hiccups tend to be ignored by the commentators, because they require a reading of the Budget 2000 book, rather than simply reading the press notices, the Chancellor's speech or these debates.
When we are discussing health we always praise the people who work in the health service--in hospitals, in the community and in GPs' surgeries--and in praising the Chancellor's delivery of his speech, let alone the content, we ought to acknowledge the efforts of people not only in the Treasury and the Revenue, but throughout Whitehall. It is quite an achievement to get the product out on the day that the Chancellor makes his speech, so I pay tribute to those people.
I move on to measures that I wish had been in the Budget. I have not yet noticed the Government facing up to the problem of annuities. If there is to be a transformation in the Government's repayment of debt and we will still require people to turn their personal pension pot into an annuity, the reduction in the amount of available Government debt that will match the annuity payments will mean that the returns on annuities will drop. Unless there has been a consultation exercise or taskforce that I have not noticed, the Government should be far more open and consult about how to deal with that. There has been independent sector work on the matter.
I have many constituents who are above retirement age. Many of them have private pension pots and have put off turning them into annuities on the assumption--which I hope is correct--that the Government will take action. It is wrong to require people to wipe out capital, even though it has been built up tax free, on a rate of return that is lower than they get from many other forms of investment that do not wipe out their capital. That is not only anomalous but unacceptable. Will Ministers find a way to discuss that problem out into the open and find a solution within the next 18 months to two years? The solution may be a transitional set of changes, but one is required.
I move on to another issue that affects retired people. In my constituency, 45 per cent. of people are above retirement age, and these issues matter to them. Married couples in which neither partner will be over 65 by the end of the tax year will lose an estimated £500 a year because their birthdays are in the wrong month. On the type of calculation used by the Government, that will mean a loss of £5,000 over 10 years--because of a birthday. Frankly, that is a bad decision by the Government, and it is wrong that it was endorsed by Parliament in previous Budgets.
I hope that the Government will hear my plea and reverse that decision. If, for some reason, they have to eliminate the married pensioners tax allowance, they should do so by reducing it by 10 per cent. a year over
several years, so that it is not a cliff-edge change. There is no justification for that sudden change. It may require a reversal of policy by the Government and may look to outsiders as though they are admitting that they have made a mistake, but I am asking for fairness.
I hope that if the Conservatives table an amendment on that, the Government will take it seriously, and I hope that it can be debated on the Floor of the House, rather in the Committee upstairs, because the issue affects people in every constituency. That is the only example that I have come across of a cliff-edge change, and I have gone back through Budget changes in most of the 24 years that I have served in the House.
Many other issues are of interest to my constituents, but it would not be right to deal with too many of them. One that matters to Worthing, West, which is a seaside constituency, is the change in Customs and Excise press notice 1, which abolishes betting duty on amusement machines with prizes, where the stake is 10p or less. That saving of £645 a year, or £450 a year in non-profit clubs, will be welcome. It is not desperately important to overall finances, but it will be a significant advantage to people who provide low-cost, low-return entertainment in Worthing and elsewhere. I say that although I have not had a major contribution from Connaught Leisure in my constituency. However, its owner worked with me in Battersea funfair, back when I was in my teens and trying to fund my education, or at least my debts.
I move on to energy saving and home security, on which VAT is coming down to 5 per cent. There is an ambiguity in Customs and Excise press notice 6. The VAT reduction is not applicable to DIY installation. It is not clear whether that applies only to home security devices or to energy saving materials as well. I do not expect that to be clarified today, but perhaps we could have an answer later. The notes to editors do not make the position clear, but it would be of interest to the trade press and those who do DIY work.
Inland Revenue press notice 8 deals with the installation of new boilers and radiators in social housing owned by councils or registered social landowners, where there is provision for leased boilers and radiators. To many people, this may sound trivial, but if tenants buy homes from their registered social landlord or council that contain radiators and boilers leased from other companies, will that lead to a conveyancing nightmare?
The fact that the boilers and radiators are leased presumably does not require them to be taken out if the house changes ownership. This could be a matter of great importance to people who want to buy the home in which they have been living, rather than being forced to move elsewhere because they cannot afford the lawyers to work out the complications involved.
On charities, I do not remember in which year I first suggested that the Treasury, or rather the Inland Revenue, ought to recognise that if money is given to charities other than through the Charities Aid Foundation, Gift Aid or Give As You Earn, it comes in the main from people who have taxable income or from people below the taxable threshold. Rather like the old system of MIRAS--mortgage interest relief at source--which eventually imputed to all payments of mortgage interest the notion that it came from taxed income or from income below the tax threshold, so that the tax relief could come back to
everyone, it would be far simpler if donations to charities were presumed to come from taxed income or from income below the tax threshold.
The only accounting for such donations should relate to those paying the higher rates of tax. That is roughly the case with earnings from dividends and savings, where the tax credit applies to the ordinary rate of tax, and only the higher rate requires a complicated paper transaction. Getting rid of paper matters.
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