| Previous Section | Index | Home Page |
8.59 pm
Mr. John Hayes (South Holland and The Deepings): I hope that my contribution to the debate will raise new issues rather than repeating what has already been said--which is unusual in itself. I always think that a person who speaks on the first day of the Budget debate is either very bright or very bold. I should like to think I am the former, although by the time I have finished, hon. Members may think I am merely the latter.
The Chancellor spent the first part of his speech talking about the prevailing economic circumstances. He talked about employment and inflation. He did not, however, speak about the decline in the savings ratio, which has halved during the Government's time in office, and the consequent damaging effect on manufacturing, particularly on exports.
The Budget contained nothing for manufacturers, despite all that we have heard in recent days and weeks about the plight of exporters. Nor did the Chancellor give much attention to investment. Some concessions have been made, particularly on high-tech investment, to which I shall refer later, but investment in manufacturing industry is below that of most of our world competitors and that is a serious problem for our economy.
The Budget certainly taxes more and delivers less, particularly for rural Britain. It contains no aid package for agriculture, which has been badly hit--in spite of protests in the House and in Parliament square. Pig producers can scarcely produce pigmeat economically; they cannot sell it for what it costs to produce. The dairy and beef industries are in crisis, and the arable sector faces prices equivalent to those of 25 years ago.
My constituents, such as pig farmer Stewart Stables, and Jane and Michael Cook, who farm cattle, are hard pressed by prevailing circumstances which the Government have failed to address in this Budget. Unlike the hon. Member for Bury, North (Mr. Chaytor), they will be not pleased: they will be deeply disappointed. There is nothing for poultry farmers, who face ever more competition from abroad.
There is nothing for rural services either. We heard a lot about spending increases for education, health and transport--on which I shall elaborate later--but little about how the money might be skewed to favour disadvantaged areas, particularly rural areas. Rural Britain has missed out. Given the nature of the crisis in rural Britain, that is extraordinary.
Let me turn to the national health service. I have had a chance to study the detailed proposals for the NHS, and Labour Members may be surprised to learn that, although great play has been made of the extra money, the figures for year-on-year growth fail to match the aspiration--I use that word advisedly; the Prime Minister told us that that was what it was--that NHS spending as a proportion of gross domestic product should match the European average. The increases do not provide a foundation for meeting that aspiration. There is a 7.9 per cent. increase for 2000-01, but growth tails off to 5.8 per cent. for the next three years, averaging out at 6.3 per cent. overall. To meet the Prime Minister's aspiration, the figure should average closer to 7.5 per cent. The pledge--which later became an aspiration--has gone out of the window.
The problem behind the Government's approach to NHS spending is that they do not understand the difference between affordability and cost-effectiveness.
They do not understand the difference between political judgments and the clinical judgments on which NHS spending should be based. The distortion created by their obsession with waiting lists has badly damaged the NHS.
Health service managers have been left confused by the continual reannouncement of figures. The British Medical Association wrote to the Prime Minister to complain that it was impossible for health service managers to plan effective delivery of services when they did not know how much they would receive. Today's Budget statement was peppered with reannouncements.
Naturally, we welcome extra spending on the NHS. We have heard some silly nonsense from the Labour Benches to the effect that the Conservatives do not welcome justified and targeted spending on public services to benefit the disadvantaged. Of course we support that. The point made by the hon. Member for Bury, North--that all tax and all spending were good--was primitive to say the least. Do Labour Members not understand the difference between tax yield and tax rate? Do they not understand the difference between targeted effective spending and spending per se? The Conservatives are merely saying that if the Government take money from people, they have a responsibility to ensure that it is spent wisely and accountably. That is the point that we have made repeatedly.
Dr. Lynne Jones (Birmingham, Selly Oak):
Is the hon. Gentleman suggesting that the Government's proposals for increased spending on health and education would not be a wise use of taxpayers' money?
Mr. Hayes:
I was about to come to that point. We do not yet have the details about the £1 billion that was announced today, but the certain problem with that proposal is that it takes a broad brush approach to education expenditure. To target that money at the most disadvantaged pupils and schools, we need to address the formula funding package. That is understood by professionals in the education service.
Of course, no school will say no to extra cash, but all schools will admit that the root of the problem is the way in which we fund education. I admit that the previous Government were responsible for formula funding, although it was based on preceding traditions--as was brought out in one of our recent debates on education. However, the formula needs adjustment so that the extra money goes where it is most needed. It is not good enough to take a broad brush to education expenditure; one has to spend money differentially--in favour of disadvantage--to raise standards throughout.
Let me offer the hon. Lady an example. The schools that will suffer most from today's proposal--or that will benefit least--will be small rural ones, or those in inner cities that have the lowest number of pupils. Is it right or wise to allocate £1 billion on that basis? Would it not have been better to allocate the money in favour of disadvantage? The proposal is headline-gathering; it does not involve the intelligent use of the funds to increase the quality of education for the majority of the children who need the most help.
There was also an announcement on e-commerce and investment in high-tech industries and information technology. We should consider that in parallel with the attack on IT skills that was the result of the IR35 changes. The Budget states its aim:
To be fair and accurate--qualities for which I am known--it was suggested that in addition to the 100 per cent. first-year capital allowances for small enterprises investing in information and communication technology, there would be a £60 million package
We should be encouraging small and medium-sized enterprises to make more effective use of ICT. We do not want people to make more and more investment in hardware, if that hardware is not applied effectively and fruitfully in the development of their business. The changes will encourage acquisition without necessarily encouraging good application. That has been the story in the past for both the private and the public sectors. Any hon. Member who doubts that should read the surveys of good IT practice, which suggest that, despite investment in IT, much of it has been under-utilised through lack of understanding. Given that people will find it harder and harder to acquire the skills, the consultancy and the training that they need as a result of the Government's attack on the industry's private consultants through the IR35 changes, the future is gloomy for IT investment as a result of the Budget.
The Budget is big on headlines and soundbites, but as we have seen in previous Budgets, we can trust and value only what is actually delivered, rather than what we are told will be done. It is certainly true that the tax take has increased during the lifetime of the Labour Government. That has come home hard to people. I was amazed to hear Labour Members claim that they had never received a single letter complaining about tax increases. Are they telling us that people have not written to them complaining about the abolition of the married man's tax relief, the abolition of MIRAS or the possible introduction of a pesticides tax, which has now, happily, been abandoned because of the campaigning of mainly Conservative Members? Have they not received letters about the threat that the climate change levy will represent to arable farmers and to horticulture? The Red Book recognises that those industries are energy intensive, but sufficient help is not being provided to help them to cope with the levy.
To encourage firms to take up the challenge to get online, the Chancellor announced . . . that firms would be eligible for discounts for electronic filing and payment of tax returns.
There was a reference to 100 per cent. tax relief on investment in IT.
to help SMEs understand what getting online means.
However, that £60 million is relatively small fry, so those changes will breed an acquisition culture in high-tech and ICT, rather than an application culture.
| Next Section
| Index | Home Page |