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9.45 pm
Mr. Gareth Thomas (Clwyd, West): I am grateful to the hon. Member for North Shropshire (Mr. Paterson) for abbreviating his speech to allow other Members to get in. Indeed, I will confine my comments to a few remarks, so that others may speak.
The Budget will be welcomed in both my constituency and the country at large because it addresses the economic and social priorities: the need to build on the foundations of stability, sustained growth and low inflation that have been laid by the Government; the need to improve public services, which were allowed to run down under the previous Government; and the need to tackle the blight of poverty that scars society and that, again, is part of the legacy of the Conservative party.
One of the most striking features of the Budget is that the purse strings have been loosened, but prudently. It is welcome that the Budget gives a very large boost to national health service funding: there will be real growth of 6 per cent. per annum, increasing from £45 billion last year to £69 billion by 2003-04. That represents the largest spending increase for the NHS, which will be warmly welcomed by my constituents.
The £1 billion increase in education spending will also be welcomed. The figures for Wales--as I am a Welsh Member, it is pertinent to refer to the matter--have not been announced. Of course, we have a directly elected Assembly, which is charged with responsibility for allocating funds, but I would be surprised if it did not follow broadly the same pattern of spending.
The Chancellor is right to introduce measures to support families and to tackle child poverty. I am particularly gratified with the increase in child benefit to £15 for the eldest child. That represents a 26 per cent. increase over the duration of the current Parliament. The 1p cut in the basic tax rate will mean that the tax burden on working families will be at its lowest since 1972.
The Government are spending an additional £7 billion on pensioners over the Parliament. Many will share my view that more needs to be done to tackle pensioner poverty, but let us give credit where credit is due. The increase in capital limits attached to the minimum income guarantee, the increases in the winter fuel allowance, together with other measures that have been introduced during the year, will substantially improve the quality of life of many pensioners.
Great strides have been made in increasing employment opportunity and in making work pay for many millions of low-paid families. Extending the new deal to the long-term unemployed is particularly to be welcomed, as are the Chancellor's announcements on building stronger businesses and on help for small and medium enterprises. I am pleased to note the cuts in capital gains tax and corporation tax, which will create an environment that is amenable to growth and job opportunities.
In conclusion, it would be remiss of me, as a Welsh Member, not to refer to objective 1 and the need to ensure match funding, which is very much a vexed issue in Wales, where the debate has raged for the past year or so. I fully accept that the Government can make no commitments until the conclusion of the comprehensive spending review. I note that my right hon. Friend the Prime Minister has undertaken not to let Wales down, and I take comfort from the fact that the Red Book includes some interesting indications of the thrust of Government policy.
On page 52, the Government state that part of their economic strategy is to
Dr. Lynne Jones (Birmingham, Selly Oak):
I also congratulate my right hon. Friend the Chancellor of the Exchequer on giving short shrift to the siren voices on the Conservative Benches calling for tax cuts. That is the last thing that we need in the west midlands, where we are still reeling from BMW's betrayal of Rover. Tax cuts would certainly result in higher interest rates and further strengthening of the pound, which, in the debate on Rover, Conservative Members claimed to be against.
Even if Conservative Members do not understand, my right hon. Friend the Chancellor stated three times that fiscal policy and monetary policy must work in tandem. First, he said that fiscal stability was needed; secondly, he said that the Budget would lock in greater fiscal tightening; and then he said that the Budget would lock in even greater fiscal tightening. Despite that, the tax take will still be lower than it was during seven years under Mrs. Thatcher's Government.
There is clearly no need for tax increases. The Government have concentrated on making sure that taxation is fair and tax reductions are targeted on those who are less well-off. I commend my right hon. Friend for that, although I would prefer less reliance on means testing.
Of course, there is only so much that my right hon. Friend can do to bring down the value of the pound to a more competitive rate that would assist our manufacturing industry. One reason for the strength of the pound is the weakness of the euro, and that is partly due to mismanagement by the European investment bank. I urge my right hon. Friend the Chancellor to use whatever influences are available to him to impress upon the
European Central Bank the importance of adopting a symmetrical inflation target, as that policy has been most successful here.
Mr. St. Aubyn:
Does the hon. Lady feel that we should on no account join the euro unless the European Central Bank adopts the suggestion that she has made?
Dr. Lynne Jones:
I think that the sooner we can join the euro, the better. However, I should like there to be better management by the European Central Bank--[Interruption.] That is not inconsistent. Fundamentally, the European economy is sound. Bankers should have greater confidence in that fact and not try artificially to stimulate the euro by increasing interest rates. The euro should be allowed to fall to its natural level, after which it will start to bounce back. However, whenever the euro rallies slightly, that seems to encourage major holders of the currency to sell, which is counterproductive in reaching the ultimate objective.
The euro could be managed better. If the bankers took advice from the Chancellor, I am sure that it would be better managed, and that we could eventually have a more competitive pound and an enhanced ability to join the common currency.
In this Budget, we are starting to see a Labour Government recognising that taxation is not such a bad thing. We pay our taxes because we receive services in return. As the fourth most wealthy country in the world, we should be able to afford excellent public services. The Government realise that, despite the extra cash that has gone into the health service, a great deal more needs to be done.
I do not necessarily believe that, ultimately, health spending must be increased to the same level as that in other European countries. The NHS, by its very nature, is more efficient in the provision of services. Nevertheless, we need a more service-oriented approach in health provision--as I discovered to my cost yesterday. After sustaining a small injury to my hand, I had to sit for two hours, with a whole crowd of other people, in my local hospital's casualty department. We expect to be able to make appointments in the private sector--whether it is to see a hairdresser, to reserve a table in a restaurant or to have a car repaired--and we do not expect to have to wait. We should demand the same level of service in the public sector, in our NHS, as we demand in the private sector.
The Governments who have been pandering to the idea that we have to keep taxes down have artificially prevented the British people from spending more on health and education services. As society becomes more wealthy, we expect to have excellent public services. I congratulate the Chancellor on his announcements on spending boosts for those services.
I have some concerns, however, about other matters. I thoroughly agree with my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) when he points out the need for greater capital investment. Although the extra money for transport--£250 million--is welcome, in the west midlands, Birmingham city council is arguing that we should be increasing investment in public transport by about £400 million, although
obviously not all in one year. We need such up-front capital investment to boost business investment and to encourage greater investment in our region.
The Chancellor said that he was committed to balanced economic development across the regions. We need more capital spending on our infrastructure. Even with the planned increases, we shall still not return to the capital investment level as a percentage of gross domestic product that was reached in 1994-95 by the previous Government. We are still far from the capital investment levels achieved by previous Labour Governments.
There is no need for us to use private finance for public sector capital investment. I am not advocating that we should let borrowing rip, but there is clearly scope for investment that will reap dividends in future revenue income. Transport is a very good example of that. If we make up-front capital investment, we can introduce environmentally friendly congestion charges, which would pay for that capital investment. It would also be beneficial--
encourage balanced economic growth across all regions and to enable each region to make the most of its comparative advantages.
My hon. Friend the Member for Doncaster, Central (Ms Winterton), who is in her place, represents an objective 1 area. She will also take comfort in the commitment on page 28 of the Red Book that the CSR process is aimed at determining how departments' programmes can best
contribute to the achievement of the Government's objectives . . .
One of those objectives must be to ensure balanced development across the country.
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